DETROIT, Oct. 8 - Delphi, the nation's largest auto supplier, filed for bankruptcy protection on Saturday, the largest such filing ever in the domestic auto industry.
The move reinforces the industry's deepening financial crisis and is a sign that the labor upheavals in the airline and steel industries have reached Detroit. It is also the latest economic blow to Michigan, where Delphi, based in Troy, is one of the largest employers.
And it will likely cost General Motors, Delphi's former parent company, billions of dollars, because G.M. made commitments to pay for much of Delphi's retiree pension, health and life insurance benefits in the event of a bankruptcy. In its filing on Saturday, Delphi said it would file a motion to end health and life insurance benefits in mid-December for its roughly 12,000 American retirees.
The company is also seeking to cut wages of its nearly 35,000 hourly American workers by up to two-thirds, to as little as $10 an hour, though it is not clear whether they will succeed in doing so.
"Delphi's decision is obviously an extremely bitter pill," said Ron Gettelfinger, the president of the United Automobile Workers union, in a written statement.
Robert S. Miller, chairman and chief executive of Delphi, said in his own written statement: "We took this action because we are determined to achieve competitiveness for Delphi's core United States operations."
"We simply cannot afford to continue to be encumbered by high legacy issues and burdensome restrictions under current labor agreements that impair our ability to compete," he added.
G.M. said the filing could increase its future liabilities by as much as $11 billion, or possibly far less. Looking for a silver lining, G.M. also said it could reap as much as $2 billion in annual savings if Delphi's parts were more competitively priced once it restructures.
The company filed in Federal Bankruptcy Court in Manhattan under Chapter 11 of federal bankruptcy regulations, which provides protection from creditors. The move came after Mr. Miller failed to secure a multibillion-dollar bailout package from G.M. along with sweeping wage and benefit concessions from its unions, the largest of which is the U.A.W. The company's American work force earns far more in wages and benefits than workers doing similar jobs in countries like Mexico and China, a legacy of labor contracts negotiated by G.M. over several decades.
Mr. Miller said he expected his company to emerge from bankruptcy proceedings by early to mid-2007. The filing applies to Delphi's American operations, not its overseas businesses.
Delphi, which listed global assets of $17.1 billion and liabilities of $22.2 billion, has $4.5 billion worth of credit lined up and said in its statement that it would continue to produce and deliver its parts on schedule. Delphi's customers include all of the industry's major automakers, but the largest is G.M., which spun off Delphi in 1999.
The government may have to assume responsibility for a pension fund that is nearly $11 billion short of its obligations, according to a calculation by the Pension Benefit Guaranty Corporation obtained by The New York Times, though it is not a foregone conclusion. Delphi's separate calculation, which assumes the plan would not be terminated and would continue to receive new money, indicates that it is about $4 billion short of its obligations.
Delphi, which has 185,000 workers worldwide, has reported losses of $5.5 billion in the last six quarters, and its cash reserves have dwindled. With half of its business coming from G.M., its fortunes have waned along with those of its former parent, and Delphi's executive suite has been largely purged in the wake of an accounting scandal. The company makes a range of auto parts, from air bags to instrument panels, that are installed in about 75 million cars and trucks.
Three months ago, Delphi's board hired Mr. Miller, an executive with a history of turnarounds. Mr. Miller had said the company would file before a major change in bankruptcy laws took effect on Oct. 17, unless G.M. and Delphi's unions agreed to his demands.
This week, hopes that such a complex deal would emerge were dashed, with local union leaders saying they simply could not accept the sharp cuts.
Delphi wanted workers to accept wages of $10 to $12 an hour, compared with the $26 to $30 an hour most make today. One union local pointed out to members in a letter last week that they would likely no longer be able to afford new cars with Delphi parts if such wages were put in place, but it conceded that a better deal was not likely in bankruptcy court. The company also wants to close some of its plants and stop paying 4,000 workers who no longer have jobs to do, as required by their current contract.
On Friday, in a move that dismayed the union, Delphi sweetened severance packages available to its top 21 executives, a move the company said was necessary to retain its newly assembled management team. Union leaders, however, said it showed a lack of shared sacrifice.
"Once again, we see the disgusting spectacle of the people at the top taking care of themselves at the same time they are demanding extraordinary sacrifices from their hourly workers, engineers, administrative and support staff, midlevel managers and others," Mr. Gettelfinger said.
Most workers have seen the writing on the wall.
On Thursday, Dayna Delling, a 49-year-old electrician at a Delphi plant in Flint, Mich., said she could not get used to the thought of a bankruptcy.
"You feel like throwing up," she said. "You try not to think about it too much."
Donnell Smith, an assembly line worker at the plant, said he thought a bankruptcy filing was inevitable because it would allow Delphi to impose the wage and benefits cuts it is seeking. "They're better off filing for bankruptcy," Mr. Smith, 52, said. "That's bad news for us."
From Mr. Miller's perspective, and in the view of many financial analysts, the company cannot continue to support the high cost of paying its United States work force.
"There are all kinds of things other than just wages that need to be dealt with here," Mr. Miller said in a recent interview.
The domestic auto industry faces the same kinds of labor problems that have bedeviled airlines and steel companies, with too few workers trying to support too many retirees, and too many workers being paid for not working. Health care costs are an increasingly onerous burden. G.M. pays $1,500 in health care costs for every vehicle produced in the United States, exceeding the cost of steel, while rivals like Toyota of Japan have nationalized health care at home and support very few American retirees.
Competitive pressures on the domestic automakers have been passed on to their domestic suppliers, and several of them have previously filed for bankruptcy. Delphi is now the largest to do so in the industry. The company had $28.62 billion in annual revenue last year and is ranked 63rd on the most recent Fortune 500 list of the nation's largest companies.