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More than car radios.

Delco Electronics Corp. is the world's leading supplier of automotive electronics.

Mention the name Delco to the typical Hoosier, and he or she will respond with something to the effect that it makes automobile radios up in Kokomo. Or is it batteries in Marion? Well, anyway, it's something for cars.

Something for cars. That's the standard response when residents of Indiana think of Delco Electronics Corp. Only Delco Electronics is considerably more than an automobile-radio manufacturer. The Kokomo-based company, a wholly owned subsidiary of General Motors, manufactures a full line of automotive-electronics products, both for its parent GM and other domestic and foreign automotive manufacturers.

Delco's line of electronic components for the automotive industries includes an audio system with designed-in sound incorporating as many as eight computer-positioned speakers, the Head-Up Display that projects vehicle speed and turn-signal indicators on the windshield, steering-wheel-mounted climate and radio controls, and an array of electronics under the hood that increase fuel economy and lower emissions.

Each day, Delco's 30,000 employees in Indiana, the U.S. and 12 foreign countries--ranging from Singapore to Mexico to Luxembourg--build millions of electronic components and devices for automobiles. The Kokomo headquarters facility alone each day produces some 700,000 integrated circuits that go into everything from airbag sensor controls to antilock-brake modules to theft-deterrent components.

The company's Kokomo operations encompass 3.9 million square feet of space, including 327,000 in the Corporate Technology Center, which includes administration and engineering facilities. Nearly all of Delco's research and development is done in Kokomo, while the majority of the car radios that were the company's bread and butter in the beginning are now made at other plants.

Delco Electronics today is a roughly $4 billion company. It is one of Indiana's largest companies, and if it were not a subsidiary of another company, it would check in at 119 on the Fortune 500. While it began as the radio supplier for GM cars, its customer list now also includes Chrysler, Toyota, Nissan, Renault, Rolls Royce, Mercedes, Opel, Audi and Daewoo. Big as it is, Delco remains poised for continued explosive growth, considering that the typical electronic content in every vehicle--the average in 1993 GM cars is $835--is expected to double by the turn of the century.

Gary W. Dickinson, the newly named president and CEO of Delco Electronics, calls his company "the 500-pound gorilla" of the automotive-electronics-components business. Indeed, Delco has a 24 percent share of the business, twice that of its nearest competitor. A high percentage of that output goes to parent GM, but like so much else that's going on around corporate headquarters in Kokomo these days, that's likely to change in the not-too-distant future.

Delco got its start making car radios in Kokomo back in 1936. The Delco Radio Division of GM began manufacturing operations in the Howard County seat in a plant formerly owned by the Crosley Manufacturing Co. The company began manufacturing the first automobile radio to be installed in the instrument panel on the dashboard, and three years after start-up, Delco introduced the first multibutton mechanical radio tuner. In 1940, Delco pioneered the first elliptically-shaped automobile-radio speaker.

The name Delco went considerably further back than the 1930s, however. In 1912, C.F. "Boss" Kettering had founded the Dayton Engineering Laboratories Co. to build self-starters for use in Cadillacs. Delco took its name from the initials of Kettering's pioneering automotive-components company.

Delco produced the first successful signal-seeking automobile radio in 1947 and followed that with the introduction of the first completely transistorized automobile radio 10 years later. In 1963, the company introduced an AM/FM car radio. By 1969, the Kokomo-based company had also introduced the first stereo radio, the first solid-state voltage regulator using a hybrid integrated circuit, and the first AM/FM stereo radio and tape player in a single dashboard package.

The 1970s were a period of consolidation for Delco. At the beginning of the decade, Delco and the AC Electronics Division, with plants in Milwaukee and Santa Barbara, were merged to form the Delco Electronics division of GM.

Delco engineers and scientists introduced numerous technological advancements during the 1970s, both in car radios and in diversified automotive-electronics components, including hybrid-circuit electronic ignition, an ignition/seat-belt interlock module, electronics for an inflatable air-cushion restraint system, a citizens-band transceiver, the first electronically tuned radio with a 40-band CB, and the first modules for electronic carburetor and spark control.

The passage of America's first clean-air legislation in 1971 opened new vistas for Delco's components. In 1979, the company produced the first of millions of electronic control modules for GM's computer-controlled catalytic converter.

In 1981, Delco produced its 200 millionth speaker and its 25,000th gyro. In May of that year, the company introduced its 2000 Series radio, and the next year Delco premiered the Delco-GM/Bose Music System. In 1983, the company embarked upon a $204 million expansion and modernization program, which included plans for an Advanced Manufacturing System facility and areas for production of bipolar integrated circuits. Delco was realigned into three business units, including Automotive Electronics, Semiconductor Products and Entertainment and Comfort Products.

In the past decade, Delco has undergone sweeping change. Prior to 1985, Delco was a division of GM. That all changed when the Detroit-based company purchased Hughes Aircraft Co., made Delco Electronics a corporation and formed GM Hughes Electronics Corp. In 1992, the GM Hughes board of directors integrated the electronics activities of Hughes into Delco Electronics.

The corporate realignment also brought about a change of leadership at Delco Electronics. The retirement of Don Almquist as chairman of Delco Electronics last December brought a new generation to the corporate offices at Kokomo. Named to succeed Almquist, a 41-year veteran of GM, was Dickinson, a 53-year-old mechanical engineer who spent his entire working career with the parent company.

Dickinson took over the helm at a time when Delco was flying high. "Delco Electronics is definitely at a high point," Almquist told employees last winter. "There is no organization in GM stronger or more profitable."

Almquist noted, however, that Delco's current success "doesn't mean we can't get higher. When you can get the right people together and identify the tasks, the improvements in cost and quality are mind-boggling. It's far greater than anything I could have imagined."

Those improvements in cost and quality are Dickinson's abiding passion. Much like the legendary first 100 days of Franklin D. Roosevelt's New Deal back in 1933, Dickinson began his presidency at Delco with 100 days of laying the groundwork for a new strategic plan. "We're looking at how we're going to approach business in the next five years," Dickinson says. "If I can get everyone informed and behind us, I know we can win."

For Dickinson, moving in to head Delco Electronics is a homecoming of sorts. Born in Montclair, N.J., Dickinson attended school in nearby Marion from fifth to 10th grades. He received his bachelor's degree in mechanical engineering from Duke University and joined GM in 1960, working on the development of early automotive emissions-control systems and later establishing GM's emissions laboratory in El Segundo, Calif. Dickinson was a founding member of the automobile giant's environmental-activities staff, served for a time in Washington, D.C., working with federal agencies overseeing emissions control, and was GM's first congressional fellow in 1976 when he served on the staff of U.S. Sen. Robert Dole, R-Kansas.

Dickinson subsequently served as the manager of advanced design for the Buick Motor Division, assistant chief engineer for Buick and director of engineering for the AC Spark Plug Division. The new Delco CEO was elected a GM vice president in 1985 following a term as program manager for development of the new mid-sized GM models. Immediately prior to joining Delco, Dickinson served as vice president and group executive in charge of the GM technical staffs.

Dickinson sums up his third of a century of technical background in the automotive industry by noting that "we're car guys. Part of the culture is that the companies we sell to are in the car and truck business. We need to have that same emotion about cars." Indeed, Dickinson is such a "car guy" that his current hobby consists of restoring a 1938 Chevrolet Good Humor Ice Cream truck.

Dickinson's mission at Delco is to position the Kokomo-based supplier to be a key player in the global sourcing process under way at GM. Part of that challenge will consist of weaning Delco away from its captive status as a supplier for just GM.

"It's an opportunity for that organization, GM, to bring in dozens of competitors," Dickinson points out. "Now, we have numerous rounds of competition."

That's been a positive outcome for Delco. GM's drive for the lowest market price for its automotive components "drives us to understand targets and cost levels. We're learning a lot about world prices and managing costs. It's gotten us much more aggressive on pricing and cost reduction. We're much more competition-focused, outcome-focused."

Dickinson adds that Delco has been very successful in coping with the new GM strategy. "We're not losing in the competition in GM," he says, "and we're winning a high percentage outside GM. We're very positive on the whole process."

Increasingly, that competition is becoming global in scope. According to Dickinson, the dollar value of automotive-electronics sales worldwide will double in the next five to seven years from the current $20 billion a year. Delco's market share of 24 percent could be worth $10 billion a year by the turn of the century.

Delco sees much of that emerging market coming from customers in Europe and Asia. This spring, the company announced it plans to set up a new European subsidiary in Frankfurt, Germany, and an Asian unit in Singapore.

"Our strategy calls for growing with the market growth in Europe and Asia," Dickinson says. "We have to play off our success with GM and use that technique to foster growth worldwide. We decided on May 6 we are a different company, and that means moving forward globally."

Within three years, Dickinson wants the European and Asian subsidiaries up and running with a European national running Delco Electronics-Europe and an Asian national running the Singapore operation.

"I want a customer in the Asia/Pacific region to feel like they are working with a local person," Dickinson says, adding that "the support mechanism will still be there from the U.S. until we get a critical mass of business over there."

For Delco's 10,600 Kokomo employees, the past five years have been an era of constant change, and more change is likely ahead. In its Kokomo R&D labs, Delco continues to pioneer technological change in the automotive-electronics field. In April, the company and Motorola jointly announced development of the 68332 power-train controller, incorporating a 32-bit CPU and 16-channel time-processing unit. About 65 percent of GM vehicles are expected to use the new power-train controller by the 1996 model year.

Delco's automotive electronics continue to become more powerful. The modules that control the Chevy Beretta's antilock-brake system process instructions 20 times faster than the computers on board the Apollo lunar-landing vehicle, and the speed is expected to triple within a year or so. The computing capability on a 1993 Cadillac Seville is similar to that running the displays, controls and communications on the Navy's F-14 Tomcat fighter.

Close to mass marketing is Delco's near-obstacle detection system. Called Forewarn, Delco's system is currently being installed in school buses. The two-sensor system engages whenever the bus is stopped and the stop-arm is extended. The system warns the bus driver of motion to the front of the bus, to the curb side and underneath the bus adjacent to the curb.

Delco thinks that the Forewarn radar technology is adaptable on everything from recreational vehicles to large trucks. Down the road, the potential is for the technology to be installed in passenger vehicles, warning of lane changes and vehicles backing up.

Dickinson notes that in recent years, Delco has "stepped back and taken a look at core technologies. These are critically important things. We've assigned advocates to measure us against other companies worldwide. We've decided the core technologies that are important. And we'll nurture those core technologies."

Delco has, in fact, examined all of its operations in its attempt to be a world-class competitor. "Our way of life is cost reduction," Dickinson says. "We're much more aggressive about designing for low-cost operation. We're moving toward lean manufacture and the synchronous workshops, and we plan to continue re-engineering. We'll analyze all the major processes to eliminate waste. We will re-engineer virtually everything we do."

Everything it does, Delco still does well. "This company has a history of inventing new stuff and producing it in quantity," Dickinson concludes, and that's unlikely to change. What is changing is that Delco parts will be competitive with automotive components manufactured anywhere else in the world.
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Title Annotation:Delco Electronics Corp.
Author:Beck, Bill
Publication:Indiana Business Magazine
Date:Nov 1, 1993
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