Profile of a resourceful and lean company succeeding in the declining heavy-truck industry.
By moving quickly and living close to the bone, the aptly named Spartan Motorsis flourishing in a shrinking market -- and demonstrating whatsmart business means today
Spartan motors' corporate headquarters looks like those of many other hot and high-flying growth companies these days. The visitor steps into a lobby of glass and polished stone to be greeted by a receptionist sitting in front of a potted palm and an eight-foot-wide abstract canvas. Water splashes in a central fountain as the gentle trilling of the company's ultramodern phone system resonates down a distant hall. . . .
Wait a minute. Cut. We're in the wrong place. Let's try that again.
Spartan Motors sits in an industrial park carved from a cornfield, in a squat, functional building that does what it can to marry the elements of brick and aluminum. A heavy glass door opens into a cramped space where the walls are cinder block and the carpet is stained. A narrow staircase ascends to the "executive" offices, where you find yourself in what appears to be an outpost of the Michigan Department of Motor Vehicles. Partitions, beige and listing, keep the cheap, undersized desks from bumping against one another, and a fine rain of plaster dust settles on the scene as carpenters doing some patch-up work muscle a piece of ductwork in around the drywall.
Spartan's executive offices exist as little more than an entryway to the heart of the operation. At Spartan the real drama unfolds in the adjoining space, where fluorescent light dances off the gleaming cabs of brand-new fire trucks, as uniformed workers -- scripted names (Rod, Earl, Jimmy) affixed to their pockets -- crawl over the big machines, bolting, wiring, drilling the parts together.
Spartan builds chassis for fire trucks, motor homes, and other heavy-duty vehicles. For the past five years, while the heavy-truck industry has drifted down, down, down into a quasi depression -- sales are off by 40% in the last two years alone -- Spartan's revenues have gone the other way: up from $14.6 million in 1986 to about $90 million in 1991. Net earnings have jumped from $670,000 to $5 million. From 1990 to 1991 the Charlotte, Mich., company doubled sales and tripled profits. In 1991 it increased its work force from 290 to 380 employees and treated its shareholders not too shabbily, either: Spartan stock rose 800% during the year.
Spartan's chairman and driving force, George W. Sztykiel (pronounced Stee-cull), believes Spartan's bare-boned, no-nonsense ethic is the key to the company's gains in a market that is mature to the point of senility. He also believes Spartan is riding the wave of the future -- one that has just begun to build, as U.S. companies rush to pare themselves down in an era of heightened costs and competition. "In 10 years a lot of companies in the United States will look like we do," says Sztykiel, referring to ideas that surpass the symbolism inherent in Spartan's threadbare appearance. He's talking about such issues as job security and executive compensation, blurring the line between labor and management, and the idea -- central to the way Spartan operates -- that every spare dime must be plowed into production, not fancy fixtures.
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The Power of Poverty
Sztykiel, an engineer, started Spartan after his last employer, Diamond Reo Trucks Inc., went bankrupt, in 1975. Before that, he had worked for 19 years at Chrysler, where he grew to detest the bureaucracy. "I felt I was wasting my life," he says. When Diamond Reo went under, Sztykiel was 46. He had one son in law school, another in college. His wife was suffering from a blood disorder. Sztykiel and his three cofounders -- Bill Foster, Spartan's vice-president, and Jerry Geary and John Knox, who have both since retired -- built their first chassis in a commercial garage, funding the venture with second mortgages. Despite the stress of Diamond Reo's death and Spartan's birth, Sztykiel cherishes the chance he had. He was forced to become an entrepreneur. He was forced to husband his resources and live by his wits. "We had the luxury of having our house burn down at Diamond Reo," he says. "We had the power of poverty."
The power of poverty is a principle that Sztykiel has strived to maintain to ensure that life at Spartan does not drift toward the fat and happy. To Sztykiel the power of poverty is a simple notion: if you are driven by want, you are forced to work hard. Hard work builds value and creates wealth. When the hunger fades, so, too, does the company.
At Spartan the secondhand furniture and creaky phone system serve as more than gimmicky trademarks. They make a statement -- one that George Sztykiel is happy to expound. "I have used furniture in my office. How much production do I get out of a $1,000 desk?" says Sztykiel, energetically launching into a sermonette. "Why waste it? We are here for one reason, to make money. A solid-gold watch doesn't keep better time than a Timex. Luxury must be dumped."
Sztykiel, an ardent student of history, loves to talk. Questions put to him often result in minidiscourses charged with a Socratic urgency. He doesn't have a secretary, because "you have to dictate letters to keep a secretary busy. At Chrysler I had a secretary, and what we had was a paper factory. We mistook that for production."
At Spartan, because it is assumed that budgeted money will be spent and departments will waste time crafting ever-larger requests, there are simply no budgets. Three department heads rule on all budgetary matters. "I have to justify each expenditure by showing how it will improve the profitability of the company. I have to show a desperate need," says Tony Sommer, Spartan's chief financial officer, who also doubles as personnel manager. Sommer says that mind-set informs the company down to the assembly-plant floor, ensuring that few if any frivolous requests will surface. Last year a cost-reduction committee made up of 10 workers was able to cut Spartan's raw-material costs by $500,000.
