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RUNDOWN AND OUT?

Geraldine Podgorny, a machine operator at Stewart-Warner Corp., had a particularly frustrating day at work Thursday.

Her machine leaked oil so badly, Podgorny said, that she had to pour in 19 quarts over an eight-hour shift to keep the machine lubricated and operating.

Podgorny, who has worked at Stewart-Warner`s main plant on Diversey Avenue for 13 years, said her boss wouldn`t shut the machine down until he could find a replacement and get it up and running.

”First it was five quarts. Then it was nine quarts,” she said of the machine`s worsening condition in recent days. ”Today was the limit. Now I think the machine is broken.”

Bob Pitera, another machine operator at the same plant, said outdated, poorly maintained and overworked production equipment is ”falling to pieces.”

”It`s like running the Indianapolis 500 with a 1959 Chevy,” he said.

”You may get around the track, but that`s it.”

Such stories of life inside Stewart-Warner, on top of deep job losses in recent years, have fueled fears within a local union and community groups that, after 82 years in Chicago, the company could become the latest Playskool or Schwinn–companies that have left the city for good.

A damning financial analysis by the Center for Urban Economic Development at the University of Illinois at Chicago supported the concern. The report said Stewart-Warner`s competitiveness has eroded over the last decade because of lackluster capital spending, falling profits and excessive dividend payouts.

The diversified manufacturer, best known for its speedometers and other instrumentation for cars, lags behind its major competitors in developing new products in its instrumentation business, a study by the Midwest Center for Labor Research also contends.

The Chicago-based company has three major plants here, two on Diversey and the other on Kostner Avenue, plus a smaller facility on Dakin Street.

At the center of the controversy is Bennett Archambault, Stewart-Warner`s septuagenerian chairman and president, who has been firmly in charge of the company for 33 years.

Stewart-Warner ignored repeated requests from The Tribune to interview Archambault (pronounced Are-shaum-bow) but Treasurer Jack Morrison denied the company plans to close any of its three major Chicago plants, blamed its operating woes on depressed markets and said it has boosted new product development to record levels since last year.

However, the unusually secretive company divulged few details, and this has led a coalition of labor and community groups to mount an increasingly aggressive, public campaign to force disclosure.

The Coalition to Keep Stewart-Warner Open scored a coup last week by gaining what turned out to be a private, 1 1/2-hour session with Archambault at the company`s closed-door annual meeting in Virginia. Later the same day, the coalition won assurances of help in its effort to preserve jobs in a Capitol Hill meeting with U.S. Rep. Dan Rostenkowski, whose 8th District includes Stewart-Warner`s Northwest Side operations.

Promises of further meetings with Archambault left the coalition hopeful. But coalition leaders say the company`s actions so far suggest that Stewart-Warner`s Chicago operations are in for deeper cuts.

Already, the company, forced to cut costs because of the loss of business, has reduced employment at its plants here by more than half since 1980. According to the union representing production workers, about 1,350 of its members work today, down from 2,850 seven years ago.

Concern grew in early 1985 when Stewart-Warner announced plans to move a major part of its Alemite Division`s pump assembly operation from Chicago to its nonunion plant in Johnson City, Tenn. Earlier, the company had contracted out certain work to Mexico from its Kostner Avenue electronic plant, the union said.

So far, the Tennessee transfer cost 65 workers their jobs, the company said, and endangers another 90 jobs. But Local 1154 of the United Workers Association-United Electrical, Radio and Machine Workers, fears as many as 300 workers could lose their jobs from the move.

Then late last year, Stewart-Warner took a pretax charge of $23.6 million to cover the costs of a future restructuring. For apparent competitive reasons, Stewart-Warner hasn`t detailed what cuts will be made, but union officials said the company, without being specific, has hinted its two Diversey Avenue plants will be affected.

More recently, Stewart-Warner has said it expects to take another charge later this year, though a substantially smaller one than in 1986.

Elaine Charpentier, a lawyer for the Midwest Center for Labor Research and one of two coalition leaders to meet with Archambault last week, said the chairman talked in general terms about further cost-cutting measures ”that make me nervous.”

These are indeed troubled times for Stewart-Warner. Last year`s huge charge caused the company to post a loss of $20.9 million, its first since 1938.

But even excluding the charge, earnings fell to $2.8 million, or 44 cents a share, two-thirds below depressed 1985 levels.

Sales last year plunged to $268 million, the second lowest level in the last decade and more than a quarter below the 1979 peak.

A study by William D. Howard, associate director of the UIC`s Center for Urban Economic Development, suggested Stewart-Warner`s profit woes stemmed from its sluggish capital spending in recent years.

Spending on improvements to plant and equipment fell over the last decade at Stewart-Warner, while comparable companies boosted their capital spending as much as seven-fold, the report said.

The Midwest Center for Labor Research study, based on interviews with employees, contended Stewart-Warner hasn`t kept up with competition in new-product development in its traditional instrumentation business.

Howard`s report also criticized Stewart-Warner for paying dividends that exceeded earnings in four out of the last five years, forcing the company to dip into past savings.

But Stewart-Warner shows no inclination to cut its dividend, apparently to try to keep its stock price from falling.

A somewhat positive report on Stewart-Warner by Value Line Investment Survey, however, predicted the company`s earnings probably won`t exceed its dividend until 1990.

Stewart-Warner pointed out its cash swelled in recent years despite its high dividend. The company also said it spent nearly $80 million on capital improvements and research and development in the five years ended in 1986.

Even the UIC report notes that Stewart-Warner, with no debt and its cash hoard, is in unusually strong financial shape.

”They`ve really got a lot going for them,” said a Chicago stockbroker, who, however, quickly added: ”But you`ve got to look at the (dismal operating) results.”

It is uncertain who will lead Stewart-Warner into the future. Although he shows no sign of retiring, Archambault, who has been chairman since 1959 and president since 1954, is 77 years old.

If any succession plans are in place, Stewart-Warner isn`t saying. None of the company`s other half-dozen top officers holds a rank above vice president.

Stewart-Warner is a publicly held company that in many ways is run like a ”fiefdom,” as one stockbroker familiar with the company put it.

Despite being headquartered in Chicago, Stewart-Warner holds its annual meeting in Virginia, where it is incorporated. Few shareholders ever show up, and Archambault apparently enjoys it that way.

At last week`s annual meeting, he even excluded the press when the coalition showed up armed with a resolution calling on Stewart-Warner to commit to reinvest in its Chicago plants.

Helen Horn, a union official and one of only five people to gain entrance to the meeting, said Archambault defended excluding reporters by saying,

”This is family. Things should be decided in the family.”