Aug. 19--At least 300 layoffs will hammer Indiana's largest automotive city as Delphi's electronics arm pares jobs after a 32 percent drop in second-quarter U.S. sales.

Layoffs in the state's massive auto-parts sector helped push the Indiana jobless rate to 6.3 percent in July, and the state surpassed the national rate for the second straight month.

Kokomo's unemployment rate has risen in recent years with previous Delphi cutbacks rippling through the city and Howard County. The county's jobless rate hit 7.7 percent in June. That was the highest jobless rate among Indiana metro areas.

"It's not a complete shock to see this happening, knowing what is going on with automotive suppliers," said Kokomo Mayor Greg Goodnight.

The city has launched an effort to diversify the economy and has begun a green initiative to make government and other buildings more energy-efficient.

"The possibility actually exists to create more green jobs," Goodnight said. "Factory workers and auto workers possess the skills necessary in advanced manufacturing, windmill technology, welding processes, electricians. We think we can use these individuals to retrofit not only government buildings but a lot of other buildings in the community."

For Delphi, No. 1 customer General Motors' rapid fall-off in sales of high-end sport utility vehicles cut demand for expensive electronics such as back-seat entertainment systems designed by engineers in Kokomo.

On Monday, officials in Delphi's Kokomo offices announced the electronics division will let go 600 of its 3,200 white-collar workers in the United States by late December.

The majority of those layoffs will occur in Kokomo, one of the company's largest employment centers in the nation, Delphi spokesman Milton Beach said.

Kokomo is the headquarters for the electronics division and home to about 2,500 white-collar employees and 1,500 hourly employees. Salaried workers are mainly in the Delphi engineering center, microchip fabrication plant and administrative offices.

"What we are doing is addressing the issues of market conditions and trying to do everything we can to get this particular division to a healthy path," Delphi spokesman Jay Jiang said during a conference call with reporters. "If we're able to reduce costs and remain competitive, it's a great contribution."

One stroke of good fortune for Kokomo: No plans exist to close, sell or cut back the $1 billion microchip plant, which provides 500,000 circuits daily used to make sensors common in the electronic systems on modern autos, Beach said.

And, although Europe and Asia now account for half of Delphi's $26 billion in annual revenue, the company has no plans to outsource engineering to lower-cost areas in Asia, Jiang said.

Jeff Owens, the Delphi executive in charge of the electronics division, disclosed the coming layoffs Monday in meetings with employees. Employees to be laid off will be notified in person by Aug. 29. Layoffs also will occur at Delphi electronics operations in Auburn Hills, Mich.; Flint, Mich.; Milwaukee; and Vandalia, Ohio.

The cutbacks come as the Detroit auto industry grapples with intense foreign competition and customers walking away from mainstay vehicles.

Pickup trucks and sport utility vehicles have powered the domestic auto industry since the 1980s. But the escalation of gasoline costs at the pump -- prices surpassed $4 a gallon this summer -- has customers turning to lower-priced cars made by Japanese, German and South Korean automakers.

Automakers this year have sold 1 million fewer new autos than a year ago. The bulk of those lost sales: pickups and SUVs. By this time a year ago, Chrysler, Ford and GM together had sold nearly 900,000 more trucks than they've produced this year.

As a result, forecasters expect U.S. and foreign automakers will assemble 13.3 million vehicles in North America this year and 12.9 million next year, compared with 15.1 million last year.

The pain is already apparent across Indiana. Navistar has idled output at its Indianapolis diesel plant, a supplier to the Ford F-series pickup. Cummins has let go some workers at its Walesboro diesel plant, a Dodge Ram supplier.

Moreover, GM's Indianapolis stamping plant, whose products include parts for trucks, is on the sales block. And Delphi and sister companies Guide and Delco Remy have slashed more than 5,000 jobs in Anderson.

Delphi is the global auto-parts giant whose American arm filed for bankruptcy protection in 2005 after GM market share sagged in the face of competition from rivals in Asia and Europe.

Since the bankruptcy filing, the Michigan-based supplier has lost more than $11 billion in the United States.

Delphi employs about 169,000 workers worldwide, down from about 202,000 in 1999.

At the electronics division, revenue slid to $1.1 billion in the quarter ended June 30, from $2.2 billion a year ago. The decline mainly reflects the drop in sales to GM.

General Motors created Delphi in the 1990s and spun it off in 1999 in an effort to obtain new technology and lower-cost parts from other suppliers.

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