Delphi Invests in New China and Korea Technical Centers

Initial Investment of $40 million signifies company's commitment to the region and growth opportunities

TROY, Mich., Dec. 4 -- Delphi Corp. will open two new technical centers in China and Korea and has committed $40 million to begin work on the new facilities immediately. Once the projects are complete, Delphi will have 13 wholly-owned manufacturing sites, 17 joint ventures and six technical centers in the Asia Pacific region, supporting both OEM and aftermarket sales and service.

"Our customers want increased local support in Asia Pacific, and we're going to give it to them," said Donald Runkle, Delphi vice chairman, Lean Enterprise and Chief Technology Officer. "The growth opportunities in China and Korea are great, but success in these markets demands a local presence. These new technical centers will provide our customers with stronger levels of technical support. For Delphi, these new centers will provide us with a more robust value stream and optimize the return on our R&D expenditures."

Delphi's 2002 consolidated sales in Asia Pacific increased more than 20% to $1.1 billion. This includes $777 million in sales to outside customers, with the balance representing sales to other Delphi units. Sales in China increased over 30% in 2002, the second straight year of over 30% growth. On a 2003 year-to-date basis, sales growth in Asia Pacific has exceeded prior year levels, lead by China growth of nearly 40%.

Delphi China Technical Center

The wholly-owned entity will be called Delphi China Technical Center Co., Ltd. and will be located in Waigaoqiao Free Trade Zone in the Pudong New Area of Shanghai, China. The center is expected to open in June 2005 and will initially employ 500 employees. Approximately 25 Delphi Delco Electronics Systems design engineers, systems engineers and managers are already working in a nearby facility and will transfer into the technical center upon completion. The center will develop components and support application and systems engineering for several local customers in the country and transplant automakers in addition to global customers.

"Asia Pacific continues to generate profitable growth for Delphi and plays a critical role in Delphi's customer and market diversification strategies," said Dr. Choon T. Chon, president of Delphi Asia Pacific Operations. "Delphi's commitment to its Asia Pacific customers, coupled with its strong technological capabilities and engineering resources, will allow Delphi to embrace the inevitable growth in China and the rest of the Asia Pacific region."

Delphi has had a presence in China since 1993 in anticipation of growth in the Chinese automotive market and is the leading foreign invested component supplier in the country. Data indicates that China is already the third largest auto-producing country in the world. Today, approximately 80 percent of Delphi China's sales come from within the region.

In 2001, Delphi officially launched its aftermarket brand in China. The Delphi branded maintenance-free battery has become one of the leading brands. One out of every two maintenance-free batteries sold in the China market bears the Delphi brand.

The Pudong New Area of Shanghai is the largest special economic development area in China. The development was officially launched in April 1990. The 10-square-kilometers of Waigaoqiao Free Trade Zone is one of four development zones of Pudong, focusing on international trade, bonded warehousing and export processing.

Delphi Korea Technical Center

The Delphi Korea technical center will be located in Seoul, Korea. The center is expected to open in June 2004 and will employ 240 employees.

The technical center will be a systems engineering center and will initially focus on gasoline and diesel EMS systems. It is strategically located to better serve the Korean OEMs with its central proximity to their R&D centers. The facility will include both a vehicle emissions lab and an engine dynamometer lab.

South Korea, at 3.1M units produced in 2002, is the sixth-largest vehicle producer in the world. By 2007, this figure is forecast to increase to nearly 3.5M units.

Delphi Korea was established on July 1, 1989, and today employs approximately 4,300 employees with its six joint ventures and one wholly owned operation in Korea.

All Delphi divisions manufacture in Korea and among the many products manufactured are: airbags, converters, compressors, heater assemblies, steering systems, generators, valves, batteries, power & signal distribution systems, A/C system modules, condensers, sensors, rack & pinion gears, columns/halfshafts, door latches, and fuel injectors.

Delphi Global Technical Centers

Delphi uses a global perspective in managing its engineering resources and site locations. The staffing of technical centers in locations such as China, Korea, Mexico, Paris, Tokyo, Eastern Europe and India enables Delphi to grow where our customers are also growing -- while tapping into highly skilled employee populations.

In determining site location, Delphi considers several issues including: customer proximity, benchmarking, political stability, economic politics, intellectual property, logistics, infrastructure, cost of labor, tax structure, development incentives, educational institutions, skills availability, plus many more.

With the addition of the China and Korea technical centers, Delphi will operate six technical centers in Asia Pacific -- Japan, Singapore, India, China and Korea (2).