Delphi Signs Cadiz Plant Shutdown Deal

Delphi Signs Cadiz Plant Shutdown Deal Delphi Spain (a division of Delphi Automotive, USA; OTC: DPHIQ) has signed an agreement with Andalusian authorities and unions in Cadiz, Spain, removing final roadblocks to closing its plant there. But the agreement comes with a steep price tag for a company already operating in bankruptcy. The total cost to Delphi for closing this one plant will exceed $270 million, more than triple the initial forecast. Delphi Puerto Real manufactured bearings and steering and suspension components; after continued losses, it was marked for closure earlier this year. Also, Delphi has classified several product categories as "non-core," going forward out of bankruptcy; the bearings and steering system components manufactured in Puerto Real among them. Plants producing non-core products are subject to sale or closing, in line with the reorganization plan. While Delphi's move would have been unremarkable -- and even predictable -- other than the large number of workers involved (over 1,600). Its impact on the depressed Cadiz region's workers and communities has been massive, reverberating all the way to pull in prime minister Zapatero. Delphi's move became, "the proverbial straw that broke the camel's back," in Cadiz, observed one politician. Delphi's final agreement with the controlling UGT union means all Puerto Real workers will receive 45 days pay for every year worked. Delphi had offered to pay through the end of July, followed by the state-mandated minimum of 20 days pay for each year worked. In addition, Delphi has agreed to walk away from the facility -- simply abandoning a wide swath of its plant and equipment (although not intellectual property, patents, customer lists or proprietary technology). Andalusian regional authorities will take over those assets in a yet-to-be-determined program, "necessary for the future pursuit of any industrial activities," to, "facilitate the regeneration," of Puerto Real's industrial base. Delphi has now budgeted the final cost of closing the Cadiz plant at more than $268 million. Approximately $161 million is tied to the 45-day seniority payments, $10 million to additional claims, and $90 million in direct Puerto Real facility-related and organization-related costs. Jose Barriga, head of the UGT union, said: "We have just signed a social plan. It's a bit hard to sign an accord closing a factory with 1,600 people."