The supplier, which lost $1.36 billion in the third quarter and last recorded a full-year profit in 2000, has been in constant restructuring since its break from Ford four years ago.
No. 1 Delphi also is restructuring and says it's on track to reduce its U.S. hourly work force by 6,000 by year's end.
Smaller suppliers are hurting too, and at least two have filed for bankruptcy protection in recent months, citing the skyrocketing tab for scrap steel.
Unfortunately, industry observers paint an uncertain, if not bleak, picture for suppliers in the months ahead.
Among the reasons: little relief expected on materials costs, and continued pressure from automakers to lower prices amid a highly competitive sales environment.
GM and Ford in particular have laid out some of the highest consumer incentives on record this year and squeezed automotive profits in the process. Yet they've both had to trim production because of periods of subpar sales that created bloated inventories.
"Suppliers, tire companies, dealers and aftermarket companies faced a challenging third quarter, and there is no end in sight," Morgan Stanley analyst Stephen Girsky said in a recent research report.
Dana Corp., American Axle & Manufacturing Inc. and Tower Automotive Inc. -- which ranked 14th, 26th and 40th, respectively, in global sales to automakers in 2003 -- all cited lower vehicle production and rising metals costs in recent months as culprits for lower-than-forecast profits.
Two smaller companies, metal-casting firms Intermet Corp. of Troy, Mich., and Citation Corp. of Birmingham, Ala., were forced to file for Chapter 11 bankruptcy protection in September.
Citation President Ed Buker said at the time of the filing that scrap steel ranged from $120 to $180 a ton over the past 10 years but had climbed to more than $420 a ton. Some customers, he said, refused to pay the higher prices.
Many familiar with the supply and pricing of steel see no sign that the situation is going to improve soon.
Rising energy costs and raw materials shortages have helped keep steel prices high for more than a year.
Restructuring and consolidation have been constants among suppliers in recent years, and that's likely to continue.
A common practice among some successful suppliers is outsourcing work to lower-cost locations, including those outside the United States, and developing other operational efficiencies.
Auto parts firms singing the blues
Although new car and truck sales rose more than 2 percent during the first 10 months of 2004, many of the companies that supply parts to the big automakers have little to celebrate -- their profits are shrinking as raw materials costs rise and production falls at General Motors Corp. and Ford Motor Co.Already, Delphi Corp. and Visteon Corp., the nation's two largest suppliers with combined sales of $45.7 billion in 2003, have warned of lower-than-anticipated earnings this year because of higher materials expenses, particularly for steel, and because top U.S. automakers GM and Ford plan to turn out fewer vehicles.No. 2 Visteon, the former Ford division that counts on the automaker for most of its business, said Monday it had offered buyouts to its 8,300 U.S. salaried workers as a way to trim costs and become more competitive.