DETROIT - The executives who run Delphi Automotive Systems will change little when General Motors spins off its components division next year. But the way they manage the new company will change a lot.
Delphi President J.T. Battenberg III said the spin-off will give him and his team a 'clean sheet' to meet challenges as they see fit. In the coming years, Delphi's challenges include:
Increasing sales outside the vast GM umbrella.
Maintaining and increasing its current business with GM in North America and globally.
Boosting sales in Europe.
Improving its relationship with the UAW union in the USA, which represents 25 percent of Delphi's global workforce.
Battenberg and GM Chairman Jack Smith announced earlier this month that Delphi will become an independent, publicly traded company in 1999. Battenberg will be chairman, president and CEO.
The team is working on how to differentiate Delphi's style from GM's.
'There are no rules now,' Battenberg said in an interview. 'We're starting over. There's nobody that's telling us how to have relations with our unions or our people.'
Battenberg has a core group of 19 executives to take the new company into the next century, including nine division heads and three regional presidents. All but one have had long GM careers; most have been with the car company since the 1970s.
'Truly a leader'
Former GM President Lloyd Reuss, once a mentor to Battenberg, believes Battenberg is disciplined and the right man for the job.
'J.T. first and foremost is truly a leader, and that is true in whatever he does,' Reuss said. 'J.T. is also an individual who loves automobiles.'
Battenberg - soft-spoken at times, animated when he is making a point - said it will be hard breaking away from a company he has been with since 1961, but he is honored that GM has asked him to take Delphi public.
The spin-off will let Delphi forge a better relationship with union members in the USA and around the world, Battenberg said.
'We're reaching out to the unions...asking for their ideas on what we can do differently, because we do have this clean sheet of paper,' Battenberg said.
Before Delphi begins selling stock, the Battenberg team must show Wall Street it can work with union leaders and avoid strikes.
Delphi executives expect the spin-off to increase the company's ability to win business outside of GM. Currently, about 34 percent of its sales are to customers outside GM North America Operations; more than half of those are outside GM International Operations.
Delphi's goal has been to increase its non-NAO business to 50 percent of sales by 2002. However, other automakers had been reluctant to give Delphi more business - and more information on their future vehicle programs - while Delphi remained part of GM, Battenberg said.
Although the spin-off increases GM's flexibility to choose other suppliers, GM and Delphi are working out a long-term contract.
Terms of the contract were not available. One source said there are always loopholes in such contracts, and GM has a way of finding them.
Slow progress in Europe
Growth in Europe will be a priority of the new Delphi team. Sales have remained at about $4.1 billion since 1995. The percentage of Delphi business coming from Opel and Vauxhall has remained unchanged at around 53 percent, or $1.7 billion last year.
'The spin-off will strengthen an already tough competitor,' said an executive at Valeo, Europe's fourth-largest supplier. 'But we don't fear Delphi.'
An executive at a major German competitor said Delphi 'does not bother us in Europe.'
'They spent a lot of money setting up European r&d centers and they have used low prices to gain new customers,' he said. 'But I do not see that they have had a lot of success with European carmakers.'
Stephane Farhi contributed