UPDATE: Kokomo could be blitzed by Delphi plan

June 25, 2007

The economy near Kokomo-including northern reaches of the Indianapolis area-could sustain a two-fisted punch if Delphi Corp. succeeds with its plan to emerge from bankruptcy protection.

The Michigan-based auto parts maker has reached a preliminary agreement with the United Auto Workers and its main customer, General Motors Corp., to cut production by about half at its Kokomo plant, which currently employs more than 4,000.

Employees there expect heavy job cuts, though the company hasn't disclosed its intentions.

Annual revenue at the plant would fall to $310 million by 2012 compared to the current $666 million, the Detroit Free Press reported this morning, citing unidentified sources.

Making matters worse for the local economy are plans to c
ut wages by almost $11 an hour as part of the downsizing, which includes closing Delphi's Anderson plant July 1. That plant, which already has sustained heavy cuts, has about 90 workers remaining.

United Auto Workers officials later today will brief Delphi employees-including the 1,500 hourly employees at the Kokomo plant-on a contract that will slash wages from $27 an hour to an average of $16.23 an hour.

Delphi Corp.'s Kokomo plant is expected to be among four of 18 to remain open, but that doesn't mean all of its workers are happy with the plan.

Delphi employee who wished to remain anonymous said Kokomo workers are divided into two camps-one grateful to keep the plant open, and another that would rather strike than accept permanent pay cuts. Union officials have voiced confidence the contract will be ratified. Workers are scheduled to vote by July 1.

Delphi officials declined to comment on the most recent contract offer, but said a strike could cause it to go out of business.

"If ratified, we believe this agreement will be a significant milestone in our transformation and a major step towards emergence," Delphi's chief restructuring officer, John Sheehan, said in a statement.

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