New Owner Revives Truck-Engine Maker

FIVE years ago, Detroit Diesel Corporation was a struggling engine-maker, destined for the junk heap. Today, it hums with new spirit.

"We are working harder than we have in 10 or 12 years and we're having fun at it," says Larry Hawley, the company's manager of manufacturing service.

"To tell you the truth, I'm glad to come to work every day," confides Curtis Miller, a union electrician. "And that's saying something."

Fun? Fulfillment? Those are unusual ideas for an American factory. Yet they are conspicuous here at Detroit Diesel. Walking through the plant of this one-time General Motors division is like breathing fresh air. It suggests that industrial renewal is not only possible in the United States, it is happening.

"It's amazing what you can do if you rip [a company] away from the parent's bureaucratic machination and develop a little entrepreneurial spirit," says Eugene Jennings, professor emeritus of business management at Michigan State University and longtime GM watcher. Detroit Diesel will be a premier example of American manufacturing prowess by 1995, he adds.

Change is filtering throughout the North American auto industry, says John Vergoz, vice president for quality and technology at Budd Company, a Troy, Mich., auto-parts maker. "I think we're in the execution wave. People are changing."

In 1987, few people would have forecast a turnaround for Detroit Diesel. The company let quality control slip in its rush to fulfill orders. Its new heavy-duty truck engine was riddled with problems. Market share plunged from 22.5 percent in 1980 to 3.3 percent in 1987.

"There was a time I would not wear a Detroit Diesel jacket outside of the plant," recalls Bob Ingram, an electrician.

As volume fell during that period GM halved the company's work force. Morale was low.

"A lot of us were very fearful about what would happen in the future," recalls Ray Winningham, chairman of the company's apprentice committee. The company was working on a next-generation diesel engine with advanced electronic controls. But it was not clear the company would survive long enough to market it.

The turnaround started a year later. GM sold 60 percent of Detroit Diesel to race-car builder and entrepreneur Roger Penske. Later, he bought another 20 percent of the business, leaving GM with 20 percent. This year, the company is working flat out to try to keep pace with demand for its new engine, the Series 60. Market share is back up to 26 percent. Sales at the now private company apparently have passed $1 billion.

"Penske made the most difference," Mr. Ingram says. He lopped off a large portion of the salaried work force. He paid attention to marketing the Series 60 and turned it into a winner. Mr. Penske listened to workers. When Ingram wrote him a letter critical of management - "The leadership at D.D.C. STINKS," he wrote - Penske responded the same day. He gave Ingram more leeway in final product testing, even though it slowed production.

Workers used to hesitate to tell managers anything, says Pete Fisher, a production supervisor. "Now he can walk up to anybody and say: `This is going on.' A lot of that fear is gone."

"They respect your needs," adds trainer Ross Fogarty. Under the old regime, after a worker asked a foreman for a tool, "you might wait a week before the guy would come back with a tool." Now the response is quick. Penske has speeded up decision-making at the management level too.

"Any time we wanted to do anything different in this business, it took months and months to get any kind of funding" under GM, Mr. Hawley says. "We make decisions in days now under Roger."

The company has not eliminated all gripes. Mr. Fogarty complains about back-stabbing in the plant. Mr. Fisher wants more communication. When company president Lud Koci spots a worker dozing at an afternoon worker-management meeting, he tells the workers not to fall asleep.

Detroit Diesel is not out of the woods yet. The company expects to turn a profit this year. But managers concede it is far too low.

"Penske is a heck of a marketer but he's weak on manufacturing and manufacturing is where he's going to make his money," Professor Jennings says. That means turning the company into a lean manufacturer and cutting the 3,500 work force even more, he adds. He thinks the era of good feeling will pass.

"In one year, either Penske will have made a very profitable company and workers will be unhappy," Jennings adds. "Or the workers will still be happy and Roger won't have a profitable company."

But the company thinks it can gain far more from employee involvement than lean manufacturing technology. Workers respond to that spirit.

"It's the best break I ever had," says Mark Holeva, a toolmaker who joined the company in March.

Ingram is wearing his Detroit Diesel jacket again. And these days, he says, truckers who see his jacket come up and ask how they can get a Series 60 engine.