Born From Adversity, Spartan Motors Proved a Recession Can Be The Best Time To Begin a New Company
The mid-’70s marketplace was not kind to America’s automobile and truck makers. Government regulations, increased oil prices, and the resulting fuel crisis forced the industry to abandon traditional platforms in favor of smaller vehicles. The sagging vehicle sales resulted in tremendous production losses, which forced painful employee reductions as well.
Several independent niche vehicle assemblers were forced out of existence entirely. One such automaker was Diamond-Reo of Lansing, Michigan. The company had been a longtime builder of heavy-duty Class 8 diesel truck platforms, but it finally succumbed to bankruptcy.
With their engineering jobs at Diamond-Reo eliminated and no other place to go, four former employees pooled their finances, mortgaged their homes, and set out to design, engineer, and produced their first specialized chassis in a rented building in 1975.
Four of a Kind
These men, The Spartan Four, consisted of George W. Sztykiel, Bill Foster, Jerry Geary, and John Knox. The pressure on this group was monumental. In Sztykiel’s case, he suffered the added stress of having a wife who was confined to a hospital at the same time he was trying to pay for two sons in college. Always quick-witted, Sztykiel was known to say, “We had the power of poverty.” He also brought his own brand of skill to the table, with 19 years of experience at Chrysler, and 2 years at Reo before the lights went out. Sztykiel had developed a blunt management style that demanded simplicity, innovative engineering, and frugality.
The Spartan Four brought more than a century of experience to the table. They had definite ideas of what did, and what did not work in the specialized world of large truck production. These gentlemen, with little capital and no customer base to leverage, relied on their personal contacts and reputations to demonstrate and sell their first operational platform.
Fire Power
The Food Machinery Corporation’s (FMC) fire truck division in Tipton, Indiana, was a recognized producer of fire-suppression apparatus utilizing conventional chassis supplied by Chrysler, Ford, and General Motors. As FMC’s products’ gross vehicle weight requirements increased, International, White, and Diamond-Reo were also called on as suppliers. However, problems developed when fire agencies began to spec their vehicles with requirements and capabilities that conventional truck chassis couldn’t handle. With existing off-the-shelf chassis selections as the limiting factor, FMC turned to Spartan.
Negotiations between the two firms resulted in a hand-built Spartan prototype for the possible consideration of FMC’s management. The Spartan Four scrambled to purchase and assemble their prototype using existing components, as no money was available for any form of custom machining. The idea of assembling already-built components to produce a unique and customized design, though not new, was a Spartan strength. Upon inspection of the completed platform, FMC placed an order for 12 chassis, and Spartan became a sustainable entity.
Low-Buck, High-Value Trucks
For the next decade, the company remained focused on its initial goals of being lean, frugal, and profitable. Spartan, true to its Greek descriptive branding, stuck with its no-frills philosophy and cost-cutting discipline.
In 1978, the company moved to larger quarters, but it continued to operate in a warehouse-style environment, using movable partitions for office space. Support staff was nil due to the company’s production-oriented mindset. With regard to engineering and assembly operations, the company also took some novel approaches. College-trained engineering graduates were ignored due to their higher salary requirements. Instead, they were replaced with high school and vocational school graduates, who could be trained in-house. Spartan’s best ideas for solving problems came in many instances because assemblers and company engineers worked in tandem on the production line. A total team effort was reinforced with company bonuses based on company profit. In addition, a non-layoff program was developed. Being closely knit, when the company was faced with a layoff possibility in 1976, it instead asked its employees to take a 15 percent pay cut. When improved sales resulted in increased production, the original pay parity was restored within months.
Spartan’s in-house approach allowed a faster development process and cut product development to half the time of its competition. The company continued to purchase standardized components in larger quantities to keep its pricing ultra-competitive. Spartan also leaned toward customization, which offered its customers more specification latitude and component choice. To support this market plan, the company utilized individual workstations instead of conventional assembly lines. This permitted the continuous assembly of specialized platforms. And as an added bonus, this concept brought with it the ability to quickly respond to market changes and demand.
The Spartan Way To Success
Spartan’s approach to its market paid off handsomely, with sales approaching $12 million in 1983. The company’s structure allowed its customers 12 engine choices, 10 transmission choices, and 30 rear axle and suspension selections. Forty-five cab styles were also available in 57 shades of red.
Success meant expansion was necessary, and the company mortgaged its assets to the hilt for its first public stock offering in 1984. Its facilities were expanded to 72,000 square feet. New markets were researched, and by 1986, the company was designing and producing specialized chassis for the motorhome, bus, and airport vehicle market. By 1988, Spartan was looking for a full-time motorhome chassis assembly plant.