Just over six years after filing bankruptcy, Delphi Automotive launched an initial public offering Thursday, capping off a comeback that also signals the continued turnaround of the once-struggling US auto industry. Delphi shares began trading Thursday morning at a price of $22 a share, raising $530 million for the former General Motors-owned auto parts company. While shares slipped just over 2 percent through the first half of the trading day, the IPO launch represent a considerable amount of progress for the company.
Formerly GM's auto parts division, Delphi filed for bankruptcy protection in 2005. It was just the first of a string of major bankruptcies that would cripple the American auto sector, eventually leading to the bankruptcy of Chrysler and GM itself in 2009. In between, dozens of parts suppliers would go belly-up, as well, prompting government officials to supply hundreds of billions of dollars in bailout funds to save the struggling industry. While still well below pre-recession levels, US auto sales have rebounded by 22 percent since the low point in 2009, and Ford, Chrysler and GM have all become profitable again thanks to successful reorganization plans and new collective bargaining agreements reached with their workers.
In its pre-IPO regulatory filings, Delphi reported net income of $911 million for the first nine months of this year, up nearly 50 percent from its earnings in the first nine months of 2010. In addition, its reported revenue of $12.1 billion for the first three quarters was up 19 percent from the same period a year ago. Since filing for bankruptcy in 2005, Delphi has undergone a considerable transformation. Back tehn, Delphi was dependent on GM for the majority of its sales, and employed 185,000 workers, nearly all in the US and most represented by the United Auto Workers union.
But over the last six years Delphi has closed 70 of its plants and reduced its product lines from 119 to just 33. In addition, the company now employs 91% of its workforce in low-income countries and none of its workers are members of the UAW.