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New Venture Gear: an unprecedented joint venture between GM and Chrysler.

New Venture Gear

An ominous night has evolved into a bright day at Muncie's second-largest manufacturer.

Inside the 72-year-old automotive factory now called New Venture Gear Inc., a battalion of shiny new computerized machines will begin making a new manual transmission for General Motors Corp. trucks this spring. It stands boldly across an aisle from a cluster of dingy, tired equipment used for an outdated predecessor. Likewise, New Venture Gear's 1,200 hourly and salaried employees carry out their jobs with new hope and confidence, shedding the worry and discouragement that shadowed them a year and a half ago.

Changes like these are the result of an unprecedented joint venture between GM and Chrysler Corp. that is pumping new life into a plant that had been headed for closure. New Venture Gear's promise for Muncie: new products, new jobs, new investments and a new future for a key element in the local economy.

"It's real exciting, and a lot of things are coming together at the same time," says Kenneth Dosenbach, plant manager since December 1989.

The 1.2 million-square-foot plant began manufacturing manual transmissions and related automotive parts in 1919 as the Muncie Products Division of GM. It closed in 1932, but reopened in 1935 as a Chevrolet factory, which it continued to be for the next five decades.

But the 1980s were rough years. Layoffs were commonplace and name changes were frequent as the facility was passed around among GM divisions. Detroit Diesel Allison assumed it in 1984, and Hydra-matic in 1986.

Also frequent were rumors that the plant would close. As demand waned for manual transmissions and waxed for automatic units, the Muncie factory lost ground.

By mid-1989, its employment was down to 1,100 and its operations were running at a mere 40 percent of capacity.

Then came the announcement on Oct. 5, 1989. A new joint venture would take over the facility and combine its functions with a larger New Process Gear plant in East Syracuse, N.Y., operated by Chrysler subsidiary Acustar. Together, the factories would manufacture manual transmissions, manual transaxles and transfer cases for GM and Chrysler cars, trucks, minivans and other vehicles.

"This historic alliance is a win-win situation that means greater job security for both facilities," Chrysler Vice Chairman Gerald Greenwald said in announcing the new venture. GM President Robert C. Stempel said at that time: "GM's future relationship with this joint venture will assure us of a reliable supply of quality components for many years to come."

For GM, the move meant keeping the doors open at its Muncie transmission plant and even adding 200 to 300 employees.

For Chrysler, the arrangement allowed expansion of its East Syracuse operations without building a new facility.

The deal, in the works for two years, was the product of GM's realization that the Muncie plant was severely underused and faced cost problems because of low volume, and Chrysler's conclusion that its East Syracuse plant had too much business and too many gaps in its product line. The arrangement cleared the Federal Trade Commission and began operating on Feb. 1, 1990.

While joint ventures between a Big Three automaker and a foreign firm are not unusual, such a manufacturing agreement between two of the Big Three companies is. New Venture Gear shows that GM and Chrysler were interested in working together in the face of increasing foreign competition.

Specifically, New Venture Gear is an independent firm with a corporate headquarters in Troy, Mich., and manufacturing facilities in Muncie and East Syracuse. President and CEO is David R. Zimmer, formerly of Acustar. Chrysler Acustar owns 64 percent of the company's stock, while GM owns 36 percent. New Venture Gear's board of directors consists of two representatives each from GM Hydra-matic, Chrysler Acustar and New Venture Gear. GM and Chrysler have only limited control over the new firm, although each receives a dividend, notes Dosenbach.

New Venture Gear's goals include continuing operations at each of the two factories as well as expanding its markets and business. In the long-term, the Muncie plant will concentrate on manual transmissions and its sister factory on transfer cases. "We feel like we have an advantage because we are more focused now," Dosenbach says. "We think we can make parts more efficiently."

At Muncie, the initial five-year plan will boost production from 210,000 transmissions per year to 400,000. The number of employees will increase from 1,125 to 1,400. Most of the new hires will be United Auto Workers members who have been laid off at other GM factories.

New Venture Gear intends to spend about $130 million on the Muncie facility in renovations as well as new and retooled machinery to add new product lines and expand current ones in order to enhance competitiveness and profitability. Part of that new investment has come already.

The plant now manufactures most of the components for a five-speed rear-drive manual transmission for light-duty GM trucks. The transmission has been assembled at the plant for years, but the parts had been made by a German firm in the past. That additional work has created 150 more jobs, Dosenbach says. It also gave the plant a chance to retool and to put into operation a set of machinery that had been unused since 1986. Retooling and installing that equipment represented a $25 million investment. Production capacity for that line also will be expanded this summer by adding a third shift.

At the same time, the plant has been preparing for a new line of Acustar-designed five-speed, rear-drive manual transmissions that will be installed in GM pickup trucks beginning in April. That transmission, called the NV4500 and made with $50 million worth of new computerized Japanese machinery, will generate an additional 200 jobs this year. The product will replace an outdated four-speed rear-drive transmission for heavy-duty GM trucks, which the plant will discontinue after this summer.

Another item made at the Muncie plant is a five-speed, front-drive manual transaxle used in a variety of GM passenger cars, including Chevrolet's Cavalier, Corsica and Beretta, Pontiac's Grand Am and Buick's Sunbird, Skylark and Regal.

Even though the popularity of automatic transmissions has cut the domestic market share of manuals to only 10 percent to 15 percent, Dosenbach says he is confident of market stability. "There is always going to be a market for light-duty trucks with manual transmissions," he explains. "There's always going to be a market for small, sporty cars with manual transmissions. Business has stabilized at this point."

The irony in New Venture Gear's progress in Muncie lies in its timing--a serious slump has hit the automotive industry in recent months. Without the improvements the factory would have laid off at least 75 employees by now, Dosenbach says. Instead, employment is rising, and the Muncie plant's $130 million in annual sales is expected to jump by 50 percent this year as new products come on line.
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:New Venture Gear Inc.
Author:Buck, Ted
Publication:Indiana Business Magazine
Article Type:company profile
Date:Mar 1, 1991
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