GM PLANS TO SPIN OFF DELPHI CAR PARTS UNIT In a move that could improve its competitive position but worsen its already tattered labor relations, General Motors said Monday that it year divest its huge Delphi auto parts unit next will Though not a household name, Delphi would emerge from the complex stock transaction with 200,000 employees and rank as the nation's 25th-largest company--bigger than Intel, Chas Manhattan or Lockheed Martin Delphi, which posted 1997 sales of $31.4 bil- ion, produces AC sparkplugs, radiators, and steering components, among much else. The deal is valued by analysts at more than $10 billion. Although long expected, the deal's announcement comes only five days after the giant auto maker settled a 54-day labor dispute that erupted in part over GM's desire to close down inefficient Delphi operations. The United Auto Workers union has consistently opposed the Delphi divestiture and late Monday responded sharply to GM's announce ment, saying it would do whatever is necessary to protect the jobs of Delphi hourly workers
GM Chairman John F. Smith Jr. said the Delphi ale represents a historic, strategic shift away from vertical integration, in which GM produces everything from the smallest part to assembling and delivering a vehicle. Ford Motor and Chrysler produce far fewer of their own parts, as do many of the nation's heavy manufacturers. GM is making its move long after the shift away from vertical integration has become a business trend. GM makes more of its components than rivals, who can buy the same parts cheaper at outside, often nonunion, suppliers. GM makes about 65 per cent of its own parts, compared with less than 50 percent at Ford and 30 percent at Chrysler (Ford [hals also splujn off its Visteon parts unit The union fears that Delphi's sale will lead to plant closing and possible layoffs. In addition, the parts maker is likely to push in future years for contract concessions, such as lower wages, once it is separated from GM.