Dana Corporation

views updated Jun 11 2018

Dana Corporation

4500 Dorr Street
P.O. Box 1000
Toledo, Ohio 43697
U.S.A.
(419) 535-4500

Public Company
Incorporated: October 12, 1916 as Spicer Manufacturing
Company
Employees: 38,200
Sales: $3.695 billion
Market Value: $1.829 billion
Stock Index: New York London

Executives at the Dana Corporation are proud of the fact that the company grew up with the motor vehicle industry. The company has good reason to emphasize this since Dana Corporation has managed to remain both a flexible growth company throughout the changes in the automotive industry, as well as a leader in its field.

The Dana Corporation began with an idea that would improve automotive equipment. In 1902 Clarence Spicer invented the Spicer universal joint to replace the chain and sprocket devices that were being used for automobiles at that time. With this invention, Clarence Spicer founded the Spicer Manufacturing Company of Plainfield, New Jersey.

Clarence Spicer was president of the company from 1910-1914, and Charles A. Dana was appointed to the position in 1916. Dana, a well-known philanthropist, New York lawyer, and legislator remained at the head of the Corporation for more than half a century. In 1946 the Spicer Manufacturing Company was renamed Dana Corporation in his honor.

Dana graduated from Columbia University with both a bachelor of arts and law degree. After college, he practiced law for the State of New York, becoming assistant prosecutor in 1907. Dana went on to serve as a state legislator for six years before becoming president and then chairman of the Corporation. Dana also served as director or officer of over 20 additional companies.

In 1930 the company moved to Toledo, Ohio where its headquarters have remained. Dana had to resort to numerous layoffs over the years, and in 1945 the company fired 4,000 workers because of a steel shortage. Two months before this layoff, Dana had managed to end a 55-day strike at the Pottstown, Pennsylvania plant when 1,820 employees stopped work because personnel with low seniority were rehired after the dismissal of some of their colleagues with “super-seniority” rights.

By 1952 Dana considered closing down the Pottstown plant because it was no longer competitive. But through careful, and lengthy, negotiations with the United Auto Workers union, the management agreed to a four year $5 million modernization process that would enable the plant to regain its competitive edge. This meant several concessions on the part of the UAW, including 21 revisions in its union contract, but by 1959 the plant was productive once again.

During the 1960’s the Dana Corporation grew from strength to strength and by 1967 was one of the largest independent suppliers of automotive components and replacement parts throughout the world with $500 million in sales. Dana saw itself as a “growth company” and not a conglomerate. Management was watching for new developments within the transportation industry.

Dana became a leader in the after-market industry early in the 1960’s with the acquisition of Perfect Circle Corporation, a manufacturer of piston rings and related products, and in 1963 with Victor Manufacturing and Gasket Company. By 1968 the company’s impressive customer list included General Motors, Ford, International Harvester, Chrysler, and American Motors.

In the late 1960’s, Rene C. McPherson was appointed president of the company. Described by Fortune magazine as a “maverick,” McPherson is important in the history of Dana Corporation because of his progressive policies on management and employee relations. He is credited with turning a large, somewhat unwieldy, auto parts manufacturer into a “model of productivity.” One of the first decisions McPherson made was to cut 350 people from a 500 person staff at company headquarters in Toledo and replace a 17-inch stack of company operating manuals with a brief policy statement.

McPherson decentralized the corporate bureaucracy by requiring managers to make decisions and encourage personnel to participate in a Dana stock plan. At his insistence, managers met with employees instead of sending memos, and in a unique move, time clocks were abolished and managers helped personnel to establish their own production goals.

Another innovation was the establishment of “Dana University,” an in-house training program for employees who wanted to move up the ranks of the company. The progressive policies of the company led one security analyst to note that McPherson brought “Japanese-style management to Dana before most people even knew what it was.”

McPherson’s strategy was to make careful, small acquisitions while maintaining low costs and high productivity. As a result, Dana was considered one of the nation’s best-run companies and maintained a sound financial record in the 1970’s. During this decade, McPherson moved Dana away from its reliance on the original-equipment market and toward the light trucks market, which ultimately represented 35% of its 1970’s sales.

Dana has been praised for its ability dramatically to improve its acquisitions. For example, in 1974 Dana acquired Summit Engineering Corporation, a manufacturer of numerical controls for machinery. At the time the company’s sales were at $900,000. Under Dana’s direction, sales increased to $18 million by 1979.

Between 1963 and 1980 Dana Corporation purchased 24 companies that were outside its original-equipment vehicle business and it saw profits rise from $62 million in 1975 to $164 million by 1979. There were now three distinct areas to the corporation’s business: original-equipment auto and truck parts, replacement parts, and industrial machine components.

The changes implemented by McPherson were carried on by Gerald B. Mitchell in 1980 after McPherson retired. Dana’s continuing commitment to its workers’ concerns was made difficult for Mitchell because of problems brought on by the recession of the early 1980’s. But Mitchell well understood the validity of his company’s approach, having started as a Dana machine operator at the age of 16.

The emphasis on light truck parts in the 1970’s caused a dependency that resulted in a 40% earnings drop in the 1980’s when the light trucks no longer appealed to the consumer. 1982 earnings were 46% below those of 1980; Dana had to close five plants and lay off one-third of its employees in its American operations.

One United Auto Worker officer stated that Dana’s management principles “are very nice while everything is going good. But when things turn bad, Dana is just like every other company.” However, Dana’s concern for its employees was demonstrated to some degree. The company offered its unemployed workers preferential hiring at other plants and assisted with relocation expenses. Lists of laid-off employees were sent to other manufacturers in the area and a two week job counseling program was provided when Dana plants were shut down.

Suddenly in 1983 Dana’s original equipment parts business had an excellent year; earnings rose 119% to $112 million. However, Mitchell believed that Dana’s best prospects for the future were probably in the replacement market for its auto and truck parts. In 1984, Mitchell was anticipating that the replacement parts business would make up 40% of the company’s net earnings by 1989, while the original-equipment business would make up only about 30%.

Dana began manufacturing gears in 1984 that were identical to those designed for a line of Clark Equipment Company truck transmissions. Through this tactic, it is possible for Dana to “skim the cream off the top of Clark’s replacement sales.” A competitor commented in Business Week that “Gerry Mitchell has drive and nerve, but our attitude is: We are going to watch him slip on that banana.” But Mitchell did manage to direct Dana through a difficult period to a position of moderate security.

During the early 1980’s Dana also diversified into the financial service industry. The company had earlier developed an internal financial service as protection against anticipated insurance costs. However, its acquisition of Cherokee Insurance Company, a small property and casualty insurance company, was not successful. In 1984 Cherokee failed and Dana wrote off $6 million of its investment. While Dana declared it had no further liability for Cherokee Insurance, other companies felt differently, particularly because Cherokee had been unable to fulfill reinsurance obligations. Dana was subsequently sued for $1.7 million by St. Regis Corporation in 1985 and other insurance companies involved with Cherokee were reviewing the matter.

During 1985 Dana spent $120 million on “Project 90,” a program for investment in new technology, better use of existing facilities, and a new system of incentive payments which could be tied to higher productivity. The company hopes to reduce its costs to 90% of those of its major competitors. Dana is experiencing another transition because of the trend of car manufacturers’ to make parts in-house or to use foreign-made parts. Although it has now limited its manufacture of passenger car components, Dana has expanded its production of engine parts for trucks.

Dana’s future is inextricably bound to the automotive industry. However, over the years the company has learned to survive the industry’s ups and downs. The changes that are occurring within Dana at the present time are a result of management’s realistic, and optimistic, attitudes.

Principal Subsidiaries

Dana Equipamentos Limitada (Brazil) (99.9%); Racing-Hidraulica Ltd., (Brazil); Dana World Trade Corp.; Hayes-Dana Inc. (Canada) (52%); Diamond Printing and Mailing; Boston Industrial Products; Dana Domestic International Sales Corp.; Wix Corp.; Maumee Holdings BV (Netherlands); Albarus SA (Brazil) (56%); Warner Electric Brake & Clutch Co.; Dana Distributing Inc. The company also has subsidiaries in France and West Germany.

International Directory of Company Histories

Dana Corporation

views updated May 23 2018

Dana Corporation

4500 Dorr Street
P.O. Box 1000
Toledo, Ohio 43615-4033
U.S.A.
(419) 535-4500
Fax: (419) 535-4896

Public Company
Incorporated: 1916 as Spicer Manufacturing Company
Employees: 36,000
Sales: $5.46 billion
Stock Exchanges: New York London Pacific
SICs: 3714 Motor Vehicle Parts and Accessories; 3592 Carburetors, Pistons, Rings, Valves; 3561 Pumps and Pumping Equipment; 3594 Fluid Power Pumps and Motors; 3492 Fluid Power Valves and Hose Fittings

Dana Corporation is a leading manufacturer and distributor of vehicular and industrial products with 430 manufacturing and distribution facilities in 27 countries around the world. Dana operates in three principal business segments: vehicular, industrial, and financial holdings. The company’s decentralized management system directs worldwide operations through four regional organizations in North America, South America, Europe, and Asia Pacific. Developing concurrent to the automotive industry, Dana has adapted to changes in that industry and has remained a leader in its field. Another distinction of the corporation is its “consuming orientation toward people,” a legacy of former CEO Rene C. McPherson, known for his progressive management techniques.

The Dana Corporation traces its origins to 1902, when Clarence Spicer invented the Spicer universal joint and driveshaft to replace the chain and sprocket devices then used in automobiles. Spicer founded the Spicer Universal Joint Manufacturing Company in Plainfield, New Jersey, and served as president of the company from 1910 to 1914, when he enlisted the well known philanthropist, attorney, and legislator Charles A. Dana as his successor. Dana would guide the firm for more than 50 years, and, in 1946, the Spicer Manufacturing Company was renamed Dana Corporation in his honor.

Dana graduated from Columbia University with both bachelor of arts and law degrees. After college, he practiced law for the State of New York, advancing to the position of assistant prosecutor in 1907. Dana went on to serve as a state legislator for six years before becoming president and then chairperson of Spicer Manufacturing.

In 1930, the company moved its headquarters to Toledo, Ohio. In the ensuing years, and during World War II in particular, steel shortages forced Dana to make substantial cuts in its work force; in 1945, the company laid off 4,000 workers because of a steel shortage. Also during this time, the company faced labor disputes. In 1945, 1,820 employees at the company’s plant in Pottstown, Pennsylvania, walked off the job, dissatisfied with recent lay offs and subsequent rehirings of personnel with less seniority. The strike lasted for 55 days before a settlement was reached.

By 1952, Dana was considering closing the Pottstown plant because it was no longer competitive. However, through careful and lengthy negotiations with the United Auto Workers union, the management agreed to a four-year, $5 million modernization process that would enable the plant to regain its competitive edge. This meant several concessions on the part of the UAW, including 21 revisions of its union contract, but, by 1959, the plant was productive once again.

During the 1960s, the Dana Corporation became one of the world’s largest independent suppliers of automotive components and replacement parts with $500 million in sales. Characterizing itself as a “growth company” rather than a conglomerate, the Dana Corporation sought expansion through acquisition within the transportation industry. Early in the 1960s, Dana purchased Perfect Circle Corporation, a manufacturer of piston rings and related products, and, in 1963, Victor Manufacturing and Gasket Company was acquired. By 1968, the company’s impressive customer list included General Motors, Ford, International Harvester, Chrysler, and American Motors.

In the late 1960s, Rene C. McPherson was appointed president of the company. Described by Fortune magazine as a “maverick,” McPherson was vital to the history of Dana Corporation ^because of his progressive policies regarding management and employee relations. He was also credited with Burning a large, somewhat unwieldy, auto parts manufacturer into a “model of productivity.” McPherson’s first moves involved cutting 350 people from a staff of 500 at company headquarters and replacing the 17-inch stack of company operating manuals with a brief policy statement. McPherson decentralized the corporate bureaucracy by requiring managers to assume more responsibility in the decision-making process and encouraging personnel to participate in a Dana stock plan. At his insistence, managers met with employees instead of sending memos, time clocks were abolished, and managers helped personnel to establish their own production goals.

Another of McPherson’s innovations was the establishment of “Dana University,” an in-house training program for employees who wanted to move up through the ranks of the company. Moreover, Dana recruited “student teachers” to study excellence in manufacturing abroad and then return to their home plants to disseminate the human relations strategies, manufacturing techniques, and philosophies they had learned. The progressive policies of the company led one security analyst to note that McPherson brought “Japanese-style management to Dana before most people even knew what it was.”

McPherson’s business strategy was to make careful, small acquisitions while maintaining low costs and high productivity. As a result, Dana was considered one of the nation’s best-run companies and maintained a sound financial record in the 1970s. During this time, McPherson shifted the company’s focus away from its reliance on the original equipment market and toward the light trucks market, which ultimately represented 35 percent of its sales during the decade.

Moreover, Dana became known for its ability to turn unprofitable companies around. For example, in 1974, Dana acquired Summit Engineering Corporation, a manufacturer of numerical controls for machinery. At the time, the company’s sales were at $900,000; under Dana’s direction, sales increased to $18 million by 1979.

Between 1963 and 1980, Dana Corporation purchased 24 companies outside its original equipment vehicle business, and company profits rose from $62 million in 1975 to $164 million by 1979. By 1980, Dana had developed three distinct areas of business: original equipment auto and truck parts, replacement parts, and industrial machine components.

The changes implemented by McPherson were carried on by Gerald B. Mitchell when McPherson retired in 1980. Having started as a Dana machine operator at the age of 16, Mitchell understood and appreciated the company’s commitment to its workers’ concerns. However, economic recession during the early 1980s made it increasingly difficult to honor McPherson’s personnel policies; when light trucks declined in popularity during the early 1980s, prompting drastic declines in company earnings, Mitchell was forced to close five plants and lay off one-third of its employees in its American operations. Some UAW officials regarded the company’s treatment of its employees as unfair. Nevertheless, the company strove to offer its unemployed workers preferential hiring at other plants and assisted with relocation expenses. Lists of laid-off employees were sent to other manufacturers in the area, and a two-week job counseling program was provided when Dana plants were shut down.

In 1983, Dana’s original equipment parts business had an unexpectedly profitable year, as earnings rose 119 percent to $ 112 million. However, Mitchell maintained that Dana’s best prospects for the future remained in the replacement market for its auto and truck parts. In 1984, Mitchell anticipated that the replacement parts business would make up 40 percent of the company’s net earnings within five years, while the original equipment business would account for only about 30 percent.

In 1984, Dana began manufacturing gears identical to those designed for a line of Clark Equipment Company truck transmissions. Through this tactic, Dana entered into direct competition with Clark’s replacement sales, and Dana’s success in this arena helped the company offset losses in other divisions. During this time, Dana also diversified into the financial service industry, acquiring the Cherokee Insurance Company, a small property and casualty insurance company. However, the venture proved unsuccessful, and Dana was forced to write off $6 million of its investment. While Dana considered its relationship with Cherokee Insurance over, many of Cherokee’s clients were unsatisfied that the subsidiary had been unable to fulfill reinsurance obligations. Dana was subsequently sued for $1.7 million by St. Regis Corporation.

In 1985, Southwood “Woody” Morcott, then a twenty-year veteran of Dana, advanced to the firm’s board of directors and was subsequently elected CEO and president, positions he would hold into the 1990s. Morcott began focusing on streamlining operations and cutting costs at Dana, investing $120 million in “Project 90,” a program for developing new technology, better facilities, and a new system of incentive payments which could be tied to higher productivity. The company hoped to reduce its costs to 90 percent of those of its major competitors.

However, in the late 1980s, global economic recession prompted increasing numbers of auto companies to manufacture parts in-house or to use less expensive foreign-made parts. Dana’s earnings declined during 1989, 1990, and 1991, and, in 1992, Dana suffered a $382 million loss, despite a slight rebound in sales. Limiting its manufacture of passenger car components, Dana fortuitously expanded its production of engine parts for trucks. As that market segment, which constituted over 25 percent of Dana’s business, rebounded in the early 1990s, the company was able to report net earnings of $80 million on 1993 sales of $5.46 billion.

As Dana’s sales to Ford and Chrysler totaled 29 percent of its consolidated sales in 1993, Dana’s future seemed inextricably linked to the fortunes of the automotive industry. Dana therefore focused on adapting its product lines in order to offset the effects of fluctuation in the industry. Management also persisted with its streamlining and cost-cutting measures and concentrated on penetration of international markets into the mid-1990s, with the goals of “Dana 2000” as incentive. According to the objectives stated in Dana’s 1993 annual report, the company planned to earn 50 percent of sales from distribution markets and 50 percent of total sales from outside the United States. Distribution sales amounted to 36.6 percent of sales and foreign sales contributed 17.8 percent as of 1993.

Principal Subsidiaries:

Albarus Inc.; DTP Trucking, Inc.; Dana Distribution, Inc.; Dana International Finance, Inc.; Dana International Ltd.; Dana World Trade Corp.; Flight Operations, Inc.; Gemstone Gasket Co.; Precision Specialties, Inc.; Swanton Air Three, Inc.; Results Unlimited, Inc.; Warner Sensors Corp.; Undercar International, Inc.; Krizman International, Inc.; Summit Fidelity Insurance Agency, Inc.; Diamond Financial Holdings, Inc.; Dana Venture Capital Corp.; Hayes-Dana Inc.; Air Refiner (Canada) Ltd.; Dana Japan, Ltd.; Dantean Co., Ltd.; Dana Asia (Thailand) Ltd.; Dana Industrial Co., Ltd.; Spicer Asia (Thailand) Ltd.; Dana Industrial Co., Ltd.; Dana Asia (Singapore)Pte. Ltd.; Dana Asia (Thailand) Ltd.; Dana Asia (Taiwan) APD Co., Ltd.; Spicer Asia Engineering Ltd.; Taiyiu Warner Industrial Ltd.; Dana Australia (Holdings) Ltd.; Warner Electric Australia Pty. Ltd.; Dana Europe Holdings B.V.; Warner Electric S.A.; Dana Holdings Ltd.; Superior Electric Engineering Services, Ltd.; Shannon Properties U.K., Ltd.; Shannon Finance Ltd.; Dana Commercial Credit Ltd.; Dana Commercial Credit (U.K.) Ltd.; Farnborough Properties Co.; Farnborough Airport Properties Co.; Dana S.A.; Superior Electrie S.A.R.L. (France); Dana Finance S.A.; Warner Electric SpA; Spicer Italia Sri; Dana Italia SpA; Warner Electric Ltd.; Spicer Espana, S.A.; Dana A.B.; Warner Electric (International) S.A.; Warner Electric S.A.; Dana GmbH (Germany); Dana Equipamentos Ltda.; Warner Electric Do Brasil Ltda. Solar Insurance Company Ltd.; Astro Insurance Company Ltd.; Dana Foreign Sales Corp.; Fairway Captive Services Ltd.; DCC Spacecom Ltd.; Dana Asia (Hong Kong) Ltd.; Shui Hing Manufacturing company Ltd.; Technologia De Mocion Controlada SA de CV; Ubali S.A.; E. Daneri, ICSA; Dana Asia Pacific (Malaysia) SDN BHD; Dana Asia (Korea) Co., Ltd.; Industria de Ejes y Transmissiones S.A.