(EXPANDED ON 1/27/2023)
Many books, magazine articles and blog posts have been written about the independent automakers’ struggle to survive in the 1950s. Even so, I have come across a number of unresolved mysteries relevant to Indie Auto. I thought it could be useful to summarize them in one story to see if any interesting patterns emerge.
To keep this list manageably short, the focus is on what strikes me as the biggest lingering questions. Thus, I am not dwelling on a variety of smaller factual points where postwar automotive histories may deviate. For example, Thomas E. Bonsall (2000, p. 288) wrote that Packard bought the Conner Avenue plant. This is contrary to other historians, who have stated that it was leased (e.g., Blond, 2021; Hamlin and Heinmuller, 2002b; p. 581; Ward, 1995; p. 124).
By the same token, this post sidesteps pop-culture debates, such as whether Studebaker designers “stole” the styling for the 1959 Lark from the Chrysler Corporation’s 1960 Valiant (go here for further discussion on that topic).
I am sharing these five questions with the idea that 1) I might have missed some nuance in histories I have read and 2) there may be other readings I should also consider. I hope that readers will help fill any gaps. Here are my questions in rough chronological order.
1. What was Studebaker’s real breakeven point?
This is arguably one of the most important unresolved questions about Studebaker’s collapse in the mid-1950s. Historians have tended to focus on research by Packard’s chief financial officer Walter R. Grant. After the automaker completed its purchase of Studebaker in late-1954, Grant came up with a breakeven figure that is usually quoted as 282,000 units per year.
James A. Ward used a slightly different number: 286,256 units. However, either figure was substantially higher than what Studebaker had reported to Packard during purchase negotiations — 165,899 units (Ward, 1995; 167-168).
Some historians have acknowledged that Studebaker executives questioned the accuracy of Grant’s breakeven figure. However, their perspective hasn’t been given all that much weight.
For example, Thomas E. Bonsall noted that Studebaker leaders Paul Hoffman and Harold Vance “argued that Studebaker had recorded a profit before taxes of $29.1 million in 1952 with vehicle production running at just under 200,000 units. It was a good point. Of course, much of that profit came from defense orders connected with the war in Korea and part of it was doubtless due to Studebaker’s ability to charge relatively higher prices for its cars and trucks while supplies were restricted during the emergency. Neither of those factors were in play” in 1954 (Bonsall, 2000; pp. 285-286).
Those factors sound plausible, but were they enough to compensate for passenger-car production falling more than 80,000 units below Grant’s breakeven point? That’s a pretty large gap.
Most other historians have not offered this level of nuance about the various factors that could have impacted Studebaker’s bottom line. Instead, the focus has tended to be on Studebaker’s factory labor costs. For example, Ward discussed Nance’s difficulties in streamlining the new corporation’s operations staff, but the author primarily highlighted production costs at the South Bend plant.
Ward reported that by June 1955 Nance thought the number of “excess workers” was around 2,400, which placed the plant’s breakeven point at around 245,000 units. Six months later the breakeven point had fallen to 175,000 units because of cuts in a contract with the United Auto Workers (Ward, 1995; pp. 171-173). Ward did not question the accuracy of these figures — or Grant’s initial estimate.
Robert R. Ebert wrote that Studebaker-Packard management considered 121,000 units to be the breakeven point for passenger-car output in 1959 (2013, p. 56). How did it get that low? A useful contribution to the historical literature would be a comprehensive overview of how the automaker’s breakeven point was cut during the 1950s.
2. Who pulled the plug on a proposed four-way merger?
The dominant view of auto historians has been that the independent automakers needed a “grand merger” to be competitive with the Big Three. Nash-Kelvinator head George Mason has frequently been lauded as a “visionary leader” because he began to work toward this goal in 1946 (e.g., Foster, 2017, p. 111).
Less often mentioned is that Mason had a pretty blue-sky ambition: To create a full-line automaker that was “bigger than Chrysler Corporation” (Hamlin and Heinmuller, 2002a; p. 557). The plausibility of that goal has not been seriously questioned even though the combined passenger-car output of all postwar independents never came close to matching Chrysler’s.
Instead, historians have focused more on debating why a four-way merger between Hudson, Nash, Studebaker and Packard did not come to fruition. For example, Charles K. Hyde blamed the situation on a power struggle between Nance and Mason. He wrote that the two men “had agreed on the need to merge all four independents.” However, because both “envisioned themselves as the top man of any combination, the likelihood of that happening was nil” (Hyde, 2009; p. 177).
George Hamlin and Dwight Heinmuller are among the authors who presented Nance’s view that Mason had agreed to a four-way merger but died — and his successor, George Romney, rejected the idea (2002a; 2002b). This take was similar to that offered by Bonsall (2000) and Richard Langworth (1979, 1993).
Patrick Foster quite-rightly noted that the above narrative “has been accepted at face value” for years (2008, p. 92). Then he proceeded to rebut it point by point. For present purposes, what is most important about Foster’s perspective is that it is apparently aligned with Romney’s recollections.
For example, Foster stated that Romney was “in full agreement” with Mason’s merger ideas. These included a proposal to Packard in late-1953 to join Nash and Hudson in a three-way merger. “Nance talked Packard’s board out of approving the deal,” Foster argued, “leaving him free to merge with his preferred choice, Studebaker, where he could be CEO of the merged companies.” (2017, pp. 124-126).
Later, after American Motors and Studebaker-Packard had been formed, Foster stated that Mason still envisioned a grand merger where Nance was in charge of a Packard-Clipper Division and would report to Romney as a corporate-wide vice president. According to Foster, Nance nixed the idea by insisting on being president and CEO (2017; p. 133).
Ward hinted at the tense interpersonal dynamics between Romney and Nance after Mason died. He wrote that in late-1954 Romney sent Nance letter congratulating him on the Studebaker-Packard merger. Ward suggested that, in “diplomatic language, Romney was saying, ‘Talk to me, work with me.'” Nance’s terse response “slammed the door on any chance to reopen discussion of an AMC merger” (1995; p. 157).
Blond offered a more measured take on the complex — and often behind-the-scenes — dance between the automakers. However, he wondered whether Nance was willing to consider a four-way merger “only on his terms” when he asked staff in July 1954 to take another look at the idea after Studebaker and Packard had agreed to combine. Only two months earlier the Packard board had shelved a proposal by Mason to bring the automaker into AMC (2021, p. 134; original italics).
Historical accounts may be so divergent partly because they were written in different eras. In general, the older histories have tended to be more pro-Nance. Would the authors still living hold to their basic perspective after accounting for more recently published works?
3. Was there a bad guy on the parts-sharing agreement?
A corollary to the above debate is who — if anyone — was the bad guy in a part-sharing agreement gone sideways between Studebaker-Packard and American Motors. Here historians appear to be even more polarized into pro-Nance and Romney camps.
Hamlin and Heinmuller summed up the pro-Nance argument by concluding that “Packard had apparently gone out of its way to cooperate with American Motors; AMC cooperated only to its own convenience” (2002b; p. 599). The authors pointed to AMC bids that “were always too high,” building its own V8, and refusing to sell to Studebaker its OHV six-cylinder engines for the 1957 model year.
Langworth hinted at his take on the interpersonal dynamics between the two auto executives when he wrote about Romney’s rejection of the Studebaker request: One “can visualize him gritting his teeth” . . . yet “Nance thanked Romney for his consideration” (1979, 1993, p. 83). Unmentioned was Romney’s view that Nance was saying disparaging things behind his back, such as that Nance would “scoop up American Motors before the end of the year” (Foster, 2017; p. 133).
Donald T. Critchlow took at face value Romney’s contention that AMC would not have the production capacity to produce enough engines for Studebaker, noting that “Romney’s expectations for a boom in Rambler sales were realized” (1996, p. 145).
That was eventually true. However, in 1956-57 production of both Studebaker and Rambler sixes totaled under 110,000 units — well below Nash’s total production of sixes in the early-50s. In addition, AMC would presumably have had to increase engine production capacity in 1959, when output soared to over 334,000 units. It should also be noted that Romney had been an advocate of independent automakers sharing major components in order to gain adequate economies of scale (Foster, 2017; p. 125). I argue here that walking away from the engine-swapping agreement was one of his biggest mistakes.
That said, pro-Nance historians don’t tend to mention how steep of a price AMC paid for using Packard drivetrains on its 1955-56 models. Hyde noted that during “the first three years of the contract, AMC would pay 30 percent of Packard’s tooling costs.” Although developing its own V8 would cost $10 million, it could result in “a savings of $200 per engine over the Packard engine” (Hyde, 2009; p. 178).
Note that the V8 engine was only available with Packard’s Twin Ultramatic transmission. Nance acknowledged that it cost AMC $20 more per unit than GM’s Hydra-Matic, which AMC had been using (Blond, 2021).
The high cost of the Packard drivetrain — which AMC built into higher list prices — could have been a key reason why they were a sales flop. Despite the industry-wide popularity of V8s in 1955-56, Nashes and Hudsons equipped with Packard engines sold more poorly than equivalent models with sixes. This raises the question: Did the expensiveness of Packard’s V8 play a role in the collapse of Nash and Hudson sales in 1955-56 (go here for further discussion)?
Blond pointed to historian Robert J. Neal’s contention that the agreement was “very loosely written” in such a way that did not require Packard to buy components from AMC (2022, p. 23). According to Foster, Mason and Romney understood that but “believed they had an understanding with Nance on the need for reciprocity” (2017, p. 137; original italics).
Pro-Nance historians also haven’t tended to acknowledge that Nance initially turned down AMC’s request to purchase Studebaker V8s. He only changed his mind once realizing that Studebaker could benefit from using AMC’s more modern six (Blond, 2022b).
4. How could Packard have shared a body with AMC?
After Briggs announced in December 1953 that it would no longer build Packard bodies, Nance reportedly considered buying them from American Motors. According to Hamlin and Heinmuller, the idea wasn’t for AMC to take over building Packard’s existing body, but rather to use a version of AMC’s full-sized platform (2002b; p. 580).
This presumably posed a number of issues for Packard. For starters, AMC cars used unit-body construction, which required a different assembly process than a body-on-frame construction Packard had long used.
Thus, the question: If Packard had switched to unit-body construction, how big of a deal would it have been to redo its production processes?
Hamlin and Heinmuller wrote that although “Mason subsequently suggested the plan be dropped because of excess handling and freight costs from Kenosha to Detroit, to Packard the idea remained workable if enough costs could be cut out of it, and so Graves got together again with Mason to work out common body dimensions for a possible joint body venture between the two firms. A study to determine if the unit body construction used by Nash might be a stumbling block indicated this not to be a problem” (Hamlin and Heinmuller, 2002b; p. 580).
This narrative aligns with that of Langworth’s (1979, 1993), but there is no indication of how Packard would have made the switch. A few years later the Ford Motor Company determined that it needed a new assembly plant when it gave the 1958 Lincoln and Ford Thunderbird unitized bodies (go here for further discussion). What was Packard’s plan?
Studebaker-Packard could have also faced some design challenges if they used AMC’s existing full-sized body — which originated with the 1952 Nash. AMC did not offer a convertible, a wagon or a two-door hardtop with a distinctive roofline. Could Nance have adapted his plans to these limitations? Or would the promise of added production have allowed AMC to give its full-sized body more variants?
According to Langworth, the idea of sharing bodies “died with George Mason” (1979, 1993; p. 83). The implication was that Romney closed the door on this level of cooperation. However, Ward pointed out that Packard had already rejected two merger requests and Nance was getting increasingly “bogged down in the daily minutiae” of Studebaker-Packard’s cascading crises (1995, p. 158).
Although interpersonal trust appears to have been a major consideration in Romney’s hesitancy to work with Nance, another factor may have loomed even larger when it came to platform sharing.
According to Foster, Romney assumed that “he was down to the wire, and would have, at best, enough money to retool only one car” (1993, p. 20). Of course, he chose to redesign the compact Rambler. That went in the opposite direction of Nance, whose plan was to shift Studebaker to a full-sized platform shared with Packard and Clipper.
5. Did Nance’s production plans pencil out?
Much has been made of Studebaker-Packard’s ambitious — but ultimately futile — plan to consolidate its brands onto a new full-sized platform. For example, Hamlin presented corporate documents that showed how the Studebaker, Clipper and Packard would have shared a significant number of components while maintaining stylistic individuality. The cost of the original plan was $50 million (2002, pp. 622-627).
If the entire lineup had been redesigned for the 1957 model year, Nance “predicted solid profits in 1958, with about four percent of the market” (Hamlin, 2002; pp. 578-579). If we apply this benchmark to U.S. domestic production totals, Studebaker-Packard would have produced roughly 251,000 units in 1957 and 167,000 units in 1958.
Now, let’s go back to Ward’s estimates of Studebaker-Packard’s breakeven point. He stated that Packard’s jumped from 64,000 units in 1954 to 80,000 in the wake of plant-modernization efforts. Meanwhile, Nance assumed that he had cut Studebaker’s breakeven point to 175,000 units by late-1955. That added up to 255,000 units (Ward, 1995; pp. 168-173). If these figures are accurate, the automaker could have had a slight loss in 1957 and fallen deep in the red during the 1958 recession.
None of the histories mentioned here discuss how much it might have cost to reconfigure the South Bend plant. That would have been needed because the facility wasn’t designed to build full-sized cars (Ebert, 2013; p. 40). If those costs were baked into the $50 million figure, might lenders have balked, particularly given perceptions about South Bend’s high labor costs?
By the same token, were lenders also wary of Nance’s plan because it did not follow in the footsteps of American Motors, which consolidated production of the Nash and Hudson in one plant? After all, doing so at Studebaker-Packard would have maximized the cost-effectiveness of placing all passenger cars on one platform.
Presumably Nance sidestepped plant consolidation because both the South Bend and Detroit plants had major limitations. For example, Packard’s facility was more modern than Studebaker’s, but its volume was heavily limited by its small square footage. In contrast, AMC’s Kenosha plant had a capacity of 350,000 units per year (Ward, 1995; p. 124).
Hamlin lamented that Studebaker-Packard’s lenders, by refusing to give the automaker “financing it had considered routine, killed Packard as surely as if they had used a gun” (2002, p. 634). A $50-million plan to expand into a full-line automaker was considered “routine”?
Also note that the same group of financiers who turned down Studebaker-Packard’s funding request gave AMC a $43 million line of credit (Foster, 2013; p. 38). Romney had pitched a niche-market strategy of concentrating on the compact car market.
Are there any patterns among these questions?
The thing that most struck me about the historical accounts used in this post is that they are all colored to some degree by a “get big or get out” mentality. There appears to be widespread agreement that the ideal would have been for some type of grand merger that created a full-line automaker. Next to Mason, Nance was the executive who most aggressively tried to build a miniature GM. Thus, it is not surprising that he is portrayed more favorably than Romney by a goodly portion of the histories.
Even Ward, who offered one of the most even-handed assessments of Nance, insisted that he “did not kill Packard” (1995, p. 260). The basic argument seems to be that Nance had the right overall strategy but events conspired against him.
Another commonality in the literature is uneven assessments of Studebaker’s finances. Narratives have tended to focus on factory labor costs at the automaker’s South Bend plant. That makes sense to a certain degree, but I suspect that a comprehensive overview of Studebaker’s breakeven point in the mid-50s would show a more multifaceted range of issues (go here for a brief discussion). A particularly useful contribution to the literature would be a detailed analysis of whether Nance’s $50-million plan had a meaningful chance of success.
Personality politics play a big role in all of the histories. This is clearly a key part of the story, but it can overshadow what I would argue is also important. Even in the absence of a reported personality clash between Nance and Romney, the two automakers would likely have had trouble maintaining a parts-sharing agreement unless they had created an organizational structure that was built upon “win-win” principles, such as through a joint venture.
Some of the questions I have raised would benefit from additional primary research. However, I suspect that a more important factor would be seeing the past with fresh eyes. Thomas Kuhn (1996) argued that “paradigm shifts” in the natural sciences were most likely to occur after a generational changing of the guard. If this also holds true for U.S. automotive history, then my list of questions could turn out to be most useful to a newer generation of historians.
Of course, this is only my take. What do you see as the biggest unresolved mysteries in the postwar history of independent automakers?
NOTES:
The story was originally posted on April 2, 2021 and expanded on Jan. 27, 2022. Prices and production data are from the auto editors of Consumer Guide (2006) and Gunnell (2002).
Share your reactions to this post with a comment below or a note to the editor.
RE:SOURCES
- Auto editors of Consumer Guide; 2006. Encyclopedia of American Cars. Publications International, Lincolnwood, Ill.
- Blond, Stuart R.; 2021. Spellbinder: The Life of James J. Nance: Volume One, 1900-1954. Kindle Direct Publishing.
- ——; 2022. Spellbinder: The Life of James J. Nance: Volume Two, 1955-1984. Kindle Direct Publishing.
- Bonsall, Thomas E.; 2000. More Than They Promised: The Studebaker Story. Stanford University Press, Stanford, CA.
- ——–; 2004. The Lincoln Story: The Postwar Years. Stanford General Books, Stanford, CA.
- Critchlow, Donald T.; 1996. Studebaker: The Life and Death of an American Corporation. Indiana University Press, Indianapolis, IN.
- Gunnell, John; 2002. Standard Catalog of American Cars, 1946-1975. Revised 4th Ed. Krause Publications, Iola, WI.
- Ebert, Robert R.; 2013. Champion of the Lark: Harold Churchill and the Presidency of Studebaker-Packard, 1956-1961. McFarland & Company, London.
- Foster, Patrick R.; 1993. American Motors: The Last Independent. Krause Publications, Iola, WI.
- ——–; 2008. Studebaker: The Complete History. Motorbooks International, Minneapolis, MN.
- ——–; 2013. American Motors Corporation: The Rise and Fall of America’s Last Independent Automaker. MBI Publishing Co., Minneapolis, MN.
- ——–; 2017. George Romney: An American Life. Waldorf Publishing, Grapevine, TX.
- Hamlin, George; 2002. “The Last of the Marque: The Fifty-Seventh and the Fifty-Eight Series 1957-1958.” In Kimes, Beverly Rae, ed., pp. 622-635. Packard: A History of the Motor Car and the Company. Automobile Quarterly Publications.
- Hamlin, George and Dwight Heinmuller; 2002a. “All-New Contour Styling.” In Kimes, Beverly Rae, ed., pp. 544-561. Packard: A History of the Motor Car and the Company. Automobile Quarterly Publications.
- ——–; 2002b. “America’s New Choice in Fine Cars: The Twenty-Sixth and the Fifty-Fourth Series 1953-54.” In Kimes, Beverly Rae, ed., pp. 562–581. Packard: A History of the Motor Car and the Company. Automobile Quarterly Publications.
- Hyde, Charles K; 2009. Storied Independent Automakers: Nash, Hudson, and American Motors. Wayne State University Press, Detroit, MI.
- Kuhn, Thomas S. 1996. The structure of scientific revolutions, 3rd. ed. The University of Chicago Press.
- Langworth, Richard M.; 1979, 1993. Studebaker 1946-1966: The Classic Postwar Years. Motorbooks International, Osceola, WI.
- Ward, James A.; 1995. The Fall of the Packard Motor Car Company. Stanford University Press, Stanford, CA.
ADVERTISING & BROCHURES:
- wildaboutcarsonline.com: (Automotive History Preservation Society): Hudson (1956); Nash (1956); Packard (1955); Rambler (1958); Studebaker (1955, 1957)
- oldcarbrochures.org: Packard Predictor (1956)
Interesting questions! Regarding Studebaker’s varying breakeven point – two questions pop into my mind.
One, how did any loss in defense work affect the breakeven point? During this time period, American involvement in the Korean “conflict” ended, and it’s my understanding that many defense contracts were then cancelled or reduced. (This happened to both Packard and Studebaker.) Did profits from defense work “paper over” inefficiencies with Studebaker’s passenger car and pickup truck business?
Two, Studebaker’s 1953 line raised costs because the Starliner and Starlight coupes required enough unique tooling that they could be considered separate models from the two- and four-door sedans. Studebaker went from selling one line of vehicles, to two, without any increase in volume, and in a much more competitive market. I’m no business accounting expert, but it seems to me that if a company raises its production and product costs, it has to raise the volume sold, to compensate for higher per-unit costs..?
And when the expected increase in volume didn’t happen for 1953 – due to customers shunning the sedans – Studebaker was in trouble. For 1954, the roof fell in, as even sales of the coupes collapsed.
As for the cost of Packard drivetrains in Nashes and Hudsons – there is an interesting Nash sales training film for the 1956 full-size models on Youtube. The narrator specifically says that “the problems experienced with the 1955 models have been solved.” That’s hardly a vote of confidence, and shows that the Packard drivetrain was proving troublesome in the hands of customers. He also instructs dealer sales personnel that if a customer expresses interest in the Nash models equipped with the six, DO NOT try to upsell him or her to the V-8. The concern was that the cost of the V-8 was so much greater that it wasn’t worth the risk of having a sales prospect walk out the door. If that is what sales personnel were being told by the company, it’s a safe bet to say that cost and reliability issues associated with the Packard drivetrains seriously hindered sales of Nashes and Hudsons with the Packard V-8. (The strange styling finished the job for all but the most diehard partisans of both marques.) Given that experience with the Packard components, one can see why Romney was in no rush to broaden any parts-sharing agreements with Studebaker-Packard.
Finally, regarding whether Nance’s grandiose plans for Studebaker-Packard would have proved profitable – reading Ward’s book, I get the impression that Nance had a decent feel for marketing and styling, but he was in over his head when it came to production and manufacturing issues. He also suffered from GM envy, and didn’t seem to grasp that even much larger and richer Chrysler was having a tough time keeping up with GM during this period. His projections regarding future volume were unrealistic, and he never seemed to realize that consolidation, not expansion, was what the company needed. Of course, given the limitations of the production facilities of both Studebaker and Packard, he wasn’t playing with a strong hand. But he missed what the insurance companies realized – that the market was not crying out for a fourth full-line American auto maker.
Your basic calculus makes sense. Of course, a breakeven point is generated from a variety of factors. For example, in the early-50s Studebaker had assembly plants in California, New Jersey and Canada; at what volume level might they have become unprofitable? And the South Bend plant’s layout was rather inefficient, according to Critchlow (who also noted that Vance repeatedly tried to get funds to modernize the plant but the board of directors instead chose to pump money into dividends).
At this point it doesn’t sound intuitively correct that defense work and higher passenger-car margins could make up for a 90,000-unit deficit in 1952. It would be interesting to go through the Nance papers and see if there are any indications about whether Grant’s breakeven estimate might have been pumped up to gain leverage with the UAW. I also wonder how Studebaker’s cost structure compared with Nash’s. By 1953 both fielded two distinct bodies but Studebaker was also saddled with the cost of a V8 and automatic transmission.
Historians who think that a grand merger was the best way forward don’t tend to get concrete about how the company would have made it through the late-50s, when the premium-priced market tanked. That could have been deadly even if all production had been consolidated (let’s say at Kenosha, for discussion’s sake).
Not sure how accurate the claim is in the following link, though was not aware of purported plans for Crosley to either be merged with Nash (or for the latter to acquire the former) that never occured due to the merger between Nash and Hudson to form AMC.
https://www.dailykos.com/stories/2014/5/26/1302054/-History-101-The-Crosley-Automobile
Crosley itself is a curious story and from a non-US perspective brings to mind Coventry Climax, had the latter also built cars and other products. What could they have done in retrospect to significantly improve their position and hold out long enough to be acquired by one of the larger domestic US carmakers during the post-war period of consolidation among the independents?
Have read elsewhere of the CIBA engine (or a later post-Crosley derivative) reaching a maximum displacement of 1042cc.
In a conversation with Bob Palma, he indicated that he believed that the Studebaker plant on the west coast was closed in the late 1940s.
Please don’t miss-quote Bob! He knows his history and l’m sure would have answered correctly: the Vernon California plant was closed after the end of the 1956 model year. l own a ’53 that was made there and my son has a ’56 also assembled there.
By the way, Steve, NO production Studes or Packards were ever assembled at the New Brunswick, New Jersey facilities.
Stewdi, Donald Critchlow wrote, “Seeking to reduce assembly and transportation costs for its eastern markets, Studebaker purchased an assembly plant in New Brunswick, New Jersey for $8.8 million in 1951. The corporation expected to save $75 per car, including freight and other costs” (p. 125). I just did a quick web search and found conflicting information on what happened to the plant. Can you fill in any details?
The Fox/Cannon book “Studebaker, the Complete Story” (not Foster’s) was the source for a lot of this info:
During the heady days of flat-out production for the 1950 model year, and with new contracts for military trucks, a new assembly plant was envisioned. Hence, the purchased the New Jersey property.
At the same time, defense contracts were extremely important to ALL the independent manufacturers and Studebaker was proud to have procured one for the production of the General Electric J-47 turbojet engines for B-47 bombers. Meanwhile, 1951 Stude car assembly numbers were down from 1950 (but market share remained the same) thanks in part to production restrictions invoked because of the Korean conflict. The New Jersey plant was nowhere near car production, and so was re-purposed to defense work, producing parts for the J-47 engine.
THEN, “Engine” Charlie Wilson, former GM president became Secretary of Defense in January 1953. His “narrow procurement” policy for equipment contracts was disastrous for AMC , Studebaker and Packard who all, perhaps wrongly, but also necessarily, counted on this defense income. A huge chunk of their sorely needed government income was “gone” (not all of it, but the amount was alarming). At the same time, GM defense work increased significantly. Thanks, Charlie! You can imagine the consternation of the presidents of the losing corporations who all initiated frantic new efforts to lobby the government for more business with little success. Ward’s book gives a picture of this from Nance’s perspective. And this was at SUCH bad timing for this to happen when the seller’s market was coming to a fast close and the also-disastrous Ford/GM sales war was starting up.
Meanwhile Studebaker-Packard production market share tanked and with defense work also in the dumps – and increased capacity available in South Bend and now Detroit too, the New Brunswick, New Jersey plant was sold in 1955 as part of S-P’s spending curtailment/retrenchment programs.
Hope this is what you needed, Steve.
Thank you, Stewdi — that’s helpful. So Critchlow was essentially correct that the initial purchase was for automobile production.
This is actually a reply to Stewdi’s 2/2 comment. Defense contracts tend to be feast or famine. Wartime contracts are pretty much “make as many as you can as fast as you can then stop when we tell you to stop” However, if you get a good reputation supplying parts to prime contractors, you can get a steady living, although not hitting the jackpot of a first tier contract. Look to the upscale German cars and Rolls Royce of that era.
No deliberate intent to mis-quote, Bob Palma. It was his response to that singular question at the 2021 Studebaker gathering in Indianapolis.
Both Studebaker and Packard had great and resourceful engineers as they entered the 1950s. What they lacked were the visionary and forceful leadership qualities of George Mason and his lieutenant, George Romney. It takes a true leader to say “NO”, even when a deal is tempting. Where Packard stumbled was not thinking about where its future lay.
1951 was a pivotal year for Nash, Hudson, Studebaker and Packard. Packard had an up-to-date, well-engineered car in 1951, even though it was not stylistically exciting. Studebaker had a new o.h.v.-V-8. The “new”-design Studebaker for 1952 was delayed until 1953. Hudson’s Jet was still in the design stage. Nash was still committed to the Airflyte and Rambler. The re-engineered 1952 Fords, Mercurys and Lincolns should have been a signal to Mason, Romney, Studebaker, Hudson and Packard as to what was coming. G.M. was still the giant and Chrysler had a powerful V-8 with new styling touches for its cars.
Imagine what might have been if in 1952, Nash and Hudson merged, purchased Studebaker V-8s and sold the Nash Ambassador six to South Bend. I wonder if Mason had first approached Packard in 1952, if a merger could have been worked out as to keep Packard alive as a premium brand, without the need for a cheaper Clipper. The problem for the merger is what to do with Hudson and Nash. By 1952, the Hudson was five-years-old, with no successor design in sight. The 1952 Nash was updated, but was an acquired taste in terms of its styling.
If the real financial state of Studebaker had been known, then perhaps Mason and Romney could have scooped up the South Bend automaker as the low-price make of a merged A.M.C. The line-up could have been the Rambler, the Studebaker Champion and Commander, Nash, Hudson and Packard. Hudson could have become the “Pontiac” of a new A.M.C.; however, where would the money come from to redesign the Hudson, the Studebakers (assuming that the 1953 Lowey designs were scrapped) and update the foundries and factories ? Studebaker did have a profit-center in its truck division to exploit. Packard’s redesign could wait until 1955, but it’s heavy V-8 could have been held back with the adoption of the 289 cu.-in. Studebaker V-8.
The other big obstacle were the labor agreements, especially in South Bend. Sadly, where the autoworkers in South Bend were previously treated like members of a big family, management attitudes changed and labor relations greatly deteriorated. The dealer networks could have been bolstered such that the erosion of Studebaker dealers taking on other franchises, like what happened in Indianapolis (Charlie Stuart Studebaker adding Oldsmobiles in the late 1950s, for example), might have never occurred since a fully-merged A.M.C. would have offered a full-line of cars and trucks from Ramblers to Packards ! But given the failure of the full-size Nashes and Hudsons in the U.S. market in 1955-56, Romney was right to bet on the new 1956 Rambler for A.M.C.’s future. Very often, LESS is MORE !
You are left with a lot of marques and a lot of under utilized factories. Move Studebaker into trucks only available at all dealers, like GMC with GM brands. Let Kenosha make Ramblers in both small and midsized again available to any dealer. Let Nash die on the vine. Rambler will be the name of the marque. Get Packard and Hudson to cooperate on a shared design using an updated step down platform. Say something in a two and one half style for Hudson very low slung and a more formal three box design for Packard. Again, let all dealers have access to this vehicle. Sell all four makes under one roof, but at all costs avoid badge engineering and overlap.
1. Why didn’t’ Packard step down for 1951? The ’48 Hudson demonstrated its benefits and the ’50-1/2 Rambler saw fit to follow. This single action would have meant the world to Packard in the first half of the Fifties, and it could have retained its traditional body-on-frame construction.
2. Why didn’t Barit order his large cars redesigned for ’53 instead of creating the Jet? Did he not think there was a future for Hudson in the large car field? Did he get flawed information about Jet’s prospects, such as the estimated 200,000 sales per year?
3. Why in the Jet Age did Nance think that a new brand called Clipper would be successful? Was American experiencing a love affair with sailing at this time?
4. Why did Mason think that he alone needed to lead the merged Independents? By 1954 the sales of Nash’s large cars suggested that he was just another floundering CEO.
5. Why did Nance hire Bill Schmidt away from Ford and why did Bill Schmidt think that his Packard design team was better than the competition’s design teams? Was it his arrogance that attracted the arrogant Nance?
Packard and Hudson would have had a synergy if there had been a merger between them by 1950. The 1951 Packard body could have embraced a new chassis for a step-down design, while Hudson could have been prevented from tooling up the Jet (The world already had a 1952-53-54 Ford.) Plus, both manufacturers could have likely realized some economies of scale on manufacturing quality, but common components necessary for both brands. A new 1952 or 1953 Hudson could have been a competitor to the base Lincoln, Mercury, Oldsmobile and Buick.
2. It seemed like a good idea at the time. He thought there was a market for a small well appointed car. No one else seemed to be there.
3. Clipper was a legacy name from the 1941 Clipper a leap ahead from the stodgy senior Packard lines of that era. It had a positive name recognition and let’s face it Packard wasn’t the Jet Rocket Starblazer kind of car.
My question is where were the outside board of directors at the companies? They had the power to tell each CEO to “get over themselves” and make the merger happen or somebody is going to be replaced.
I would argue that the Clipper brand had a justifiable reason to exist so Packard could go further upscale to compete with Lincoln and Cadillac. But, within a four way merger it would not as one of the other brands would take that mid priced role but sharing the platform with the Packard.
The Ward book made the argument that Packard really needed their pre-war production head to do the plant organization like he had done previously. Unfortunately he had been booted from the company over some personal issues.
Jeff, in reading the various histories I am unclear as to the power balance between the boards and their CEOs circa 1953-54. For example, some historians argue that Nance convinced Packard’s board to ignore Mason’s solicitations, both before and after American Motors was created. But is that true? I don’t know.
Meanwhile, Mason had been at Nash-Kelvinator for quite a while, so I would imagine that he had considerable sway over his board.
The challenge with replacing top executives at an independent automaker was that they seemed to be in short supply. If you’ve read Ward’s Packard book you know that they had a devil of a time hiring Nance.
BTW, Mason made an initial pitch to merge with Packard back in 1948 — and the idea apparently died because some board members — rather than top management — objected.
You make a good point about Ward’s book, where he noted how Packard desperately needed leadership in the mid-50s with a more sophisticated understanding of plant organization than Nance. Here his newness to the auto industry proved to be particularly problematic. He listened to the shiny-shoed consultants rather than exercising some common sense. Packard could have navigated 1955-56 at least somewhat more easily if Nance hadn’t spent so much money moving car assembly to Conner Ave. and building the Utica plant.
I assume that I’m in the minority to argue that Packard was far too small to be able to pull off a two-brand strategy. It would have ended up half assed just like the 1955-57 Hudson and Nash dynamic duo.
According to one source, the Packard Board of Directors rejected the merger with Nash (in 1948) because they felt that the merged corporation would be biased in favor of Nash. The Packard Board objected to the proposed “55/45 split” that favored Nash, but not necessarily to the idea of a merger with Nash.
This seems odd, because this account contains no record of the Packard Board authorizing executives to make a counter-proposal more to its liking. If the Packard Board didn’t object to the idea of a merger with Nash, one wonders why they didn’t simply order the executives to submit a counter-proposal, instead of dropping the idea completely.
“Packard was far too small to be able to pull off a two-brand strategy. It would have ended up… just like the 1955-57 Hudson and Nash dynamic duo.”
Given that the ’55 DeSoto was a Chrysler with superficial changes inside and out, it appears that almost anything was possible if the base vehicle was compelling enough. The ’55 DeSoto/Chrysler/Imperial body was OK but they knew that they had to do even better. Packard didn’t have that kind of fire in their belly when it came to appearance. They were primarily an engineering company. V8 first, new body second.
Paul, the big 3 could get away with badge engineering as they were expected to have a FoMoCo, GM, or Mopar look about them, and this corporate look had been around since the 30s. The little 4 each had their own look, and attempts at a corporate style led to the Hash and Packardbaker. Everyone knew who came out on top in those mergers, and the losers took another step to the orphanage. If both cars in the merger could have got new bodies with enough sheetmetal difference to distinguish them, it might work.