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October 1, 2004

5 Min Read
Taking the world by storm

Delphi Corp. has big vision for a future that includes global growth and broadening its product portfolio to pursue new markets, such as medical.

Long known as a major supplier to the automotive industry, and until a five years ago a subsidiary of General Motors, Delphi Corp. has made its mark on the world.

A recent Wall Street Journal article (Aug. 3,2004, pg.A8A) noted that Delphi will soon "earn less than half of its income from [GM]-a sign that its customer base is diversifying quicker than many had expected."

Still a major supplier to the automotive industry, Delphi is proud of its latest expansion in the automotive connector market. The company''s new, highly automated facility in Vienna, OH recently completed installation of 124 all-electric Roboshot injection molding machines from Milacron Inc. The machines, which include 120 production presses and four in the company''s process engineering laboratory, were phased in gradually over several months at the new facility, which started up in mid-2002, and became fully operational June 2004.

"This was Delphi Connection Systems'' first experience with utilizing all-electric machine technology, in addition to being such a massive, unique project," said Karlheinz Bourdon, Milacron VP, machinery technology. "Nevertheless, we were told repeatedly that this was one of the fastest and smoothest new plant startups they''ve ever experienced."

However, as the Wall Street Journal noted, Delphi''s continued connection to GM has "been a drag on its share price" recntly. The company has been "increasing its non-GM business by an average of 13%" annually, and is "set to earn less than 50% of its revenue from GM sometime in mid-2005," says the report.

To that end, Delphi has its sights set on new markets with the establishment of Delphi Medical Systems Corp. For example, in late June, the Delphi subsidiary signed a licensing agreement with Swiezerland-based medical device company Debiotech S.A. The licensing agreement includes rights to manufacture and market Debiotech''s ambulatory intravenous (IV) pump, and its associated disposables and accessories.

Additionally, Delphi has moved quickly into the consumer electronics market. It is the leader in satellite radio, as three out of every four satellite radio listeners are tuned in on Delphi hardware. In June, it reached the 1 million mark in sales of portable satellite radio receivers covering both the Delphi SM SKYFi and Roady products. That milestone brought Delphi''s total receivers sold to 2.6 million, including original equipment. Additionally, Delphi announced Pensky Truck Leasing will outfit some of its class 8 trucks with Delphi''s satellite radio and antennas to receive SIRIUS through a deal with its distributor, Pana-Pacific.

The company, which had just over $28 billion in sales in 2003, isn''t letting any grass grow under its feet as its Meixcan operations continue to become a vital force in keeping Delphi globally competitive. The company''s Mexico Technical Center, opened in 1995, is an R&D facility located in Juarez. It''s a tribute to the high-tech skills of the Mexican workforce and Delphi''s commitment to manufacturing in both Mexico and the U.S.

Delphi began operations in Mexico in 1978, and today employs nearly 70,000 workers in 54 plants from the northern border to the southern states, producing 50 families of products. This makes Delphi one of the largest non-government employers in the country. To date, employees from the 600,000-sq-ft Mexico Technical Center have earned more than 80 U.S. patents. The facility employs 2500, half of them engineers.

"We have engineers from all over the world, making it a mini United Nations," says Michael Hissam, Director, Corporate Affairs, Mexican Operations. "Delphi''s economic impact on the Mexican economy is $2 billion annually. Economists say this translates to $6 billion pumped into the economy each year from Delphi operations."

Delphi''s success in Mexico is critical to its success in the U.S. and vice versa. "This is a highly competitive industry and we use suppliers globally," says Hissam. "NAFTA has reduced the total cost of business. We buy billions of components from U.S. and Canadian suppliers, with some 100 million components daily crossing into Mexico from U.S. suppliers to Delphi plants. Delphi Mexico supports 300,000 U.S. jobs."

Hissam says that manufacturing is evolving to a higher level in Mexico with more and higher skills required of workers, and the northern states lead in this arena. "However," he adds, "this creates additional opportunities in central and southern Mexico for assembly work and commodity-type products as some of that work has migrated south from the northern border areas."

Education is critical in Delphi''s Mexico operations, and the company invests in employee education working with a number of technical colleges in the country near its plants, including one in Juarez (Tech de Monterrey), with a plastics engineering program. On the U.S. side, there are also programs involving the Univ. of Texas at El Paso (UTEP) and New Mexico State, among others.

Hissam is excited about Delphi''s Mexico operations, and optimistic about the country''s ability to become a true partner in North America. "Mexico is working hard to improve its infrastructure and reduce business taxes, and is now giving state payroll tax rebates. The inflation rate has remained low as well," explains Hissam.

"Delphi is global and will go anywhere to serve the customer and add value," he says. "The number-one criteria for choosing a plant location should be the customer. Find out what best helps the customer and make your decision from there."

Clare Goldsberry [email protected]

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