DEARBORN, Mich. (Reuters) - After years of shifting factory work from the United States to lower-wage countries, auto parts maker Delphi Corp. has begun to do the same with white-collar work such as engineering and bookkeeping.
While the moves to date have been fairly small, leaders of the world's largest auto parts supplier say more will be necessary to deal with continuous pressure to cut costs and carry the burden of pension, health care and research expenses.
"We're moving more and more of our engineering work to India, to Poland, to Mexico and to Brazil," said Delphi Chairman J.T. Battenberg during a presentation to analysts and investors earlier this week. "These are locations where talent is strong and costs are comparatively low."
Battenberg said Delphi's foreign engineering operations now include 2,800 engineers in Mexico, as well as 300 in Poland and 280 in India, part of 32 technical centers around the globe. For the cost of one U.S. engineer, Delphi can hire three in Mexico.
Several industries, from computer software to telemarketing, have begun aggressively shifting white-collar work out of the United States. Forrester Research predicted last year that companies would move 3.3 million U.S. services industry jobs and $136 billion in wages out of the country over the next 15 years.
The auto industry has shown few signs of such shifts. But with many major automakers barely breaking even as real vehicle prices fall in North America and Europe, automakers and suppliers are keen to use any tool that cuts costs.
Since its spinoff from General Motors Corp. in 1999, Delphi has expanded output from foreign plants while reducing its U.S. manufacturing base. It now has about 30,000 United Auto Worker union employees in the United States, down about 30 percent since the spinoff, and is reducing the remainder at a rate of about 7 percent a year.
Delphi has relied more heavily on factories in Mexico to supply automakers who have built plants there and to ship parts back to the United States. With 72,000 employees in Mexico, Delphi is one of the largest private employers in the country. That growth has been driven by wage differences; while a U.S. union worker can make as much as $20 per hour, the typical Mexican employee makes less than $3 per hour.
THE ENDLESS SEARCH
Battenberg and other Delphi executives said they needed to seek lower-cost engineering to maximize the company's research spending. Delphi's basing much of its future growth plans on making more high-tech parts than its competitors, and expanding with products such as its SkyFi satellite radio receivers.
"We've made a conscious decision -- we're not going to cut engineering and we're not going to cut R&D," Battenberg said.
Even as it looks for lower costs among white-collar workers, Delphi is also seeking lower manufacturing costs. That means expanding factories in Eastern European countries to supply Western European automakers, and could even mean moving work from Mexico to Caribbean nations.
"There's very little business where we're not looking for that kind of opportunity," said Dave Wohleen, head of Delphi's electronics, safety and interior business.
But executives said Delphi will not export more of its output from China, now considered the lowest-cost location for building auto parts in the world, because its Chinese plants have such heavy demand for parts inside the country.
Delphi is the largest auto parts maker in China, with about $700 million in revenues last year, of which about $135 million came from exports. Battenberg said in recent meetings with the leaders of Toyota Motor Corp. and Honda Motor Co.Ltd., both asked him if Delphi could supply their rapid growth plans for the Chinese market.
"Local consumption will take the vast majority of our production," he said. "We won't export that much out of there." ==================================== The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his "natural superiors", and has left no other nexus between people than naked self-interest, than callous "cash payment". It has drowned out the most heavenly ecstacies of religious fervor, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom -- Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.
The bourgeoisie has stripped of its halo every occupation hitherto honored and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage laborers.
from THE COMMUNIST MANIFESTO
===== ***************************************************************** Cognitive dissonance is the inner conflict produced when long-standing beliefs are contradicted by new evidence.
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