Diesel maker on the rebound; with GM as a 'central banker,' DDA goes on the offensive - Detroit Diesel Allison Div

Diesel maker on the rebound

The order--"No more deviations allowed!' --will go out sometime this year at Detroit Diesel Allison Div. of General Motors Corp. "And we'll make it stick, too,' promises DDA General Manager Ludvik F. Koci.

It will mean, the GM vice president declares, that DDA has "ended forever the sinful waste . . . in having to pay all those engineers and others to redesign something they've already designed.'

That's what has happened in U.S. industry, he continues. "People are often paid twice--the second time to decide what deviation limits will be allowed so that the part keeps moving through the pipeline.'

DDA, he says, has reduced the deviation process drastically and "will entirely eliminate it this year and be doing things right the first time from then on.'

For Mr. Koci (pronounced Ko-see), that will mark a major milestone toward his announced goal of making DDA "one of the top diesel engine producers' in an industry where a dozen or so globe-spanning diesel makers--with combined capacity far above demand--struggle dog-eat-dog to stay, or get, profitable. In that context, he says, DDA--with the "stability of GM as a central banker' behind it--has stirred its competitors in recent months with:

Products: The microprocessor-controlled DDEC (Detroit Diesel Electronic Control) system went into production last September and gave DDA, Mr. Koci claims, a 1-year jump on other big-truck diesel makers. Coming early next year is a new engine, the Series 60, and a new family of transmissions. DDA also is re-entering the diesel/electric generator-set business after 15 years.

A joint venture: Almost overnight, DDA beefs its engine line by adding 13 Deere & Co. 50-hp to 250-hp diesels for on-and off-highway and marine use. Talks proceed with Deere, meanwhile, about going beyond a marketing agreement to merge most engine operations of both into a separate company (see sidebar).

Cost cutting: DDA consolidates engine production by moving parts-machining and 8.2L medium-duty diesel output a dozen miles to its Detroit works from Romulus, MI.

The total program, says Mr. Koci, shoves DDA far ahead of the "go-go' late 1970s when "demand was high and the emphasis was on getting out enough product to meet it. In hindsight, our quality wasn't up then to what the market demands today.'

But "there's a cost of quality--and you've got to pay it,' he adds. "You can't pay too much, though, or your prices are blown too high. So you must keep the cost of quality down.'

DDA's quality cost is "57% of what it was in 1979,' he adds, partly through a 50% drop in warranty claims on heavy-duty engines and a 30% cut in transmission claims.

Scrap costs--for material wasted in engine-making because it can't be used again --are down from $200 per engine in '79 to $125 today, he says. "That's helped us save about $2 million a year on heavy-duty diesels alone.'

This is not to say, Mr. Koci stresses, "that we don't still have quality problems. We do, but fewer all the time.'

And company-union people conflicts are rare today, he adds, compared to back in the mid-1970s "when we had an open house and the (United Auto Workers) union leaders stood outside and told people not to go in.' For the '85 open house, he recalls, "the union took the lead in setting up the program, and everybody--wives, friends, neighbors--attended, about 40,000 all together.'

But that "kind of change just doesn't happen. It takes constant attention from union and company people.'

There's particular enthusiasm at DDA over the Quality Action Program (QAP), a program launched in 1982 from a union-leadership idea that operates through 4-person teams of two company and two union members. "They can shut the line, or whatever, as long as they agree,' Mr. Koci relates. "They only buck it up if they can't agree. And about half the calls they get now are from salaried people.'

The trouble-shooting team concept "isn't foolproof, of course,' the DDA boss says. "Some regard it as a usurpation of authority, but it's a long step ahead of where we were.'

Another idea, having hourly employes handle plant tours--"of which there weren't all that many in the past'--has worked so well that "our only problem now is sorting out the requests.'

And Mr. Koci himself is booked solid for his monthly meetings with 30 hourly and salaried workers, sessions that rotate among DDA plants in Detroit, Moraine, OH, and Indianapolis and Muncie, IN.

The Series 60 engine, being field-tested now and due for customer sale in early '87, will be a "great product,' he asserts, "mainly because of the way we've involved people in development and production.'