By Tim Newton
landscaping and greenery surrounding the world headquarters
of American Axle & Manufacturing suggest that this
is no ordinary manufacturing plant.
is no ordinary company, either. Formed in 1994, American
Axle & Manufacturing is one of the top 30 automotive
suppliers in the world, and it is traded publicly on
the New York Stock Exchange. Its co-founder, chairman
of the board, and chief executive officer, Richard E.
Dauch, IM '64, HDR '99, is pleased with his company's
growth and success, but not surprised. A 37-year veteran
of the automotive industry with General Motors, Volkswagen
of America, and Chrysler, Dauch understands the world
of automotive manufacturing like few others.
described as "part Marine, part preacher, part salesman,
with a very public personality," Dick Dauch manages with
a style best summarized on a plaque that sits on his
office conference table: "The One Who Says It Cannot
Be Done Should Never Interrupt the One Who Is Doing It."
Dauch was destined for a life in manufacturing from an
early age. The youngest of six children, Dauch was born
in Norwalk, Ohio, where his family ran a small dairy
farm. He says he regularly walked past a General Motors
plant as a toddler, and he soon became interested in
learning how products were made. By the age of 9, he
says, he knew he wanted to be a manager in industry.
had a chance to tour a number of factories when I was
small," he says casually from the end of a conference
table in his Detroit office. "I learned very early that
I liked to work with people and that I was interested
in producing a product."
his father in the insurance business, Dick moved around
the state of Ohio, from Norwalk to Clarksville to Ashland,
where he graduated from high school. A football and track
standout, Dauch had 44 full-ride scholarship offers.
He narrowed the list by determining which schools offered
industrial management degrees, eventually choosing among
Purdue, Iowa State, Cornell, and a couple of other schools.
picked Purdue, playing for legendary football coach Jack
Mollenkopf and earning a solid education in the technical
side of management. While at Purdue, Dauch married his
high school sweetheart, Sandra Rule, and the pair left
Purdue in 1964 with two sons, Rick and David.
new college graduate had an immediate decision to make.
He had a chance to play in the National Football League
for the legendary Vince Lombardi and the Green Bay Packers,
but opted instead to join General Motors through the
company's entry-level college graduate training program.
In his 12 years with GM, Dauch moved through the ranks
quickly and became the youngest plant manager in Chevrolet's
history. He also got valuable experience in the trucks
division, which at the time constituted just 10 percent
of the GM fleet. (Today, trucks make up half of GM's
age 33, Dauch was on the fast track to success. He was
also wary of what he perceived as a slowdown in the company's
global advancement. With a desire to gain more international
experience, he joined Volkswagen of America in 1976.
As group vice president of manufacturing, he planned
and created the manufacturing facilities for the first
high-volume automotive transplant firm in the United
States. Dauch's star was rising, and he was in demand
throughout the automotive world.
one needed Dauch's help more than Lee Iacocca. Chrysler's
manufacturing operations were in total disarray in 1980,
losing money to the tune of $6 million to $7 million
per day. When Dauch investigated the situation, he found
the company was squandering more than money.
people there had lost their spirit and commitment to
win," Dauch says. "But I thought it was a situation that
we could change. Lee Iacocca is a great communicator,
and I knew he could deliver the message if we could deliver
the product. We told our workforce that quality was sacred
and value was sacred and we needed a total commitment
from everyone to turn things around."
results were staggering. Chrysler went from a $6 million
to $7 million deficit per business day to a daily profit
of the same amount. (Dauch still treasures a bottle of
black ink Iacocca gave him to signify the first dime
of profit, a bottle that took more than two years to
earn.) Dauch planned and directed the implementation
of Chrysler's just-in-time materials management system
and three-shift assembly system capability. Under his
leadership, the company experienced a manufacturing renaissance,
doubling productivity and reducing first-year warranty
claims by 65 percent.
retired from Chrysler in 1991. He wrote a book, Passion
for Manufacturing, which was a highly personal account
of his manufacturing and management philosophies. The
book, distributed in 80 countries and several languages,
was called by the Detroit News as "probably the best
American collection of sensible advice since Benjamin
Franklin's Poor Richard's Almanac."
Dauch is not afraid to give advice and spread his philosophies.
He shares a number of "Dauchisms," including TMT/TME
(Tell Me the Truth and Tell Me Early) and his belief
in the four T's: Teamwork-Training-Technology-Trust ("You
can't build the fourth without the first three," he says).
taught Dauch that heritage meant little. "No one
gives a rip where you came from," he says. "When
you line up for every play, you'd better be ready
helped kick off the Krannert at the Frontier campaign
cabinet with a $5 million pledge and his services
as chair of the campaign cabinet.
loyal Purdue sports fan, Dauch gave $1 million
to Purdue Intercollegiate Athletics. Twenty-six
of Dauch's family members went to watch the Boilermakers
play in the 2001 Rose Bowl.
inch in his office is put to strategic use. There are "bitin'
bullets" in the upper right corner of his desk. Several
plaques and pictures adorn the paneled walls: an autographed
photo taken at the inauguration with President George
W. Bush, citations from several charitable organizations,
aerial pictures of company headquarters. For each memento
on the wall, another rests in Dauch's closet, awaiting
A family photo
just inside the doorway reminds him to plan ahead. "That's
my uncle, Jake Dauch, from Sandusky, Ohio," Dauch says,
pointing to a large figure in the picture. "He had a
successful business, but he didn't have any succession
plan. One day he was killed in a car accident, and the
business died with him.
a succession plan for American Axle & Manufacturing
in 1993, and I want to make sure there is a smooth transition
to the next generation. My sons are learning all the
different jobs in the business, so they'll be ready."
Dauch was done
with Chrysler in the early 1990s, but he was far from
finished in the automotive industry. In 1992, General
Motors moved to sell 18 operations from its Automotive
Components Group. Along with a pair of investors, Dauch
bought GM's axle, forge, and propeller shaft driveline
Before the purchase,
Dauch had to convince the current GM employees in the
division that he was the man with the plan to make the
company go. "Starting in 1993, we met with hundreds of
people face-to-face on the factory floor," Dauch says. "They
all had one of four choices: work for us, stay with GM,
quit, or retire. When it was all said and done, we had
a workforce in the area where the median age had dropped
about 15 years, and the average education level had gone
up four years. We're proud of that. We try to dispel
a lot of myths about factory life and bring a higher
respect to manufacturing."
With a team behind
him, and after 14 months of intense negotiations with
GM, Dauch turned American Axle & Manufacturing (AAM)
into a reality in 1994. Ignoring advice to move the company
out of Detroit, Dauch poured millions of dollars into
renovating and repairing the existing manufacturing facilities.
its seven years of existence, AAM has expanded from five
core North American plants to 22 locations in seven different
countries and four continents, and from 7,000 employees
to 12,000. Though it was not on the manufacturing radar
screen in 1994, AAM is today one of the top 15 automotive
suppliers in North America and one of the top 30 in the
world. The company does about $3 billion annually in
sales. It went public in 1999 and outperformed Wall Street
in each of the first ten quarters after.
I'm in here or on the plant floor, I have a passion for
this business, and I try to pass on that passion," Dauch
says. "But you must have people who are self-motivated.
When people tell me that they want to move up in the
company, I remind them that two-thirds of promotion is
motion. Get moving. Accomplish something."
message seems to be accepted by AAM employees. The unionized
company has never lost time in more than 120 million
man-hours due to labor strife or discord.
success in labor relations comes from a hands-on approach.
Clearly at home on the manufacturing floor, he seems
to know everyone's name and life story during a golf-cart
tour of the facility. There's a world-champion powerlifter
near the dock, a plant manager who played football at
the University of Florida, and a 38-year veteran of auto
manufacturing who still looks for new ways to save time
and money on the floor.
a people game," Dauch explains, "not product."
proudly points to the cleanliness of an operation that
uses tons of oil. There is no blue smoke coming from
the welding area. For a company that produces 11,000
axle shafts a day, very few people appear to be in certain
areas of the operation, a testament to AAM's use of modern
the machinery fades into the background as person after
person stops the cart to shake the boss's hand. This
is more like a politician greeting a throng than a CEO
cruising through his facility.
ever a manufacturing plant could be considered clean,
bright, and cheerful, AAM would. Restrooms are located
throughout the plant, an ATM machine sits along a wall,
and workers can take advantage of a prayer chapel at
the beginning or end of a shift. The company also has
installed 13 parking decks for convenience and safety.
AAM began operations, Dauch cleaned up the area around
Holbrook Avenue, buying and bulldozing crack houses,
bars, and brothels, leaving only nearby churches standing.
Crime in the area has decreased 59 percent since the
company's inception in 1994.
competitive nature takes deep root in his love of sports.
He uses sports lingo prominently as he explains his business
philosophy. He favors hiring educated former athletes
because "they understand hard work and teamwork." Electronic
scoreboards throughout the plants feed him real-time
data, and remind "associates," as Dauch calls his employees,
that someone is keeping score.
is proud of one number: zero. He says his company has
not been involved in any litigation surrounding its products
and has never missed a delivery. "I just flat-out don't
believe in recalls, so we need to get it right the first
time," he says, pointing to the fact that the tolerance
allowed in production is often as small as one-fifth
of a human hair. "I learned that kind of precision at
has been very generous to his alma mater. While at Chrysler,
he provided a $1 million challenge grant that was instrumental
in the creation of the Dauch Center for the Management
of Manufacturing Enterprises. He later pledged $6 million
to Purdue, with $5 million to serve as a kickoff to the
Krannert at the Frontier Campaign, and another $1 million
earmarked for intercollegiate athletics. Dauch, who had
26 family members at the Rose Bowl, serves as chair of
the Krannert at the Frontier Campaign.
also believes in giving back to the community in which
he works. AAM is heavily involved in Junior Achievement
and scouting organizations, as well as Boys and Girls
Clubs and local schools in Detroit. He has been recognized
for his work inside and outside the business world, receiving
the 1997 Newsmaker of the Year Award from Crain's
Detroit Business magazine.
not a social company, but we do have a social conscience," Dauch
says. "We are a guest of the community, and we always
try to stay sensitive to local needs."
sons stand ready to help take over the family business,
but the 59-year-old father of four and grandfather of
14 appears in no hurry to leave. He's just extended his
contract through 2006, and it's hard to imagine a rocking
chair anywhere in his near future.
in his office, Dauch reflects on lessons learned along
the way. "People at the top of the organization said
the minivan would never work, but it saved Chrysler.
That taught me that you should never let people from
above intimidate you. Do what you think is right, not
what you think is popular," he says.
also believes in taking nothing for granted. To illustrate
the point, he pulls out a story he reads to his associates
a Love Affair
You say you love
me, but sometimes you don't show it.
In the beginning, you could not do enough for me.
Now you seem to take me for granted.
Some days I wonder if I mean anything to you at all.
Maybe when I'm gone you'll appreciate me and the things I do for you.
I'm responsible for getting food on your table; for the clean shirt you wear;
for the welfare of your home; for the thousand-and-one things you want and
Why, if it weren't for me, you wouldn't have the car you drive.
I've kept quiet and waited to see how long it would take for you to realize
how much you really need me.
Cherish me ... take good care of me ... and I'll take good care of you.
Who am I? I'm your JOB!
a job that permeates Dauch's soul.
"Working in the auto industry has been a constant pressure-cooker, full
of stress," he says with a smile. "And I've loved every second of it."