SCHUMER URGES GM AND DELPHI TO REACH AGREEMENT TO ALLOW GM PURCHASE OF CRITICAL AUTO PARTS PLANT; WILL PRESERVE 1200 JOBS IN ROCHESTER AREA
In Plan Supported By Auto Czar, Schumer Calls On General Motors To Repurchase Rochester Delphi Plant; Calls On Delphi To Be Open To GM's Offer
GM Purchase Best Way To Preserve Jobs In Rochester During Tumultuous Time In Auto Industry
Shutdowns Would Be Disastrous For Rochester, New York And Nation's Auto Industry; Plant Essential To GM Car And Truck Production
U.S. Senator Charles E. Schumer today called on General Motors (GM), as part of their ongoing restructuring, to repurchase the Delphi Corporation plant in Rochester that employs approximately 1,200 people and is vital to the well being of communities across the region. Schumer also urged Delphi and its creditors to negotiate in good faith with GM, and to be receptive to the company’s offers. GM’s purchase would protect these local jobs and ensure that the company has an affordable, reliable supply chain far into the future. Schumer will note that such a move is critical, as Delphi has been operating under bankruptcy protection since 2005, and there is concern that the plant’s future is uncertain. The plant in Rochester, in addition to the one in Lockport, NY, is one of four Delphi plants operating in the United States that are considered essential to GM’s operation, so purchasing all four to ensure their viability makes eminent sense. The four plants are also seen as likely to be the first to become profitable again as the economy turns around. Schumer has discussed GM’s purchase of these plants with the administration’s Auto Czar and has secured his support of the plan.
The continued operation of Rochester’s Delphi plant has enormous implications for the entire region. The plant’s workers frequent restaurants, grocery stores, and other businesses, and auto related industries provide nearly 50,000 jobs in New York. This does not include industries that make the rubber, steel, plastic and other materials that go into auto parts.
“We are in a time when big decisions need to be made, and decisive action needs to be taken,” said Schumer. “To preserve these 1,200 jobs and help secure the survival of the company, GM needs to reacquire these essential factories to preserve vital jobs and secure a supply chain for the future, and Delphi needs to be a willing partner. I will continue to do whatever is necessary to see this purchase through, for the sake of Rochester, our state and our country’s auto industry.”
There are currently ongoing negotiations to restructure General Motors and to bring Delphi out of bankruptcy. Schumer urged Delphi and GM to work together to allow for a sale of the Delphi auto plants. Such a sale would greatly benefit GM, and would allow Delphi to be taken out of bankruptcy. GM has already expressed interest in buying parts of the Delphi operation, including its steering parts production unit. Today, Schumer is calling on GM to purchase four Delphi factories, including two in New York, that produce parts that are critical to GM’s operation, and whose shut down would cripple GM’s ability to manufacture cars and trucks in the United States. He is also calling on Delphi and its creditors to be open to reasonable offers from GM, and act in the best interest of the country and the state by selling these four critical plants at a reasonable price.
Delphi was originally spun off from General Motors in 1999 and has been operating under Chapter 11 bankruptcy protection since October 2005. Delphi is GM’s largest supplier and sold the company $5.5 billion in parts and services in 2008, accounting for 31 percent of Delphi’s revenue. Since Delphi declared bankruptcy in 2005, GM has taken charges of almost $11 billion to pay for the restructuring efforts of Delphi’s North American operation.
There is concern that that the Delphi facilities and their thousands of jobs will be in danger if GM does not acquire them as part of its restructuring effort. Schumer argued that it makes sense for GM to acquire the Delphi facilities as it would guarantee its supply chain at an affordable cost. For example, the Delphi employees in Rochester average $16 per hour in wages, or about $28 total including benefits, which is comparable to the total labor costs of foreign manufacturers. So the Rochester labor force is both experienced and affordable.
The Rochester plant manufactures fuel delivery systems (fuel injectors, fuel rails etc.), emissions control systems, and cylinder deactivation systems, and 95 percent of the work at the plant involves producing GM parts. This facility has been one of the area’s longest and most important employers, with over 1000 employees. The plant and its employees has a storied history, as it was the first in the GM empire to convert to 100 percent military production during World War II, and it is where fuel injection was invented in the 1950s.
The Lockport plant started as the Harrison Radiator Company nearly 100 years ago. Harrison Radiator was acquired by United Motors in 1916 and then became part of GM in 1918 when GM acquired United Motors. It became part of Delphi in 1995 and left the GM family when Delphi was spun off. They currently have around 2,100 employees. At the plant in Lockport, they make radiators, oil coolers, condensers, evaporators, and HVAC units. It is an incredibly important part of the Lockport community and NiagaraCounty, and is one of NiagaraCounty’s largest employers, and the workers there have a huge ripple effect on the community surrounding Lockport.
The full text of the letter is below:
May 4, 2009
Frederick A. Henderson Rodney O'Neal
President & CEO President & CEO General Motors Corporation Delphi Corporation
300RenaissanceCenter 5725 Delphi Drive
Detroit, MI48265Troy, MI48098
Dear Mr. Henderson and Mr. O'Neal,
In recent months, I have been following the situation with General Motors, Delphi, and the other domestic automakers and suppliers very closely. Even though New YorkState does not boast any major auto assembly plants, we still have thousands of workers whose livelihoods depend on the automotive sector, from the manufacture of auto supplies to the more than 1,000 auto dealers throughout the state. For example, nearly 50,000 New Yorkers work at new-vehicle dealerships, and more than 23,000 New Yorkers work in parts manufacturing (not including the thousands of indirect jobs supported by the industry, such as those in steel, plastics, or rubber). These jobs are essential to my constituents and their communities all across New York.
I am writing to you to discuss the ongoing negotiations concerning a possible transaction between General Motors and Delphi. As you know, Delphi has two major locations in New York: a manufacturing facility in Rochester and another in Lockport. There is also a fuel cell research facility in Henrietta, a small town near Rochester. I am hopeful that General Motors and Delphi will reach a solution that ensures that these jobs (and others in Kokomo, IN and Grand Rapids, MI) will be protected in the years ahead. These are four Delphi manufacturing facilities with substantial GM business.
You will recall that Delphi was originally spun off from General Motors back in 1999. Delphi has been operating under Chapter 11 bankruptcy protection since October 2005, and I am greatly concerned that if Delphi fails to negotiate a transaction that allows it to emerge from bankruptcy, the Delphi facilities and their thousands of jobs will be in danger. I urge Delphi to work closely with its creditors and GM to reach an agreement by Tuesday's deadline and avoid a shutdown of Delphi's facilities.
Both of Delphi's New York facilities have storied histories and have been important GM suppliers for many years. The Rochester site on Lexington Avenue was the first in the GM system to convert to 100 percent military production during World War II, and it is where fuel injection was invented in the 1950s. The plant manufactures fuel delivery systems (fuel injectors, fuel rails etc.), emissions control systems, and cylinder deactivation systems, and 95 percent of the work at the plant involves producing GM parts. This facility employs about 1,200 workers, and it has long been one of the area’s most important employers. As we gradually wean ourselves off of fossil fuels, it is poised to lead again – this time in manufacturing fuel cells.
Delphi's Lockport site started as the Harrison Radiator Company nearly 100 years ago. Harrison Radiator was acquired by United Motors in 1916 and then became part of GM in 1918 when GM acquired United Motors. It became part of Delphi in 1995 and left the GM family when Delphi was spun off nearly ten years ago. They currently have around 2,100 employees. At the plant in Lockport, they make radiators, oil coolers, condensers, evaporators, and HVAC units. It is an incredibly important part of the Lockport community and NiagaraCounty, and is one of NiagaraCounty's largest employers, and the workers there have a huge ripple effect on the community surrounding Lockport.
In my view, a Delphi transaction involving GM would make keen economic sense for all parties because it maintains the existing supply chain at an affordable cost. For example, the Delphi employees in Rochester average $16 per hour in wages, or about $28 total including benefits, which is comparable to the total labor costs of foreign manufacturers. So the Rochester labor force is both experienced and affordable.
Moreover, I would like to urge Delphi and GM to locate any future fuel cell production in the Rochester region. My understanding is that a fuel cell for vehicle propulsion is being developed by 400 GM employees at the HoneoyeFalls facility in MonroeCounty, and that this fuel cell is being tested in the Chevrolet Equinox around the country. This kind of fuel cell is the type that I am hoping could be made in Rochester. I would like to hear more from General Motors on the possibility of fuel cell manufacturing occurring in New YorkState.
The local UAW already has an agreement with Delphi to produce solid-oxide fuel cells in Rochester by 2012, at the Delphi plant on Lexington Avenue. These fuel cells, developed by Delphi, are used to supply large trucks with auxiliary power. So these employees will already be skilled at manufacturing fuel cells, making them an excellent source of future manufacturing for propulsion fuel cells developed for GM.
Given that keeping Delphi jobs is so crucial to the local communities, I implore you to do whatever you can to ensure that a deal can be reached by Tuesday. I look forward to discussing these issues with you at your earliest convenience. Thank you for your attention and your consideration.