DETROIT – Delphi Corp. (DPH) said Friday it plans to cut 8,500 jobs — or 4.6 percent of its total work force — worldwide next year as part of an ongoing restructuring. The world's largest automotive supplier also expects to lose $350 million as it struggles with lower vehicle production and rising commodity prices.
The Troy, Mich.-based company had a similar goal for global job reductions in 2004 and exceeded it through attrition, retirements and job transfers. In the first nine months of 2004, Delphi trimmed between 9,100 and 9,200 jobs, spokeswoman Claudia Baucus said.
Of the total announced Friday, Delphi said 3,000 of the cuts were expected to be U.S. hourly employees and 5,500 would be from outside the country.
Delphi also revised its earnings forecast for the fourth quarter and 2005 to take the layoffs as well as slower sales into account.
Delphi shares slipped 14 cents, or 1.6 percent, to $8.50 on the New York Stock Exchange (search) — near the low end of its 52-week trading range of $8.17 to $11.78.
Delphi, which has 186,500 employees worldwide, is among several auto suppliers that recently have warned of lower-than-anticipated earnings because of higher materials expenses, particularly for steel, and because top U.S. automakers General Motors Corp. (GM) and Ford Motor Co. (F) plan to turn out fewer vehicles.
GM, Delphi's biggest customer, and Ford both recently announced lower production schedules for the first quarter of 2005 versus this year's first quarter. Delphi is a former GM division.
"We expect the plans Delphi has in place will, over time, offset the majority of these headwinds," Delphi chairman and chief executive J.T. Battenberg III said in a statement. "However, the combined forces of the near-term cost and revenue pressures will outpace our progress in the early part of 2005."
Delphi forecasts revenue in the October-December period to be between $6.9 billion and $7 billion — $200 million lower than its previous outlook.
It also said it expected to report a loss of between $123 million to $143 million in the fourth quarter. Excluding restructuring and other charges, the fourth-quarter loss will be between $70 million and $90 million, it said.
Delphi's previous fourth-quarter forecast ranged from a loss of $18 million to a profit of $32 million.
For the year, Delphi forecasts a loss of $57 million to $77 million. Excluding charges, earnings are expected to be $118 million to $138 million, it said.
For 2005, the company expects revenue of $28.5 billion to $29 billion.
It said the full-year loss would be $350 million, including $150 million for work force reductions.
The announcement came two days after Delphi revealed in a filing with the Securities and Exchange Commission (search) that it had improperly recorded a $20 million payment from Electronic Data Systems Corp. (EDS) in 2001.
The company said it also booked $26 million in credits from EDS in 2000 and 2001 for future information technology services when the amount should have been recognized over a longer period of time.
Delphi, which said its audit committee's review was not complete, disclosed in late September that the SEC was investigating certain transactions with EDS, its longtime IT services provider.