Delphi Bankruptcy

[Rickertsen2]

Delphi has filed for bankruptcy. I'm guessing that things like FIRST sponsorships will be among the first items cut from their budget. What will this mean for Delphi sponsored teams?

http://www.forbes.com/work/feeds/ap/2005/10/08/ap2266956.html

[Shu Song]

That's terrible. I hope that none of the other automotive companies that sponsor FIRST and its teams file for bankruptcy. That would be detrimental to FIRST and I don't even wanna think about what might happen if something like this did happen.

[Adam Richards]

This was actually starting to be noticed around Q4 2004 when they had a nice 4 billion dollar income tax cost incurred (thank you government :(). They were starting to lose their footing back in Q3, where they incurred losses of $113million, but the income tax really just decimated them. They lost a further $726million in the Q1 and Q2 of this year, making the likelihood of them being able to keep themselves afloat at their current rate very difficult to say the least.

This is truly going to affect the FIRST community in a very bad way in the next few years, and we can only hope that either the affected teams are kept on the budget or that they are able to find sponsors for the 2007 or 2008 season, depending on if/when the cut occurs.

(Data taken from Hoovers.com)

[Koko Ed]

That's terrible. I hope that none of the other automotive companies that sponsor FIRST and its teams file for bankruptcy. That would be detrimental to FIRST and I don't even wanna think about what might happen if something like this did happen.
Well right now it's strictly speculation. If there is something that happens I'm sure the Delphi teams will let everyone know.

[phrontist]

This was actually starting to be noticed around Q4 2004 when they had a nice 4 billion dollar income tax cost incurred (thank you government :(). They were starting to lose their footing back in Q3, where they incurred losses of $113million, but the income tax really just decimated them. They lost a further $726million in the Q1 and Q2 of this year, making the likelihood of them being able to keep themselves afloat at their current rate very difficult to say the least.

This is truly going to affect the FIRST community in a very bad way in the next few years, and we can only hope that either the affected teams are kept on the budget or that they are able to find sponsors for the 2007 or 2008 season, depending on if/when the cut occurs.

(Data taken from Hoovers.com)

Wait... do you mean to imply the government shouldn't have taxed them?! I don't care what they sponsor, I don't feel bad for a company that goes under due to variables within their control, espescially a car company. In a free-market democracy, the majority gets what it deserves.

What's the old saying? Death and something...

[Gadget470]

This was actually starting to be noticed around Q4 2004 when they had a nice 4 billion dollar income tax cost incurred (thank you government :().

Should be:

(Thank you poor people who wished to have income taxes for the rich to provide you with government jobs and then wanted further government expansion once the rich found ways to shelter their money, which in turn led to income taxes for everyone :()

Just thought I'd point that out. It's not the government's fault for taxing, it's the people's willingness to be taxed.

[Billfred]

On the bright side, nobody's dead in the water yet.

And even if Delphi were to cut funding to its teams, it's still not the end of the world. They happen to sponsor some darn good teams in FIRST, who I'm willing to bet are capable of getting on the grind and raising the money they need. (Granted, it might be awkward to start calling ChiefDelphi something else, but stranger things have happened.)

If all else fails, of course, the teams can always move to Kansas (http://www.chiefdelphi.com/forums/showthread.php?t=39930). ;)

[Adam Richards]

Wait... do you mean to imply the government shouldn't have taxed them?! I don't care what they sponsor, I don't feel bad for a company that goes under due to variables within their control, espescially a car company. In a free-market democracy, the majority gets what it deserves.
I'm not necessarily saying that they shouldn't have been taxed, rather, at least subsidized, such as the government does to other industries. I'm not going to go into any politics on this one, as this thread isn't the place for it, though I'd happily take it in an IM/PM.

[Tristan Lall]

Should be:

(Thank you poor people who wished to have income taxes for the rich to provide you with government jobs and then wanted further government expansion once the rich found ways to shelter their money, which in turn led to income taxes for everyone :()

Just thought I'd point that out. It's not the government's fault for taxing, it's the people's willingness to be taxed.Are you seriously attributing Delphi's bankruptcy to the actions and whims of the poor of America?

Maybe you should clarify your position, because right now it sounds rather untenable.

[Travis Hoffman]

I think it's a pretty safe bet that most of y'uns don't possess anywhere near the necessary amount of factual information you need to pursue cogent arguments regarding Delphi's financial losses over the past few years, so I propose you all calm down and not waste valuable time and energy needlessly and carelessly debating this topic.

:) <-- Means I am not upset. Just be cool!

Regarding the restructuring announced today, Koko Ed is right - it's wayyyy too early to speculate on the future of any of the Delphi teams or of any other support Delphi provides to FIRST. In fact, our new CEO (who I happen to respect a great deal) has explicitly asked us not to guess about anything that might happen as a result of this filing, especially in public media forums. I think that course of action is very wise, and I intend to follow it.

I can tell you for a fact that Team 48 will compete in 2006 no matter what. I'll leave it up to Andy Baker, Mike Aubry, and the other Delphi mentors to make any statements regarding their own teams' status for next season, but looking at the registered team lists for all the regional events, I see Delphi teams all over the place. We didn't go anywhere - we're all still here, and we're a resilient bunch. I'm also pretty dang certain ChiefDelphi won't be changing it's name any time soon. :)

While it would be very unfortunate if any of the Delphi FIRST teams were hurt by this Chapter 11 restructuring, if there was any cause for concern at all, I hope it would be primarily directed toward the well-being of the many Delphi mentors, their families, and their coworkers.

For now, I encourage everyone to use discretion when posting to this thread. Please don't speculate. Remain patient. I'm sure the Delphi mentors who are active on ChiefDelphi will update the community with relevant factual information as soon as it is permissible and prudent to do so. Just remember, Chapter 11 isn't a sign that a corporation is dead; on the contrary, it is a sign that the corporation is very much willing to do whatever it takes to transform itself and improve amid the most difficult of business conditions. Let's all just go about our business as usual and we'll revisit this a bit later down the road.

[Karthik]

Moderators Note:

Let's keep this discussion to Delphi's bankruptcy, and it's effect on FIRST. Discussion of the roots, merits and demerits of taxation laws in America (not directly related to the Delphi situation) should be held in a new thread in the Chit-Chat forum.

[Joe Matt]

So, what about scholarships? Will they cut those?

[Rickertsen2]

this thread rapidly detioriated my original intent.

[Conor Ryan]

This can be bad for first as a whole not only as for the Delphi sponsored teams, but FIRST as a whole. Delphi is a founding sponsor (http://www.usfirst.org/about/sponsors.htm) of FIRST and dedicates tens of thousands of dollars to get the competition of the ground each year. So it should be intresting what happens now.

Heres an older thread on Speculation that this would occur (http://www.chiefdelphi.com/forums/showthread.php?t=39266&highlight=Bankrupcy) it has some intresting discussion too

[Collmandoman]

Will they shutdown the forum?!? :ahh:

[Rich Kressly]

Alright. I thought Travis made things crystal clear for people, but perhaps I should clarify.

1. Your ONLY concern right now should be for PEOPLE. Teams, forums, and how this may or may not affect the outside world are secondary.

2. Speculation on what happens to others at BEST belongs in the rumor mill, but in this case, doesn't belong at ALL.

3. This announcement was released yesterday. How on earth could anyone know anything yet, especially when the CEO states that nothing will change right away and that all future changes will be handled in an orderly manner?

4. If there is something for you to learn, you will learn it directly from appropriate sources. Be PATIENT. You may hear nothing at all for months, maybe longer.

5. Please refrain from starting your thoughts with "I bet..." or "I wonder if..." followed by some doomsday scenario. It's thinking like that that sent thousands running to the bank for their money in 1929.

If you've ever come upon two people having a conversation and found the people were talking about you, I'm sure it was at least uncomfortable for you. I consider the people that are potentially affected my friends (notice I use the word "potentially" because I have no clue about any of the inside details, nor will I ask anyone).

Maybe I'm just being grumpy, but I find this kind of rumor-mongering to be distasteful. Every time I face adversity and uncertainty in my life (yes, we all get our turn to go through such things), I find compassionate people, not people who pick at open wounds.

When I think of this announcement I see the faces of my friends and, in some cases, the faces of their children. I wish my friends and their families well during an uncertain time and I offer my support.

Now, if you want to talk and speculate further, BET on this. You will receive a pm from me, asking you to take your conversation to a private arena. I know society in general loves this kind of thing. I also know that FIRST attempts to improve upon and even change the culture for the better. Everyone here is capable of rising above the trappings of popular culture and this situation is no different.

Namaste...

[UlTiMaTeP]

This was actually starting to be noticed around Q4 2004 when they had a nice 4 billion dollar income tax cost incurred (thank you government :(). They were starting to lose their footing back in Q3, where they incurred losses of $113million, but the income tax really just decimated them. They lost a further $726million in the Q1 and Q2 of this year, making the likelihood of them being able to keep themselves afloat at their current rate very difficult to say the least.

This is truly going to affect the FIRST community in a very bad way in the next few years, and we can only hope that either the affected teams are kept on the budget or that they are able to find sponsors for the 2007 or 2008 season, depending on if/when the cut occurs.

(Data taken from Hoovers.com)

You have been flamed enough for this, but every corp, unless its a chapter S, pays federal and state income tax, its the reason you have roads, and a High School.

[Rich Kressly]

You have been flamed enough for this...
Then why is there a need to respond? As stated before, please stick to the intent of the thread.

[Dennis Jenks]

All,
I know nothing first hand of the Delphi situation so I am not going to comment on that here. However I would like to point out that while Delphi Automotive provides most of the financial support to their teams, it is the work of people like Andy Baker, Dr. Joe, Travis and many others that make the Delphi teams what they are. Speaking from a mentor’s point of view, there is no way a company can compensate you for the amount of time it takes to run a FIRST team. These people do what they do because they like helping kids and they believe in the cause, it’s that simple. In my opinion, the future of FIRST does not lie in the hands of corporations, but in the hearts of the mentors and students (future mentors) involved. The Delphi teams may emerge from this unscathed, or they may have to scale back a bit, but I am confident that they will continue to exist. That said, (and again knowing nothing of the situation) I would like to wish Delphi and their employees nothing but the best during this uncertain time.

[Michael Hill]

This is very bad news in Kokomo. Many jobs in the city, and a lot of the city's economy relies on Delphi. If Delphi goes down and Chrysler follows, our city will surly be in an economic crisis. They are the two biggest employers in our city. The only 2 factories I know if in Kokomo...

[Kyle Love]

This is very bad news in Kokomo. Many jobs in the city, and a lot of the city's economy relies on Delphi. If Delphi goes down and Chrysler follows, our city will surly be in an economic crisis. They are the two biggest employers in our city. The only 2 factories I know if in Kokomo...

Theres a few more like Haynes and some other small ones...but nothing close to Delphi and Chrysler. But I doubt the plant in Kokomo would close very soon...I have heard it would be THE last one to close...but thats not coming from a person that would control that so I don't know how true that would really be.

[wilshire]

Delphi has filed for bankruptcy. I'm guessing that things like FIRST sponsorships will be among the first items cut from their budget. What will this mean for Delphi sponsored teams?

Notice the original intent was to discuss the bankruptcy of Delphi Automotives and the POSSIBLE cuts to FIRST related funds that they donate every year. Possible economic crisis of kokomo and related teams losing functions should be discussed elsewhere.

[David Kelly]

Theres a few more like Haynes and some other small ones...but nothing close to Delphi and Chrysler. But I doubt the plant in Kokomo would close very soon...I have heard it would be THE last one to close...but thats not coming from a person that would control that so I don't know how true that would really be.



This filing does not mean that Delphi is going out of business, it just gives them protections and ability to restructure their company.

I am just worried about my friends and family during this uncertain time. It's still very early and we should not speculate on what could happen because only worsens the situation.

Lets keep everyone in our thoughts and hope for the best.

[Alan Anderson]

FIRST sponsorship is probably not going to fall under the category of "day to day activities". Losing team funding is definitely something worth worrying about, but it's not worth worrying about right away. I'm going to wait to see what the first couple of weeks of activity under Chapter 11 brings before I spend much time dwelling on it.

(By the way, Chapter 11 of the Bankruptcy Code deals with reorganization. It isn't a Chapter 7 "liquidation" bankruptcy, it's seeking protection against creditors and lawsuits while it works on a plan to satisfy them and avoid going out of business.)

[KWachowski27]

That's terrible. I hope that none of the other automotive companies that sponsor FIRST and its teams file for bankruptcy. That would be detrimental to FIRST and I don't even wanna think about what might happen if something like this did happen.

Look at Team 27. C&A had to drop us a short while back. This stuff's been spiraling down for a while. Unfortunately, a lot of us thought that the bottom had already been hit.

[MikeDubreuil]

I just wanted to say to the employees of Delphi... good luck and that I hope there's a good outcome for you. Your generosity in with your time and dollars has been exemplary for the entire FIRST organization.

[bill smith]

This is happening to other teams with big name sponsors Ford Motor told all its teams (16 of them ) in Sept. No Financial funding for this year.

[KenWittlief]

The company has filed for chapter 11. That is not speculation or second guessing, its the reality of the situation.

Read this report: http://news.yahoo.com/s/nm/20051010/bs_nm/auto_delphi_dc

and then tell us if you think Delphi is going to close plants, lay people off, ask many employees to take a cut in pay, and then continue to make charitable contributions to HS FIRST teams?

Chapter 11 means the company owes money that it cannot repay: suppliers and creditors. Outside agencies become involved in overseeing how every dollar is spent. How can the company tell a supplier or creditor "we owe you money and cant pay it, but we are still going to donate $50k, or $100k, or $500k to these charitable organizations this year" ?

This is a very serious situation for teams sponsored by the company. From my experience, large companies become tight lipped and very cold at times like these, and you wont get any warning that you are losing your funding, or that you are losing your job until the very day it happens.

Its october 10th, we are well into the school year. I would be busy looking for backup funding for this year incase the company is not able to support your team. That way, you are covered no matter what happens. If you take a wait and see approach, and the worse case hits you, its going to be very hard to fund a team on short notice for this years regionals.

[Alan Anderson]

Chapter 11 means the company owes money that it cannot repay: suppliers and creditors.
That's not entirely correct. Chapter 7 is all about being unable to pay one's debts. Chapter 11 is basically about getting some breathing room in order to negotiate ways to satisfy all creditors without selling everything and shutting down operations.

It seems that Delphi's main problem has been an inability to manage the operating costs that were inherited in the split from General Motors. This isn't from a lack of trying; many of the costs have been beyond the company's control. The Chapter 11 filing provides a chance to force a solution to some of the previously unresolvable issues.

[Erin Rapacki]

I just wanted to say to the employees of Delphi... good luck and that I hope there's a good outcome for you. Your generosity in with your time and dollars has been exemplary for the entire FIRST organization.

I agree, and I hope all goes well for the Delphi employees who also serve as FIRST mentors. If this unfortunate situation results in a pink-slip for any FIRST mentor, I hope they feel free to reach out to other mentors with their situation (or vice versa). Another job might be just a phone-call-to-a-FIRST-friend away.

[AmyPrib]

We had a company meeting this morning. Chapter 11 does not mean we can't pay our suppliers. In fact, we have money to pay our suppliers and at this point are not worried about that at all. Our suppliers and customers have also managed to lower their anxiousness on our ability to deliver, so they have some confidence in us. This is what we were told as FACTS from the many meetings and phone calls between the executives. If you have not been in those calls or have not talked to someone directly involved in those calls, it would be appreciated to keep the suspicion, rumors, and opinions on what it all means out of topic until more FACTS are known.

It will be up to the judges as to what happens in various aspects. Until those FACTS are known and announced by direct sources, nobody knows exactly what will happen. Our management (executives) seem to be very open and blunt with us as to what is happening, with the information that they KNOW at this point. It is not for any of us that even work here, let alone those who are just guessing, to say what the near future holds.

Do not speculate on the gloom and doom of Kokomo as a city or the companies within it. You cannot say "and if Chrysler follows", you have no clue. I am disappointed in a few of the posts of this nature and the "I think, I heard" statements. There are numerous other companies that file Chapter 11 and come out of it just fine. There are obviously compromises and negotiations along the way, but in the end, the company doesn't typically fold.

There's a Kokomo newspaper that had a huge headline today "BANKRUPT". That is entirely incorrect!! That shows a lack of understanding by our own news sources, and just points out how you cannot believe everything you "hear". It shows what happens when people write/report before they get the facts.

Sorry, had to get that out. I really don't think we can speculate on the future funding of Delphi teams either, until it becomes FACT that teams actually start losing their sponsorship due to this reorganization. My guess is that most Delphi teams have been prepared for this and have thought about it. So, even if there is some loss, they are smart enough to find a way to carry on... Let's focus on the positive people.

[Travis Hoffman]

The wait-and-see approach many have suggested here pertains only to minimizing the uninformed public speculation on the Delphi restructuring and how it affects FIRST and the Delphi-sponsored teams. By no means are we implying that Delphi teams should just sit back and do nothing within their organizations to prepare for the worst. In reality, Team 48's mentors have been well aware of the potential reduction in funding any form of major restructuring may bring, and we've been preparing for this occasion for a long time. Our fundraising and alternate funding levels are such that I can confidently say Team 48 will be a participant in the 2006 FIRST Robotics Competition.

As was mentioned by Joe Johnson and Andy Baker in the other thread (http://www.chiefdelphi.com/forums/showthread.php?t=39266&) started a while back regarding this matter, many Delphi teams have seen a steady reduction in funding from the corporation over the years. As this has happened, many, Team 48 included, have sought out alternate funding sources and employed increased cost-saving measures. Increased reliance on these practices can only benefit us in the event of a more drastic reduction in funding.

But once again, money shouldn't be the primary focus here. Out of all the sources of capital a FIRST team has, I believe human capital is most important. While it certainly is a challenging task, a team's students and teachers can replace lost funding by working harder to fundraise, cut costs, and streamline the team operations. As many teams have found out though, including my own, replacing the experience and leadership of lost local technical mentors can be the most difficult challenge of all.

If any of you would like to find out more facts about Delphi's Chapter 11 filing or bankruptcy law in general, the law firm Delphi has retained to manage the Chapter 11 court proceedings has established a website to release relevant information and/or required documents to the media and the public. This is freely available information:

http://www.delphidocket.com (http://www.delphidocket.com/)

Hopefully, this site will serve to further reduce/eliminate any speculation and misinformation being posted in this thread.

[Conor Ryan]

Ok, there appears to be more confusion on the definition of what exactly Chapter 11 Bankruptcy is, so here what is it is:

Chapter 11 is a state that is declared by corporations to protect them from creditors, what it says is that they spent more money then they actually have, and the company has the intent to stay in business and not liquidate all of it's assets and go out of business (Liquidation is Chapter 7 bankruptcy). What happens now is there is a reorganization of how the company intends to payoff its contracts and other debts. After this case is pleaded to the court they supervise they meet the needs and then potentially can relieve the creditors some or even all, so the company has time to get back on it's feet and doesn't start an uphill battle.

The Chapter 11 Bankruptcy code is being changed on October 17th, to become more creditor friendly, right now its easier on the corporations. Thats partially why Delphi declared it now rather than later.

Sooo....in the famous words of Douglas Adams, Don't Panic. My dad said (this is coming from an Financial Advisor) that a company with the product reputation of Delphi surely will be able to make its way back.

More reading (http://en.wikipedia.org/wiki/Chapter_11%2C_Title_11%2C_United_States_Code)

Interesting Fact: Between Aug. 31 and Saturday, Delphi dropped 1.27 Billion Dollars off of its Debt (and 0.6 Billion of its Assets) thats pretty good for 6 weeks.

Interesting Fact 2: Worldcom had the worlds largest Chapter 11 Filing, listing 103 Billion in Debt

Interesting Fact 3 (theres a lot): Delphi has the largest amount of assets ever declared by a company with a Chapter 11 Filing

[gburlison]

Just to help some people understand what can happen after filing Chapter 11.

Kmart filed Chapter 11 in early 2002, emerged from bankruptcy in May 2003, and announced it would buy/merge with Sears in Nov 2005. While this is listed as a merger, it is Kmart that is bailing out Sears.

The point is that filing for Chapter 11 should help Delphi financially in the long run. There is still a possiblity for some short-term pain. As Delphi makes changes and tries to be more competitive, the pain most likely will be felt by its workers. How it will effect the support that Delphi gives to FIRST teams is unknown. Personally, If I were connected with a FIRST team that is supported by Delphi, I would rather that the team do without Delphi money instead of someone getting laid off.

Just my .02

[D.J. Fluck]

Just to help some people understand what can happen after filing Chapter 11.

Kmart filed Chapter 11 in early 2002, emerged from bankruptcy in May 2003, and announced it would buy/merge with Sears in Nov 2005. While this is listed as a merger, it is Kmart that is bailing out Sears.


Yeah, I'm still alive believe it or not....


Anyway, Chapter 11 isn't necessarily a bad thing. It's not a good thing, but there definitely are much worse alternatives. Most companies that file for Chapter 11 come out stronger [Example: Kmart], as shown in the above quote.

In fact, the company my dad works for in Kokomo filed for Chapter 11. Very few if any lost their jobs. Company operations and the way they did things were examined and changed. As a result, the company came out of bankruptcy 6 months earlier then expected and is currently stronger then ever. As people have said in above posts, just sit back and wait. There is no purpose in speculating.

[Thomas P]

They just got approval from a judge for a $950M loan to continue operations... still can't really determine what's going to happen based on that. They could be like "Ok, we aren't going to be shutdown so we'll continue with stuff like before" or "Ok, we were close to getting shutdown, so we're going to be a lot more conservative with our spending." I know that either way, the Delphi teams (with or without Delphi) will be at competition so I look forward to seeing all of you there.