Dana Corporation History

Company History:

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 turning 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 tech-nology, better facilities, and a new system of incentive pay-ments 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.; DTF 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 Electric S.A.R.L. (France); Dana Finance S.A.; Warner Electric SpA; Spicer Italia Srl; 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

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.

Further Reading:

• Byrne, Harlan S., 'Dana Corp.: After a Sluggish '91, Parts Supplier Readies a Kick into High,' Barron's, September 30, 1991, pp. 41-42.
• McPherson, Rene C., Dana: Toward the Year 2000, New York: Newcomen Society in North America, 1973.

Source: International Directory of Company Histories, Vol. 10. St. James Press, 1995.

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