AUTO INDUSTRY Delphi tries to dispel image of weakness

With its stock down 40 percent, Delphi is out to convince analysts that the company is strong.
YOUNGSTOWN -- The leader of Delphi Corp. likens rumors of insurmountable problems at Delphi to his children's fear of monsters under the bed.
When his two boys were young, J.T. Battenberg said, he spent night after night assuring them, with flashlight in hand, that there were no monsters.
Today, as chairman and chief executive of the world's largest automotive supplier, Battenberg said he's frustrated that he can't convince stock analysts that the company is strong. Some analysts have reported that the Michigan-based company has obstacles it simply can't overcome.
At a conference Tuesday in New York that was carried over the Internet, Battenberg told stock analysts that "there are no monsters under the bed at Delphi."
Lower stock price
Recently, confidence in the company and the automotive industry has been shaken. Delphi's stock price has fallen by more than 40 percent since it was spun off by General Motors as an independent company in 1999. The stock is trading at about $10 a share, compared with an initial public offering price of $17.
Battenberg talked about these points, which he said are myths reported by analysts:
U Revenue is dropping.
Battenberg said revenue from companies besides GM is growing 10 percent a year and will be about 35 percent of total revenues, compared with 24 percent in 1999.
Revenue from GM is holding steady, he said. Delphi has kept more than 80 percent of its GM business that comes up for bid each year and is winning new business.
U GM's reduction in standard features in vehicles will hurt Delphi.
Battenberg said GM's plan is helping Delphi. By removing standard content, GM is making cars more affordable and increasing sales, which boosts Delphi sales, he said.
Also, GM's plan affects only a handful of options on select models and is not a companywide reduction.
U Delphi has a pension burden like GM.
Battenberg said Delphi's pension obligations are manageable because it has only 0.12 retiree for each employee. Delphi is making yearly payments that are designed to make its pension plan fully funded by 2006.
U Delphi has cash flow problems.
Delphi is in a strong cash flow position even with its pension payments, dividend payments and restructuring costs that include severance payments to laid-off workers, Battenberg said. The company's debt at the end of this fiscal year will be the same as a year earlier, he said.
U Labor costs are too high.
Although that may have been true five or 10 years ago, Delphi has been moving its work force to low-wage countries, Battenberg said. The work force in the United States has been cut about 16,000 to 75,000 since 1998, so now only about one-third of the company's employees work in the United States.
About half of the employees in this country are between 45 and 54, meaning they will be retiring soon so Delphi can continue to reduce its United States employment, Battenberg said.
Locally, Delphi has about 4,700 hourly workers, compared with about 8,600 in 1995. It also employs about 1,900 salaried workers. It is the parent company of Warren-based Delphi Packard Electric Systems, which makes wiring systems and related components.

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