DAYTON DAILY NEWS                   Copyright (c) 1996, Dayton Newspapers Inc.DATE: Sunday, March 17, 1996                 TAG: 9603180138EDITION: CITY           SECTION: NEWS        PAGE: 1A TYPE: CENTERPIECE SOURCE: By Todd R. Wallack DAYTON DAILY NEWS                              GM STRATEGY AT RISK               STRIKE IMPERILS PLAN FOR DELPHI'S INDEPENDENCE   You have to look hard these days to find mention of the world's largest automaker anywhere at its parts plants - Delphi Automotive Systems.   Nearly all the old signs have been covered up. It isn't visible anywhere inDelphi's new slick brochures. And the old familiar General Motors Corp. logo has been removed completely from Delphi business cards.   Like a parent urging a teen-ager to get a job, GM has told its parts business its time to earn its keep. Though GM says its unlikely that it will kick Delphi out of the corporate family soon, GM executives want it to become more independent.   For Delphi, it means a better opportunity to compete for business around the globe - even from GM's fiercest competitors. But it also poses a risk. It means GM can take its business elsewhere if Delphi cant compete.   "We no longer have the security of knowing that we have General Motors' business," said Delphi president J.T. Battenberg III, in a past interview. "Weare an independent operation now, and we're going to be searching for global growth, and we have to be competitive."   But the 12-day-old strike by a union local in Dayton - in which talks are continuing - may put the whole strategy in jeopardy.   United Auto Workers Local 696 struck two Delphi Chassis brake plants in Dayton on March 5 because of its concern about GM's plans to shift some of itsbusiness to non-Delphi plants.   In fact, since 2,700 workers went on strike, they have virtually shut down GM's North American production by hitting a key point in GM's supply line. Theplants supply brakes for virtually every car and truck GM makes.   If the strike drags on, analyst David Healy of Burnham Securities calculated it could cost the company about $250 million a week in lost profits.   Union members say it doesn't matter that the company plans to replace the business with orders from other automakers. They were counting on new businessfrom both sources, creating up to 500 new jobs at the plants.   The bottom line: Union members feel they are entitled to GM's business, no matter what executives say about Delphi becoming independent.    "I feel they are one in the same," said Joe Buckley, Local 696 shop chairman, reflecting a common attitude of workers walking the picket line. "Nomatter what you call it ... this is a General Motors plant."   Union members are particularly concerned the strategy could lessen GM's dependence on its parts plants - making it less vulnerable to such strikes and, in turn, weakening the union's bargaining position.   Worse, if GM is allowed to shift some business to outside companies today, what's to stop it from moving much more business to other plants down the line? It means union members' jobs are potentially at risk - even if the decision is made for some reason outside their control. For instance, union members dont feel they should suffer if an engineer doesnt come up with a goodenough design to win GMs business.   Similar concerns are expected to be raised when the UAW negotiates a new three-year national contract with the Big Three automakers this summer.   "This is a local labor dispute, but it clearly has national implications," said Harley Shaiken, a labor professor at the University of California at Berkeley.   But GM is sticking to its guns. Unlike past strikes at the plant - which itresolved in a matter of days - experts say GM is dragging its feet to make a point.   "GM is really drawing the line in the sand here and saying, Weve got to getcompetitive," said David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan.   GM vice chairman Harry Pearce has made the same point.    "Guaranteeing contracts to ourselves that are not competitive is a flawed strategy if I ever heard one," Pearce said Thursday.   Most observers applaud the move, noting that Delphi (once known as GM's Automotive Components Group) has been a drag on GM's earnings for years. Not only does it face higher labor costs but, until now, it never has been forced to face competitors.   "The UAW allowed Ford and Chrysler to greatly increase outsourcing in the early 80s, and now GM is trying to become more like them," said Harry Katz, labor professor at Cornell University.    GM says Delphi already is starting to show signs of success.   "Delphi's business turnaround is one of the most exciting things going on at GM today," said Jack Smith, GM's chief executive, during a speech to the Dayton Rotary Club in December. "It's a supplier to just about all the automakers in the world."   Just five years ago, Delphi estimated that only 15 percent of its business came from outside GM's North American Operations. Today about a third of its sales come from outside and Delphi said it hopes to make it half by the year 2002.   At the Delphi Chassis brake plants alone, workers have garnered orders fromChrysler, Isuzu, NUMMI - a joint venture between Toyota and GM in California -and others.   Clearly, even the striking UAW workers value the new business and the jobs that go with it.   Just a day after the strike began, the union agreed to let 300 workers cross picket lines to continue making parts for Chrysler's Dodge Ram pickups and other non-GM vehicles.   "The company thinks we're a dinosaur, but would we have done that if we weren't thinking about the future?" said Buckley, the union shop chairman.   Indeed, Delphi Chassis' sales director said that action managed to reassureoutside customers and ensure the plant can secure future outside business.   Equally important, Delphi executives say, the company is slowly carving outits own identity.   Two years ago, it became a separate division of GM - meaning its financial numbers were no longer lumped in with the rest of GM's automotive operations.   Last year, it changed its name, dumping a variety of old titles that have long been tied to GM, such as Delco. Some employees resisted the move, still calling it Delco, but Delphi spokesman Mike McCurdy said hes seeing Delphi shirts more often.   Next summer, Delphi plans to open a new headquarters and customer center inTroy, Mich., shedding its old ties in nearby Pontiac. Battenberg said the moveemphasizes Delphi's "separate sector status within General Motors."   Delphi is even trying to de-emphasize GM in its press releases. The company's official style sheets state: "It is preferred that GM ownership be indicated in the second reference." Delphi should always come first.   Ed Gansen, Delphi's sales and marketing director, notes: "We're not foolinganyone. They know we're part of General Motors. But we don't have to rub theirnoses in it."   In fact, one concern that has comes up frequently is whether potential customers can be sure their plans for a new vehicle won't be leaked to GM.   But Delphi officials said they've worked hard to build their trust. Their buildings now have specially designed conference rooms to shield plans from the eyes of GM engineers.    And Battenberg, Delphis president, said the company also channels major projects and capital requests directly through GMs top executive, bypassing the core GM division that designs and builds cars.   "It's been a concern we've dealt with over the last several years as we've moved toward outside sales," Battenberg said in the past. "We don't share information with (GM's) North American (vehicle) operations."   But Delphi faces other challenges in competing for its business.   For example, its wages and benefits (around $45 per hour) are probably twice as high as most competitors.   That's because UAW workers at the plant earn the same amount of money as their brethen at the Big Three automaker's assembly plants, while workers in most of the smaller parts companies earn less.   "We do the best in high-tech products," said spokesman Jim Hagedon, "where the labor rate becomes less of an issue."   Hagedon said thats because high-tech products are more expensive and typically require a more highly skilled workforce.   Delphi says it also has to compete for GMs business just as fiercely as it competes for outside business.   "It was always the underlying assumption that (GM) was the customer, but now they are a customer with a capital C," Gansen said.    For instance, Delphi engineers once had exclusive access to GM's early mockups so they could get started right away on parts. Now they're frequently joined by several other choice suppliers, who also have an opportunity to bid for products.   "Pre-1991, a phone call was perhaps the only thing that was needed to secure some business," said Mark Chema, manager of the sales force that represents Delphi Chassis to GM's North American Operations. "Now, we have to prepare a very detailed proposal.   "It really has been a challenge to maintain the amount of sales revenue we enjoy with NAO," Chema said.   But some observers are more skeptical, figuring Delphi still has strong ties to GM.    For instance, at a recent GM leadership meeting, Delphi spokesman Hagedon notes that Delphi workers were invited "as guests." But other suppliers were not invited at all.   Joseph Phillippe of Lehman Brothers figures certain overhead costs aren't always factored into the bids, he said. On some products, he said, Delphi simply can never compete.   "Spinning (Delphi) off would be a disaster," Phillippe said. "It is not capable (right now) of standing on its own against some of the exceptionally capable suppliers out there."LENGTH: Long  :  173 LINESSUBJ: STRIKE   LABOR NEGOTIATIONS NA: GENERAL MOTORS CORP.   DELPHI CHASSIS ENHANCER: REF1