Nearly a decade after spinning them off as independent companies, General Motors Corp. and Ford Motor Co. both continue to be plagued by the woes of their former parts subsidiaries Delphi Corp. and Visteon Corp., respectively.
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GM recently loaned Delphi $300 million to help keep the company afloat nearly three years after it first filed for Chapter 11 bankruptcy protection. Ford, meanwhile, announced Friday that a tentative deal to sell an interiors plant to Johnson Controls Inc. had fallen apart due to disagreements on price. The plant was one of nearly two dozen Ford took over from Visteon in 2005 to help that parts maker avoid bankruptcy.
GM and Ford spun out Delphi and Visteon, respectively, in 1999 and 2000 toward the automakers' goal to be more lean manufacturers, and hopeful that as independents their parts units would be able to attract new business. But the parts makers remained reliant on their former parents, and have suffered as Detroit's fortunes have declined and sales have slumped.
Both spinoff agreements called for the automakers to backstop the subsidiaries and provide protection to United Auto Workers jobs at the former units. Those deals, coupled with the companies' continued reliance on the former subsidiaries for needed parts, have forced them to play active roles in restructuring efforts at Delphi and Visteon.
Ford, despite being stuck with excess facilities, appears to still be better positioned. The company's efforts prevented Visteon from ending up in Chapter 11. GM, meanwhile has now provided nearly $1 billion in loans to help Delphi through its reorganization. The company also took charges totaling $2.8 billion in the recently completed second quarter relating to its exposure to its former subsidiary. - Lou Whiteman
See TheDeal.com story on GM again rescuing Delphi
See TheDeal.com story on Ford's lost deal
See Dealwatch: Autos
