Coding system in compilation buffer

[Enno Fennema <e.fennema@tiscali.nl>]

I am using GNU Emacs 22.1.1 part of SuSE Linux 10.3 x86_64.
When doing a compile gcc writes its messages/warnings using utf-8 which 
does not help readability when the buffers assumes latin-1.

Trying the get the compilation buffer to accept utf-8 I tried

 >>
(defun compile-utf ()
   "Set compilation buffer for UTF-8"
   ( save-current-buffer
     (set-buffer compilation-buffer)
     (set-buffer-process-coding-system "utf-8" "utf-8")))

(setq compilation-process-setup-function 'compile-utf)
<<

Now doing a compile appears to call the function compile-utf but then 
moans that compilation buffer is a void variable.

That appears to contradict the description of 
compilation-process-setup-function which says that compilation-buffer 
should be bound by the time that function is called.

I am no elisp expert at all and appreciate help.

Does the above idea make sense or is there a better approach?

If the above, then how should I get it to work properly.

Regards,
Enno Fennema