"We're back. We're better. We're relevant, and we're stronger," says Delphi CEO and President Rodney O'Neal. "We're profitable in all regions." O'Neal is shown at a speech earlier this year in Detroit. (Stan Honda Getty Images)
It's been nearly five years since the bankruptcy filing of Delphi Corp. -- Oct. 8. 2005, to be exact -- marked the start of Detroit's automotive unraveling, a harrowing ride that changed lives, communities and economic expectations across the country.
Nowhere did the reckoning hit harder than here in Michigan, still home to a smaller, leaner, less unionized and renamed Delphi Automotive LLP. The former parts unit of General Motors Co. survived and is poised to prosper, as CEO Rodney O'Neal is expected to tell the Detroit Economic Club today at the Townsend Hotel in Birmingham.
"We're back. We're better. We're relevant, and we're stronger," he said in an interview. "We believe we are a very efficient and very effective company. The company has done what it was supposed to do and that is to grow value. We're profitable in all regions."
The turnaround, detailed in a plan code-named "Northstar" that O'Neal and his team outlined to Delphi's directors in February 2005, didn't come without the pain of restructuring, bankruptcy and fierce controversy, some of it viciously personal.
Thousands lost jobs, plants were closed or sold, pensions reduced, benefits cut and the members of one union -- the United Auto Workers -- repatriated back to GM.
Delphi reduced its product lines to 35 from 119. It winnowed business units to 10 from 27. Seventy percent of the company's $13 billion in annual revenue -- roughly half its $26 billion in sales five years ago -- is booked from outside North America, and 82 percent of its revenue comes from non-GM customers.
Even now, controversy continues. As many as 20,000 of Delphi's salaried retirees are suing in federal court, alleging that GM and the Treasury Department used taxpayer money to "top up" the pensions of Delphi hourly retirees while relegating their salaried counterparts to smaller payouts from a quasi-governmental agency.
"It's just unfortunate," O'Neal said, adding that thousands of current salaried employees also expect to see reduced benefits from the Pension Benefit Guaranty Corp. "My heart goes out to the retirees. They were one of many creditors who were negatively impacted by what happens in Chapter 11. From a business perspective, our past is behind us. The world changed. "
Yes, it did, in ways that are only beginning to become apparent in stubbornly high unemployment, declining home values, tight public budgets and the nation's largest drop -- 21.3 percent -- in median income between 2000 and 2009, according to new figures from the U.S. Census Bureau.
Is Delphi, privately held by the lenders who financed its emergence from bankruptcy, a different company? No question, as much a testament to the rejuvenative power of restructuring as the human costs tallied to make it all work.
Of 100,000 employees worldwide, only 5,000 work in the United States -- 2,500 or so of them in company headquarters in Troy. Yet O'Neal says the supplier is "proud" to be based in Michigan, will be "more involved on a lot of levels" and it is "not going anywhere."
O'Neal's remarks today mark Delphi's first steps back into the public arena, a slow re-emergence that could culminate as early as sometime next year in an initial public offering of shares in the new company. Boiled to its essence, his message is that today's Delphi is a "relevant" company that operates in a business world as it is, not as a parochial view from Old Detroit would like it to be.
It accepts that globalization isn't a trend, it's reality; that successful companies understand customers drive markets, not corporate strategies; that the smartest way to defend a position in your home market is to outperform the competition, not push politicians to erect trade barriers and tariffs; and that the pace of change is accelerating.
He's right, of course, as galling as his prescriptions are likely to sound to those left in the wake of a corporate transformation that was destined to happen one way or another. The simple fact is that Delphi, like some rival suppliers and two of Detroit's three hometown automakers, spent too long living on borrowed time.
Theirs were hopelessly broken business models with unrealistic market assumptions and unrealistic leaders (in management and labor) fueled by denial. Whatever you think of the new Delphi declaring itself back, it's preferable to the old one -- because it wouldn't be.