On October 8, 2005, Delphi Corporation filed for bankruptcy protection in New York. Given the difficulties of the company, including unprofitable operations and repeatedly severe statements by the company’s management about its uncompetitive cost structure, especially its "legacy costs," the action was not unexpected.
Delphi, the largest auto parts supplier in the U.S. (and number two worldwide), employs 50,600 workers in the United States and Canada. Headquartered in Troy, Michigan, Delphi is an integral component of Michigan’s economy and the national auto industry. Given its size, Delphi’s bankruptcy filing was widely expected to have far-reaching consequences for not only Delphi’s workers, but also the state and national economy, automakers, and auto parts suppliers.
The purpose of this analysis is to provide an early indication of the likely consequences of the Delphi bankruptcy. Given our past analyses of work stoppages, interruptions, blackouts, and other events that have shut down production in the United States; and our extensive knowledge of the automobile industry; we have background knowledge from which to draw some preliminary conclusions. This is a preliminary assessment of likely events that will be played out over a two or three-year period, and useful for planning and the assessment of risks. However, we caution readers that the future is, of course, unknowable.