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Senate Investigates Delphi’s Role in Ignition Switch Recall

CEO Rodney O’Neal gets a list of questions to answer.

by on Apr.16, 2014

Delphi CEO Rodney O'Neal has been given a list of questions from four U.S. Senators asking about the supplier's role in producing the faulty ignition switches for GM.

Like it or not, General Motors’ bitter fight with its principal supplier, Delphi Corp., will be examined by a panel of U.S. Senators concerned about what role the supplier might have played in the faulty switches tied to a recall of more than 2.6 million GM vehicles and 13 deaths.

In a letter made public this week, four different senators have asked Delphi Chief Executive Rodney O’Neal on Tuesday a series of questions about the auto supplier’s production of ignition switches.

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The switches were made in a Delphi plant in Matamoros, Mexico, at a time when GM and Delphi were at loggerheads over the cost of components. GM spun off Delphi in 1999 and immediately demanded price downs from Delphi executives, who resented and resisted GM’s push for concessions. (more…)

GM-Delphi’s Tumultuous History Plays Role in Switch Problem

Cutting costs at expense of quality common impacted ignition.

by on Apr.03, 2014

GM CEO Mary Barra told a Senate subcommittee yesterday that in the past that GM's focus was wrongly on cost instead of customers. The relationship between GM and Delphi was a prime example.

Lawyers and Congressmen looking for the answer to why General Motors decided not to fix the ignition switch that has now been implicated in at least 13 deaths may want to look more closely at the tangled history of GM’s spinoff of the Delphi Corp., the supplier of the defective switch.

In her congressional testimony, GM CEO Mary Barra said the company’s old culture emphasized cost cutting and cost containment over customer service and promised that was now changing.

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The critical Delphi-GM relationship was at epicenter of the cost-containment strategy pursued by GM’s senior management after the company ran into financial difficulties, which led to the removal of then-Chairman Robert Stempel. The physical separation of Delphi and GM was being carried out even as the switch was being designed for cars then on GM’s drawing board. (more…)

Former Car Czar Will Testify About Abandoned Delphi Pensions

About 70,000 Delphi employees lost retirement plans under bankruptcy.

by on Jun.21, 2011

Former auto czar Ron Bloom will be facing some tough questioning on the GM bailout and Delphi bankruptcy.

Former White House “Car Czar” Ron Bloom will be one of those called to testify in what could be an angry Congressional session looking into the long-term impact of the General Motors bailout.

Among other things, lawmakers are expected to focus on the decision to abandon the pension program run by Delphi, GM’s former parts subsidiary.  Delphi, which underwent the longest corporate bankruptcy in U.S. history, walked away from a program that covered about 70,000 retirees.  Some have lost as much as 65% of their benefits.

Among others called to testify will be Vince Snowbarger, the deputy director of the Pension Benefit Guaranty Corp., the agency created to assume control of failed pension programs.  Delphi’s pension program was underfunded by $7 billion, and the PBGC will cover $6.1 billion of that – making it the second-largest failed pension program ever assumed by the agency.

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While Delphi did not receive a direct federal bailout, its survival – and eventual emergence from Chapter 11 – depended on its ongoing relationship with GM.  That was enough to bring it under the umbrella of the House Oversight and Government Reform Committee, which will be holding a Wednesday hearing titled, “Lasting Implications of the General Motors Bailout.”