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Richard E. Dauch, a True Believer in Manufacturing, Dies at 71

Posted By David Brousell, August 05, 2013 at 3:27 PM, in Category: Next-Generation Leadership and the Changing Workforce

Richard E. Dauch, a force in U.S. automotive manufacturing for nearly half a century who helped save Chrysler in the early 1980s and went on to start American Axle & Manufacturing Inc., growing that business globally to nearly $3 billion last year, died last Friday. He was 71.                  

Self-described as outspoken, aggressive, and impatient, Dauch was recruited by an equally outspoken and aggressive Lee Iacocca to solve Chrysler’s manufacturing and quality problems in the early 1980s when the auto maker was failing and required U.S. government financial assistance to prevent its collapse.

In his 2012 book, American Drive, Dauch described going to Chrysler as a “pivotal moment” in his career, and one that required him to establish his turf at the outset with the tough Chrysler chief.

“To salvage Chrysler’s manufacturing and quality problems, I needed the authority and a free hand,” Dauch wrote. “Anyone who knows Lee Iacocca knows he holds authority close to his chest. That was a tough and protracted negotiation. Yet I knew that if I did not carve out my territory and authority going in, I would never get it later on. I hung tough, knowing I wanted the job but that I needed running room to get it done.”

The job talks between Iacocca and Dauch went on for 11 months. One of the biggest hurdles in the discussions was Dauch’s insistence that he needed to spend large new sums of money on equipment, to integrate manufacturing into the design process, to establish a new in-line sequence for production, and to provide more worker training – all when Chrysler was losing $7 million a day.

In the end, Dauch prevailed and joined Chrysler in April of 1980. Chrysler, with the help of many others, recovered and paid off its government loans in July of 1983.

Dauch retired from Chrysler in the early 1990s. But, at 50 years of age, he was itching for another challenge. He found it when General Motors announced that it would sell 18 of its production facilities, including those making axle and driveline products. In 1994, Dauch bought the GM axle business, including 5 rundown plants in Detroit and Buffalo, and with a number of colleagues from GM and Chrysler, formed American Axle and Manufacturing.

Dauch was CEO of AAM from its founding until 2012 and most recently served as executive chairman of the board. His son, David C. Dauch, is the current president and CEO.

Today, AAM – which makes driveline and drivetrain systems and related components for light trucks, SUVs, passenger cars, cross-over vehicles, and commercial vehicles -- has 11,700 employees and does business in 13 countries. AAM’s sales in 2012 were $2.93 billion. On Friday of last week, the day Dauch died, AAM reported an 8.1% increase in second-quarter sales, to $799.6 million, and net income of $25.8 million, up from $4.7 million in the year-ago period.

Richard E. Dauch was born on July 23, 1942 to W.G. Albert and Helen Dauch, who ran dairy farms in Ohio. His early life experience in working on a milk farm no doubt shaped his values toward work and responsibility.

“My parent were disciplinarians, loving but stern,” he wrote in his book. “Cows have to be milked twice a day. They don’t take off weekends or holidays. It gets mighty cold at 5:00 am on an Ohio dairy farm in deep winter, but that was just too bad. When Dad sent us out to a job, we learned early not to come back complaining that it was too cold or there was three feet of snow on the ground. Dad did not want a weather report; he wanted to know if the work got done. He expected production, performance, and accountability. Come to think of it, I feel the same way about the people who report to me.”

Dauch was a star football player in high school in Ohio, rushing for nearly 1000 yards in his senior year. As a result of his football prowess, more than 40 colleges and universities solicited for his services, but he ended up going to Purdue University, where he also studied industrial management.

After Purdue, Dauch turned down feelers from a number of professional football organizations, including the Green Bay Packers, and took a job at GM’s Chevrolet plant in Flint, Michigan. In 1973, he became plant manager at the Chevrolet Spring and Bumper plant in Livonia, making him the youngest plant manager in GM’s history at that time.

Dauch left GM in 1976 to join Volkswagen of American as vice president and general manufacturing manager. He was later promoted to group vice president and was elected a member of the company’s board of directors. He joined Chrysler four years later.

Over the course of his career, Dauch was a member of many boards, including that of the National Association of Manufacturers, and received many awards. He received the 2006 Shien-Ming Wu Foundation Manufacturing Leadership Award, the 2005 CEO Legend Award from Automation Alley and the 2003 Harvard Business School of Michigan Business Statesman award.

Summing up his thoughts and feelings about the future of manufacturing, Dauch wrote in American Drive, “I am a manufacturing guy, and I freely admit to a pro-manufacturing bias, but I do honestly believe we are on the threshold of a great new age of manufacturing – an age in which the United States will solidify and expand its global leadership. Despite all the difficulties of recent years, we have managed to preserve our world leadership – and not by accident. We are still the most innovative people in the world, and manufacturing is the seedbed of that creativity … “

Dauch is survived by Sandra, his wife of 53 years; four children; 16 grandchildren; and two great-grandchildren. His funeral service will be held this Wednesday, August 7, 11:00am at First United Methodist Church in Birmingham, MI.

Written by David Brousell

Global Vice President, General Manager and Editorial Director of the Manufacturing Leadership Council

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