From Steam to Diesel: Managerial Customs and Organizational Capabilities in the Twentieth-Century American Locomotive Industry

Published by EH.NET (January 1999)

Albert Churella, From Steam to Diesel: Managerial Customs and Organizational

Capabilities in the Twentieth-Century American Locomotive Industry.

Princeton: Princeton University Press, 1998. viii + 215 pp.

$45 (cloth), ISBN: 0-691-02776-5.

Reviewed for EH.NET by Philip Scranton, School of History, Technology, and

Society, Georgia Institute of Technology.

It is a commonplace of twentieth century industrial and railway history

that the steam locomotive (and the firms producing it) fell before the diesel

challenge, which delivered a technologically and economically more efficient

form of motive power, promoted by two of America’s leading corporations,

General

Motors and later General Electric, enterprises which dominate locomotive

provision to this day. The great virtue of Albert Churella’s slender, but

satisfying study is his sustained effort to probe beneath this truism to

expose the complex and contingent interactions which underlay diesel’s triumph

and the business cultures which sustained steam traction’s construction and

utilization. Churella (Ohio State University)

also makes appealing arguments for individual agency and interpersonal

relations within/between giant firms as key elements in framing the transition,

notes the role of legislation and government contracts at critical moments, and

documents innovators’ persistent stumbling as they sought to design and market

standardized diesel locomotives. Thus From Steam to Diesel represents a

welcome achievement in business and technological history, valuably

complementing John Brown’s recent Baldwin Locomotive Works (Johns

Hopkins, 1995), which analyzes the nation’s leading nineteenth century railway

engine builders, closing at just about the point (c. 1910) at which Churella

takes up the story’s threads.

Constructing locomotives long necessitated that enterprise

owners and managers have the steely resolve to take the long view of markets

and as well, a generous flexibility in meeting their clients’ diverse needs for

equipment. Demand for producers’ goods fluctuated wildly, then as now,

seeming perennially to be

either overheated or “dead.” Railways routinely clustered their orders,

creating backlogs and delays, or deferred upgrades and replacements, thus

forcing workforce and financial retrenchments.

Moreover, the roads’ superintendents of motive power held quite definite

notions about the design characteristics of the locomotives necessary for

different terrains, climates, or levels of use intensity. Building engines in

response to these variations made Baldwin, American Locomotive (ALCo,

the outcome of a tur n-of-the-century merger) and Lima (a perennial trailer,

focused on market niches) virtuosos in the custom and small batch fabrication

of complex mechanical goods. In tandem they developed a sectoral culture of

steam propulsion shared by generations of railway managers and employees,

batteries of product-specific workplace skills, and commitments to particular

“ways of seeing” and addressing technical problems and evaluating locomotives’

adequacy. Each of these assets became a liability as dieselization

gained a foothold.

In theory, diesel engines had powerful advantages over steam, not least

their ability to achieve “thermal efficiencies” vastly higher

(yielding lower fuel costs) than the older technology. Diesels needed no water

supplies, had lower repair expenses, generated more startup force per

horsepower and could, through dynamic braking, ease trains’ passage on long

downgrades. In practice, however, into the 1920s, diesels were far too heavy

for railway use, achieving early success chiefly

in “marine applications” (14-17). Moreover, no experimental design could

reliably transmit the engine’s power directly to traction wheels, an obstacle

resolved by using the diesel to drive electric motors of the sort GE and

Westinghouse had created for

streetcars and interurbans. Freed of the need for electrical power line

contacts (and hence of the huge costs for erecting and maintaining these) and

encouraged by legislation banning steam locomotives from New York and

Baltimore, both companies ventured

into diesel-electric production, GE in alliance with ALCo (using diesels from

Ingersoll Rand) and Westinghouse with Baldwin. Yet it was Harold Hamilton’s

new-start, Electro- Motive, that forged ahead. For years, EM,

clearly an early virtual corporation,

“did not manufacture anything” (32).

Rather Hamilton created a design boutique for self-propelled railcars,

commissioning components and subcontracting their assembly. Rather than

incrementally shifting designs to include “learning by using” improvements

,

EM froze its designs, reaped “substantial production efficiencies,” then

consolidated accumulated feedback insights periodically into new models.

When the Big Two sidelined their diesel efforts, EM picked up a roster of their

able engineers and made some 500 railcars by 1930, but the Depression emptied

order books, threatening a collapse.

Here Churella turns to the contingent sequence of interactions which

brought EM into General Motors’ orbit and set it on a rocky path to challenge

steam traction

. In the late 20s, Charles Kettering, GM’s research director, promoted

experiments in using diesels for highway vehicles, quickly finding that

“metallurgy had not yet caught up with diesel engine technology” (38). Once

the economy slumped, Alfred Sloan pressed “Ket” to save on R&D costs by buying

an experienced diesel engine maker. The Winton company, acquired in 1930, had

worked with EM extensively; and Hamilton soon befriended Kettering, turning his

attention to the potential of locomotive diesels and

to aiding EM’s stalled engine-development plans. As an effort to promote GM

diesels by having models designed for Navy contracts power the company’s 1933

Chicago World’s Fair display was flopping badly (“the only part of that engine

that worked well was

the dipstick”), Hamilton and his ally Ralph Budd (head of the Chicago,

Burlington and Quincy) persuaded Sloan and Kettering to install diesels as

drivers for the CB&Q’s new streamlined “train-set” for the Chicago-Denver run.

A second failure would have be en disastrous, but in 1934 the “Zephyr” stunned

everyone, accelerating so rapidly on a test run that its tail lights fell off.

Cheap to operate, fast and reliable, this luxury passenger train created a

national sensation which surely helped Kettering extract a half-million from

Sloan late that year for expanding diesel engine research, then vastly more in

1935 for what became a huge locomotive production plant at LaGrange, IL. In

all this, the key players’

interpersonal networks of trust and confidence

and their uninvolvement with the “steam culture” proved crucial.

If this sounds like the run-up to rapid success, Churella supplies a

cautionary “Not so fast.” Motive power men at most railways derided diesels,

even resisting their use as yard-switchers, where their facility in starting

and stopping could be valuable. EM salesmen thus approached railroad financial

officers with reams of data showing diesels’

cost-savings and began landing orders. Second, the Zephyr-style three or four

car passenger

train-sets were a dead end, as cars could not be added.

Instead, EM had to design independent passenger diesels to supplement the

smaller switchers, then proceed to the big stuff, freight-hauling locomotives.

Third, railroad workers knew nothing about diesel maintenance and repair,

hence, the makers had to develop extensive training programs,

after-sale service linkages, and inventories of replacement parts for rapid

delivery. GM’s deep pockets were crucial here, for absent system investments

Churella

estimates totaling between $17 and $25 million, the diesel campaign may well

have floundered, even in the face of a vast locomotive replacement market

(40,000 engines, perhaps $4 billion over the long term). One further

competitive advantage was that EM,

which became a General Motors division, could mobilize the GM Acceptance

Corporation’s resources to arrange monthly payment plans for railroads, just as

GMAC did for citizens buying Chevrolets. Last, even into recent years, design

failures in new models

of these immensely complex machines (ca. 50-60,000 parts) occurred repeatedly.

Yet it is clear that transferring elements of GM’s auto manufacturing approach

to locomotive building, even if full mass production remained elusive, was a

winning strategy, especially when contrasted with the stumbling efforts of the

steam engine makers.

The three steam locomotive leaders at first

denied the relevance of

diesels to railway needs, then squandered opportunities to adapt their

facilities, engineering practices, and work routines to producing them.

All eventually fashioned diesel locomotives that ranged from dreadful to barely

adequate when put in use by railroads that had long cherished their

steam-powered drivers. Each attempted to use product diversification

strategies (making all sorts of specialized capital goods), but failed to

thrive for reasons that another research project might explore. ALCo, the

least awful diesel builder, remained in the postwar engine market in large part

because railways were

anxious about EMD’s monopoly potential. Once General Electric, which had

supplied ALCo its electrical components,

entered the diesel trade in the 1960s with better models, ALCo quickly faded

from sight. Churella rapidly surveys GE’s challenge to EMD in

closing passages; by 1993 the “newcomer” (which had traction experience from

before 1900) was outselling EMD two engines to one and GM

“contemplated exiting [the] industry.” In response, EMD “allowed its customers

greater control over the design and manufacturing process,” (139)

a step back toward the specialty production format which its standard models

had helped erase in the century’s middle decades. Whether this move indicates

desperation or represents tactical ingenuity lies outside the author’s

boundaries, of course.

In sum, this is an engaging study of the transformation of a specialty

production trade into a standard-product industry, though one which remains

vulnerable to the vicissitudes all capital goods sectors face. Churella’s

tale,

to be sure, does not neatly conform to “organizational synthesis”

templates, which he regards as “giv[ing] too little weight to historical

actors” (151). Rather, he urges readers to consider the interplay between

enterprise structure/strategy considerations and those anchored in shared

industrial cultures, technological and personal networks, and state activities,

which, together with far broader phenomena (depressions, wars),

deploy the challenges enterprises must face and create those shifts and

surprises that inspire both the managerial and the historical imagination.

(I know convention mandates that I offer something critical about this work

– OK, the index is inadequate…) This book is well worth the attention of

economic/business historians and their students.

Phil Scranton is the Kranzberg Professor of the History of Technology at

Georgia Tech in Atlanta. His Endless Novelty: Specialty Production and

American Industrialization, 1865-1925 rolled out of Princeton University Press

in December 1997

. He is presently contemplating the horrors of researching the depression-era

decay of specialty manufacturing and its restructuring (in some trades) during

the Cold War decades.