Yost, Larry D. 1938–

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Larry D. Yost
1938–

Chairman and chief executive officer, ArvinMeritor Inc.

Nationality: American.

Born: 1938, in Ohio.

Education: Milwaukee School of Engineering, BS, 1977.

Family: Married Joann.

Career: Warner & Swasey Co., ?–1971, started as machinist, eventually graduating to junior management positions in production; Rockwell Automation, 1971–1976, production and inventory control manager of the Industrial Control Group (ICG) of the division Allen-Bradley; 1976–1979, manufacturing manager; 1979–1982, manufacturing director; 1982–1990, vice president of ICG operations; 1990–1994, senior vice president of ICG; 1994–1997, president of Heavy Vehicle Systems for Rockwell Automotive; 1997, president of Rockwell Automotive; Meritor Automotive, 1997–2000, president and CEO; ArvinMeritor Inc., 2000–, chairman and CEO.

Awards: World Trader of the Year, Detroit Regional Chamber, 2001; CEO of the Year, Automation Alley, 2001.

Address: ArvinMeritor Inc., 2135 West Maple Road, Troy, Michigan 48084-7186; http://www.arvinmeritor.com.

■ Larry Yost in 2000 engineered the creation—through what was then widely billed as a "merger of equals"—of one of the world's major suppliers of components to the automotive industry. ArvinMeritor Inc., the company Yost led as chairman and chief executive officer in the early 2000s, manufactured parts for both commercial and light vehicles, including brakes, axles, clutches, and transmissions for heavy vehicles and light-vehicle roof, door, and suspension systems. In 2003, however, Yost was frustrated in his ambitious effort to more than double the size of the company, when ArvinMeritor's hostile takeover bid for its even bigger rival, Dana Corporation, was abandoned after Dana's board repeatedly refused to negotiate a possible consolidation.

Yost, who weeks earlier had told Wall Street analysts that a marriage between ArvinMeritor and Dana "would make us much stronger and more competitive than we are today," according to Automotive News (December 1, 2003), announced on November 23, 2003, that the offer was being withdrawn. It was considered unlikely that this unsuccessful attempt to expand his company's market share would permanently dash Yost's hopes of growth through expansion. The ArvinMeritor CEO had long insisted that the key to survival in the auto parts industry was through consolidation, which he considered "necessary and inevitable."

EARLY EDUCATION AND PROFESSIONAL DEVELOPMENT

Yost, who was born and raised in rural Ohio, went to work as a machinist's apprentice after graduating from high school. He was 39 years old when, in 1977, he earned his bachelor's degree in industrial management from the Milwaukee School of Engineering. In the interim, after his apprenticeship as a machinist, Yost had taken a job with the industrial toolmaker Warner & Swasey Company, where he worked in a number of positions until 1971, when he joined Rockwell Automation's Allen-Bradley Division as production and inventory control manager of its Industrial Control Group. In 1976 Yost took over as Allen-Bradley's manager of manufacturing; three years later he was promoted to director of manufacturing. In 1982 he was named vice president of operations for Allen-Bradley's Industrial Control Group, a post he held until 1990, when he became senior vice president.

In 1994 Yost was named president of Rockwell Automotive's Heavy Vehicle Systems (HVS). Three years later, in 1997, he was appointed to serve as president of Rockwell Automotive. In the fall of that year Yost oversaw the successful transition of Rockwell Automotive from its proud place as the century-old heart of Rockwell's automotive operations to independence as Meritor Automotive.

At the time of the spin-off, Meritor ranked as the 26th-largest automotive components supplier. Interviewed by Mark Phelan of Automotive Industries about a year after Meritor's birth, Yost described his vision for newly created company as becoming "the best in the world in terms of engineering, innovation, and our customers' satisfaction with our place in the value chain." From the outset, Yost made it clear that he saw consolidation as the wave of the future for the automotive parts business. Moreover, he indicated that he wanted Meritor to play an active role in spearheading that consolidation, rather than becoming a company that is picked up by its rival.

YOST'S STRATEGY OF CONSOLIDATION

In short order, Meritor, under Yost's direction, had acquired a number of smaller auto components companies, slowly expanding its share of the automotive parts market. Among the strategic acquisitions and partnerships engineered by Yost were the purchases of Lucas-Varity's heavy-vehicle braking operations and Volvo AB's heavy-truck axle business, as well as a joint venture in transmissions with ZF Friedrichshafen of Germany. But Yost had his sights set on still bigger targets. In July 2000, less than three years after its spin-off from Rockwell, Meritor merged with Arvin Industries, a similarly sized auto parts supplier based in Columbus, Indiana. Under the terms of the merger agreement, Yost was to lead the combined company for the first year or so, after which he would be succeeded by Arvin's former CEO Bill Hunt, eight years his junior. However, only a year after the merger, Hunt left ArvinMeritor, and Yost continued to lead the company.

In engineering Meritor's merger with Arvin, Yost had promised that integration synergies in the new company's first year of existence would deliver after-tax cost savings of $30 million. Only 100 days after the merger's finalization, ArvinMeritor managers had already identified after-tax savings of $40 million. Realizing that the key to a merger's success or failure is often integration, Yost directed that merger integration be treated as a core corporate competency rather than simply a one-time event.

EMPHASIS ON MERGER INTEGRATION

Even before the merger was completed, Yost had formed 19 integration teams, made up of key personnel from both Arvin and Meritor. Beginning two months before the merger itself, these integration teams met weekly to plan integration strategies for the combined company's many operational areas, including engineering, sales, procurement, operations, finance, human relations, quality control, and facilities management. According to an ArvinMeritor corporate press release, Yost credited the new company's strong management team for ArvinMeritor's early success in surpassing its ambitious integration goals: "These hardworking individuals have a strong track record of managing successful integration processes, and that expertise is paying off handsomely in integrating our operations."

At the end of ArvinMeritor's first year—a year marked by weak automotive markets worldwide—the company had far exceeded its cost synergy targets and had significantly strengthened its market position as a leading supplier to global automotive markets. In addition to the early start on integration strategizing, Yost said ArvinMeritor's first-year success could be attributed to its ability to quickly adopt and implement cost-saving and quality initiatives, a diverse product mix serving both the primary and aftermarket areas of the automotive market, and a merger that was completed without incurring debt or premium.

MANAGEMENT STRATEGIES OF COMMUNICATION AND GROWTH

Central elements in Yost's successful management strategy at ArvinMeritor included an emphasis on internal communications designed to engage all employees more fully and continued investment in new technologies that would benefit fleets and original-equipment-manufacturer (OEM) customers in a number of industry segments. As part of its internal communications program, ArvinMeritor held quarterly meetings for all employees. Each of these meetings took place in one of the company's more than 150 facilities worldwide and was broadcast live to employees at all other company plants and offices.

Further supporting ArvinMeritor's communications program were a global internal Web site and an employee newsletter. The newsletter, translated into five languages, focused on the achievements of individual employees, automotive industry trends, and other business issues. As part of ArvinMeritor's strategy to ensure continuing growth and a successful future, the company sought to differentiate itself from its competitors by offering its customers creative technological solutions. Such solutions included investment in "new modules and systems that address critical safety and environmental demands," according to Yost's second-in-command, Terry O'Rourke, ArvinMeritor's president and chief operating officer (Skydel, March 1, 2003). Further elaborating on the company's "culture of continuous improvement," Yost said the company's management was confident "our growth strategies will leverage our leading market positions in those areas that directly support our customers' needs for safe, environmentally friendly vehicles" (Skydel, March 1, 2003).

In fiscal 2001, which ended September 30, 2001, a year after the merger of Arvin and Meritor, the combined company announced net earnings of $35 million on total revenue of about $6.8 billion. The following year, ArvinMeritor's net income jumped to $107 million on total sales of approximately $6.9 billion. In fiscal 2003 ArvinMeritor's total sales rose more than 13 percent to nearly $7.8 billion, producing a net income of $136 million, up just over 27 percent from the previous year.

PURSUIT OF ADDITIONAL MERGERS

Not content to rest on his laurels, Yost, the "mergermeister," in July 2003 launched a hostile takeover bid for Dana Corporation, a rival automotive parts supplier based in Toledo, Ohio. From the outset, the reaction from Dana, an even larger auto supplier than ArvinMeritor, was anything but encouraging. Dana's board flatly rejected ArvinMeritor's initial tender offer of $15 a share and continued to refuse to discuss merger plans after the offer was increased to $18 a share. Dana was not alone in its cool reaction to Yost's offer, which also drew skepticism from Wall Street analysts, who were worried by the proposed deal's debt burden, and from federal regulators.

Yost continued to press his courtship—unwelcome though it was—of Dana until late November 2003, when he finally gave up the effort. The merger, had it gone through, would have made the combined company the third-largest U.S. automotive parts supplier, behind Delphi Corporation and Visteon Corporation, which were spin-offs of the auto parts units of giant automakers General Motors and Ford, respectively.

As of 2004, it was unclear whether Yost would seek out another merger candidate for ArvinMeritor. Although he turned 65 in 2003, Yost set aside his plans for retirement to see through the campaign to acquire Dana. According to Automotive News, the ArvinMeritor CEO faced no mandatory retirement age and could perhaps pursue yet another merger for the company. Even if Yost was to retire before pushing through another acquisition, it was anticipated that the culture he had put in place at ArvinMeritor would eventually move to achieve new economies of scale through acquisition or merger.

In the meantime, ArvinMeritor was expected to continue to survive through continuing efforts to make its production ever more efficient. As Philip Siekman of Fortune observed, "Making parts for the world's car and truck manufacturers is a high-investment, low-margin business. Participants are continually squeezed by a shrinking group of customers worldwide" (December 29, 2003). To achieve its goals of continuous improvement in production, the company used the internal communications network put together under Yost to spread the message to its employees in every corner of the globe. According to Siekman, the company had occasionally found pockets of resistance to its continuous-improvement goals. Of such resistance O'Rourke said, "There have been cases of insufficient embracing of the program. You go through coaching and educating, and if nothing works you suggest that maybe there's an alternative," namely, getting another job (December 29, 2003).

In addition to his responsibilities at the helm of ArvinMeritor, Yost was active in both community and industry affairs in the Detroit area. He sat on the boards of Kennametal Inc. and UNOVA and also served on the boards of the Economic Club of Detroit, the Automotive Hall of Fame, United Way Community Services, Detroit Renaissance, and the National Center for Educational Accountability. Yost and wife, Joann, served as chairs for the 18th Annual Barbara Ann Karmanos Dinner to benefit the Karmanos Cancer Institute.

See also entries on Rockwell Automation and ArvinMeritor, Inc. in International Directory of Company Histories.