Richard Dauch, 71, persevered during tough times in 50-year manufacturing career

DETROIT -- Richard E. Dauch -- the Volkswagen and Chrysler manufacturing chief who went on to co-found American Axle & Manufacturing Holdings Inc. -- died Friday, less than a year after handing over daily control of American Axle to his son.

Dauch, 71, died at his home in Bloomfield Hills, Mich. The cause of death was pancreatic cancer, the medical examiner's office in Oakland County, Mich., said Monday.

"His leadership helped shape the auto industry in the United States," said Jay Timmons, CEO of the National Association of Manufacturers, where Dauch was a board member since 2000.

Services are being held this week in Royal Oak, Mich., for Dauch, whose automotive career spanned 50 years.

In 1993, Dauch turned five General Motors plants in Michigan and New York into American Axle, which generated a $66 million profit in its first year. The company had sales of $2.9 billion in 2012.

Dauch stepped down as its CEO in September 2012, becoming executive chairman and appointing his son, David, as the new CEO. Neither Dauch nor American Axle cited any health concerns as a reason for the transition.

In American Drive, a book he wrote that was published last fall, Dauch described his time building American Axle as "greatly fulfilling," saying the company succeeded "against all odds."

He also expressed optimism about the future of American manufacturing in general.

"I hope to live long enough to see one or more U.S. auto companies listed again among the Dow Jones 30," Dauch wrote. "But even if I don't, I do believe U.S. manufacturing will continue to grow and prosper and lead our country back to a solid economic footing. It is already happening. We have only begun to show what we can do. Manufacturers in the U.S.A. have accepted the challenge of world competition and are poised for great things in the years ahead."

He started American Axle after retiring in 1991 as head of manufacturing at Chrysler, where he developed processes that helped the company return to profitability and repay loans guaranteed by the U.S. government.

"Dick was practicing lean manufacturing and leading the quality revolution years before those terms became part of the business conversation," former Chrysler CEO Lee Iacocca said in an e-mailed statement Friday. "He put his heart and soul into the American auto industry."

Dauch was hired by GM in 1964 and became the youngest plant manager of its Chevrolet Division at age 30 before joining Volkswagen in 1976 as its vice president of U.S. manufacturing operations.

Dauch, who was known for an intensely competitive personality, grew up on a dairy farm in north central Ohio. He played fullback and linebacker for Purdue University while earning a degree in industrial management and science.

After graduation in 1964, he faced a choice: accept an invitation from Vince Lombardi of the Green Bay Packers or enter a college-graduate-in-training program at General Motors. He had a wife and two young sons, so he chose to work for the automaker.

While at Volkswagen in 1980, Dauch got a call from Iacocca. The job: Restore Chrysler Corp.'s manufacturing operation at a time when the automaker was losing $6 million to $7 million every business day.

Dauch closed plants, modernized others and built new ones, including the Jefferson North Assembly plant in Detroit.

Reviving Chrysler's plants was one of the toughest jobs around, and Dauch "did not get full credit for his work," Frederick Caffrey, Dauch's first boss at GM, once told Automotive News. "He's a manufacturing guy. He calls a spade a spade, and that is not always appreciated."

American Axle era

Dauch founded American Axle as part of an investment group that spent $3 billion upgrading the former GM plants and became a local workingman's folk hero. He rejuvenated a Detroit neighborhood by building American Axle's headquarters there. And he endeared himself to workers, arm-wrestling them on the assembly line and remembering many of them, and their children, by name.

"All of us have lost a great friend and leader," American Axle said in a statement.

Dauch combated alcohol and drugs in the workplace in the mid-1990s by buying and bulldozing a dozen bars, drug houses and party stores around the supplier's Detroit complex near the Hamtramck border.

However, Dauch's reputation took a beating in 2008 when 3,650 UAW members staged a bitter strike at five American Axle plants. The strike halted or disrupted output at 30 factories of American Axle's dominant customer, GM.

The tough bargaining posture has coincided with a drive by American Axle to reduce its reliance on GM and target other customers, such as Volkswagen, Audi, Ford and Chery Automobile.

Avoiding bankruptcy

By 2010, Dauch's company nearly joined GM in bankruptcy but avoided Chapter 11 bankruptcy by winning concessions from creditors holding nearly $1.3 billion in debt after GM stepped to its aid.

As part of the deal, GM gave American Axle $110 million in cash, a $100 million credit line and faster payment terms.

American Axle closed the heralded Detroit Manufacturing Complex in February 2012 after failing to reach an agreement with the plant's remaining 300 UAW workers. Axle wanted to reduce total compensation, including benefits, to $30 an hour from $45 an hour.

Honors

Dauch served on the board of directors of the National Association of Manufacturers and the Detroit Economic Club. He is a past chairman of the NAM, Detroit Regional Chamber and the Manufacturing Institute.

His honors include Automation Alley's CEO Legend Award (2005), the Detroit News Michiganian of the Year (1999), Crain's Detroit Business Newsmaker of the Year (1997), Michigan Manufacturers Association Manufacturer of the Year (1997) and the Automotive Hall of Fame's Industry Leader of the Year (1996), according to Purdue's Web site.

He is also a former Automotive News All Star.

He is survived by his wife, Sandy; sons, Richard F. and David; and daughters Teri Gigot and Jane Harvey. American Axle invites memories and condolences at [email protected].

Automotive News staff contributed to this report.