Walsh selected to lead Tenneco.

A RAILROAD operator and former Cummins Engine executive has been selected to succeed James L. Ketelsen as leader of Tenneco, Inc., owners of J I Case agricultural and construction machinery operation.

Michael H. Walsh, 49, will become president of Tenneco on October 1, and also join the board of directors at that time. He had been chairman and chief executive officer of the Union Pacific Railroad since 1986. Prior to that, he held various positions with Cummins, including executive vice president and general manager of worldwide operations.

On January 1, 1992, Walsh is to assumed the title of chief executive officer.

On May 12, 1992, at Tenneco's annual shareholder's meeting, Walsh is to take over the title of chairman of the board, upon retirement of Ketelsen, 60, who was president of Case before rising to the helm of Tenneco in 1978.

Ketelsen was a key player in Case's 1984 acquisition of International Harvester's agricultural machinery division, and has reportedly maintained a strong role in running, Case-international. Most recently, insiders say he had been calling the shots while seeking a replacement for James K. Ashford, who resigned the Case presidency for unspecified "personal reasons."

The replacement for Ashford, named in July, is Robert J. Carlson, 61, who spent 29 years at Deere & Co. before leaving in 1979 to become president of United Technologies Corp. He served UT until 1985, when he became chairman and CEO of BMC Industries, Inc., a Minneapolis manufacturer of electronic and optical products.

Walsh, a native of Binghampton, N.Y., holds a law degree from Yale University Law School and an undergraduate economics degree from Stanford University, and was U.S. Attorney for the Southern District of California from 1977 until joining Cummins in 1980.

News of Walsh's selection to replace Ketelsen was greeted on Wall Street with Tenneco stock jumping up $3.25 a share to $39.875 the first day. Tenneco, based in Houston, has major businesses in natural gas pipelines, automotive parts, shipbuilding, packaging, chemicals and minerals. Case is the conglomerate's biggest unit.

Tenneco this year had a first quarter loss of $3 million and a second quarter loss of $14 million. But the Case division did much worse, with a first-quarter loss of $147 million and a second-quarter loss of $123 million.

During Walsh's tenure, Union Pacific profits increased about 50 percent in 4 years, and the line has expanded its capacity while the industry in general has declined, according to the Wall Street Journal. The newspaper noted that his management has been substantial cutbacks in layers of management, number of employees, reduction of regional offices and enhanced use of automation.

At Union Pacific Railroad, he reported upward to a holding company called Union Pacific Corp. As head of Tenneco, he would report to no higher authority than the board of directors he will chair.