Why did the Studebakers go under?

There is a lot of truth in this but not entirely accurate. Maybe I can help sort things out with a time line of events.


1943. Edsel Ford, son of Henry Ford, dies of stomach ulcers. Henry Ford, 83 years old, is too old and infirm to run the company alone. The management of the company is going from bad to worse. The US government pulls Henry Ford II out of the Navy and sends him to revitalize his grandfather's company.

1945 - 1949. Henry Ford II and his "whiz kids" succeed in putting Ford back on its feet. They are now the 3d largest car company by sales. At one time they were first but were passed by GM in 1927 and Chrysler in 1942.

Ford determines to get back on top by hook or by crook. He forces cars on his dealers whether they want them or not. They have to sell them somehow or go bankrupt under a load of cars they can't pay for.

Spurred by the drop off in sales when the postwar seller's market ended in 1949, and pressured by Ford to sell more cars, some Southern Ford dealers develop "the system".

"System houses" use every crooked high pressure sales tactic in the book to draw in suckers with phony advertising and rip them off. One of their tactics involves working the deal out backwards on a Friden adding machine called an "Okie charmer". The idea is to suck the customer in and get him to sign a deal when he doesn't know what he is signing. By manipulating price, trade in, down payment, monthly payment etc they can cook up a deal the customer will sign while making it so complicated they will not understand how they got rooked until it is too late.

"The System" sweeps the auto industry as GM and Chrysler fight fire with fire. Ford fights their way into first place in the low price field as Ford outsells Chev in 1957 for the first time in 30 years. Chrysler makes strong gains with their "Forward Look" cars although Plymouth trails Ford and Chevrolet. GM continues to hold 60% of the car market as a whole.

If Ford, GM and Chrysler all increased sales who are the losers?

The independents got swamped. American Motors managed to keep a place for themselves by dropping the Nash and Hudson and pushing the hot selling Rambler. Studebaker slowly starved for sales after 1952 until they died on the vine 12 years later. Packard went out of business. Kaiser dropped the Kaiser and Fraser to concentrate on the Jeep, a market the Big 3 didn't care about.

While this was going on import car sales grew and grew, to a certain extent replacing the independents or at least giving some kind of choice to the eccentrics who wanted something different from a Big 3 car.

 

Rusty, you are right, I,m 100% sure my Grandfathers Stude was a Canadian build.
Your info would also explain the origins of the engine, very interesting.

 

they didnt get a Bail-out .

 

1950 studebaker champion starlight.... the best looking car ever .

 

My dad used to describe the 61/2/3 convert Lark as a bar of soap when the top was down.
The one that got away for me was a Waggonaire sliding roof wagon - passed on it an regret

 

Might be more than you wanted to know but....
http://www.studebakerhistory.com/dnn/

 

owned them all my life - you could say style - BUT they put more in - and still sold them for less....a point - factory exhaust bolts ARE stainless steel - never broke one off....find a factory water pump still on?.....should have copper washers underneath....first with factory disk on a four door - 1963...first with a duel master cylinder?....1964.....first with alow buck V8 in 1951....and again in the little Lark - 1959....hill holder...yes long before any one else....Coupe Express?....gee.....we owners could go on....

although I love and have owned many 62-65 Nova hardtops....I still have my Daytona....

 

you guys are crazy,,,



ugly,, Psssssshhhhhhhhhhhhhhhaaaawwwww.

 

Had a 50 stude log truck was one hard pulling truck. Stylish as hell too always liked the rounded looking roof.

 

Like the Lark Tinman..

Guess I like Ugly Too...
Worse..green..!

Just put on the chrome grille surrounds (not in picture) ..and headed to GoodGuys Friday..
Next ..change the mirror..

 

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Exactly correct, that would have been the infusion of capital needed. Mercedes was a well established company in Europe with huge resources. Their desires for entering the American market could have been complete with the European built luxury cars, and the re-tooling of Studebaker for the mid-priced market.
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most of them were ugly as sin!

 

Sorry......Cadillac and AMC in 1962.

 

Studes were way ahead of their time right up into the 60's, and then they seemed to fall behind everyone else. I've never understood how a car that was so much better designed than the other Detroit cars suddenly just stopped advancing in their design and let everyone else pass them up.

 

Like a few others said, they just didn't have the working capital that the Big 3 did for constant changes.

 

The last year Stude made a real profit was 1950 or 51- due largely to military contracts. When the 53 came out, they had geared up for a higher sedan production, but demand was higher than they could handle for the coupe. Couple that with poor build quality, and it was a double whammy. Customers got tired of waiting, and went to the competition. Then Gm and Fords price war was killing them too. 55 saw a profit, , but the packard merger killed that. The 59 Lark was a successful Hail mary, but nothing more. People were getting wise to the redesigns, and the fact that Studebaker had been running basically the same car since 1953.
Enter the Avanti. The company that built the fiberglass bodies had a contract with Chevrolet to build Corvette Bodies- Tha of course put Avanti development down a notch. The GT Hawk redesign was quite an accomplishment, but it was still the same car introduced in 1953.
Throw in the Car scene, and what everbody else was selling, and Studebakers fate was sealed.
In about 1962, Studebaker ran an add, featuring its supercharched hawk and lark models. It is the only company ever to advertise on its top speed.

 

I grew up in South Bend, saw lots of Stude's. Cop cars, taxi's, everything. We used to say " Nothing Rusts Like a Lark". All the '50's cars rusted badly, but I remember the Studes with those air vents on the side of the cowl, just rusting and falling to the ground. This had to be part of their rason to fail.

I was 10 when they left town, lot's of my childhood friends dad's lost their jobs, and moved away. Unfortunately, South Bend has been going down hill since.

 

My grandpa had a V-8 53 Starlight coupe he bought used. He never bought a new car in his life. His farm was on a hill and one morning he came out to milk cows and the Stude was gone. Looked around and saw tracks going backwards over the hill including a 5 foot drop off. Found the car backed into a grove of trees about 80 yards down the hill. Didn't set the parking brake hard enough. Since it had taken such a rough trip and he was concerned about possible brake line and fuel line damage, he threw a chain on it and drug it back up with a tractor. He removed the limbs and brush and hosed it off. Then went over it carefully. Other than a dent the size a quarter in the rear bumper, there was no damage. It fired right up and drove fine. The only complaint he ever had with the Studebaker was the heavy non-power steerring. He drove it for several more years and sold it to a guy who drove it a long time after. Great old car and built like an anvil.

 

I didn't read the entire thread, but at least one of these points weren't mentioned:

1. South Bend was too far from the auto building center of the US. It costs more to ship outside supplier parts down there, which drove costs per vehicle up. The break-even point of the South Bend plant was around 100,000 cars, and when Packard bought Stude out they hadn't built 100K cars in a few years. Someone mentioned the higher labor costs (AMC had the same problem), but I didn't see the higher outside parts cost mentioned (and most raw materials -- that's why the auto building center of the US is around the Great Lakes area -- shipping raw materials by freighter).

2. This mainly concerns the final production in Canada. "Auto Pact" was a trade agreement between the US and Canada that was signed in 1966. This "pact" allowed duty-free transportation of cars and parts across the border. Prior to this Canada had a "Canadian content" law. The more Canadian content a car had the less tax was paid on it. To make it more cost effective to build more models in Canada, the US based manufacturers cooperated with each other on parts. AMC made wiring harnesses and some trim/interior items for GM, GM sold AMC rear axles and a few other parts. GM sold Studebaker engines and transmissions. After "Auto Pact" there was no incentive for GM to sell Stude engines. They did it prior to that because it improved the bottom line on the GM Canadian engine plant.

The same thing happened in other countries, South Africa up through the mid 70s, after which most US companies moved out due to segregation (Apartheid). AMC and even Toyota bought GM I-6s for their vehicles made in SA in the early 70s. GM agreed to build an engine plant there based on agreements from AMC and Toyota to buy engines, and GM in turn bought some parts from them. The engine plant was a major investment though, GM was the only one big enough to make it at the time, but even they wanted to guarantee a return on their investment.

 

I thought this was cool; in 63 the Westinghouse Appliance Division contracted with Studebaker to build them a user specific fleet of service vehicles. They wanted something resonably priced that would be a Westinghouse only vehicle. Studebaker came up with a simple cab over pickup and a van design. One of each was built as a prototype but Studebaker went belly up before they could start building them. This is the last Studebaker truck they ever designed. This truck was a supposed barn find that ended up in a museum and they dont know what happened to the van. I thought building a replica of this on a Dakota chassis would be cool.
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a few posts here want to blame high labor costs. bullshit, Ford paid way more than anyone else back in the old days and I hear they have done pretty well for themselves over the years.

they failed the way most companies fail. poor management decisions.

 

That's a negative ratfink -- at least it wasn't true in the 60s and later -- may have been in the real early days. I do recall reading that Ford upset the auto industry by offering $1 a day back in the 19-teens or something like that though. In the early 60s AMC exec George Romney (That other Romney's dad, and former governor of MI) wanted to reward his workers since Rambler was doing so well. So he gave them a generous contract. After all, if it weren't for them Rambler wouldn't have ousted Plymouth for the #3 spot in 1961. Well, that contract forced AMC into higher contracts later. The union wouldn't back off even when AMC was threatened with closing in the late 70s. Renault bought them out to keep them from going under in late 80 or early 81. Part of the reason Chrysler closed the Kenosha plant was due to high operating cost, part of which was that AMC workers made an average of $0.10 an hour more than any of the Chrysler plants (may have been more, memory fuzzy, but it was a little bit more). Doesn't sound like much, but with several thousand workers over two shifts...

 

farna Ford startled the world by offering $5 a day in 1914, almost twice as much as other auto makers. But there was a catch to it. To get the $5 you had to make a certain quota of parts. The quota was set by timing the fastest man in that job, for 1/2 hour, then multiplying X 16. In other words you had to go like hell for a full 8 hours with no breaks to get the $$$$. Very few could do it but there were always more at the factory gates every morning who were willing to try.

I got this info from a story by a guy who worked at the Dodge plant at the time, he got $2.85 a day. He left Dodge for Ford to get the big wages but soon went back to Dodge.

 

The economy of the 1950-s was in growth. The big 3 outstripped and quashed all the competition. They had enormous edges in marketing and product development. Smaller manufacturers couldn't compete. Not unlike Nascar where the multi-car teams dominate all the single car teams. Eventually Studebaker was in a non-competitive environment and couldnt sustain their business. The same thing will happen in Nascar. 3 or 4 teams will own all the entries. It is free enterprize at its worst.

 

Rusty -- that must be what I was thinking... $5 a day when most paid a lot less. I din't know about the "catch" though!! Sounds like things I've read about old Henry Sr. though.

 

When my 61 Hawk was three years old I blew the engine through no fault of Studebaker. I beat the hell out of that 289. I put a 352 Packard engine in it and drove it for years. A little heavy in the front end but she'd go like hell in a straight line.

Had a 56 Packard which was WAYYYY ahead of it's time. Especially with the tortion bar suspension and load leveler. It was a great car.. Too bad I wrecked it one night on a mountain road testing the suspension...

 

The post-WWII era had started out well. Studebaker was the first company to introduce an all-new postwar model in 1946, management believing the company &#8220;stood to gain much from being the first to give its customers the advantage of advancements both in design and production.&#8221; The advanced styling of Studebaker&#8217;s new envelope-body cars was impressive, with fenders integrated into the design rather than looking added on. Buyers waited in line for a glimpse.

The company soon built a reputation for styling. The 1950 Studebaker introduced controversial frontal styling with rounded fenders flanking a bullet-nose. Some thought it was the look of the future, others hated it, but it was very successful. In 1951 the company brought out a new V8 engine years before Nash, Hudson, Packard and even Pontiac.

Then came Studebaker&#8217;s centennial in 1952, a yearlong celebration for the company. There was much to be proud of. Studebaker was one of the largest automakers in the world and the future looked bright. The 1952 cars were face-lifted by Raymond Loewy&#8217;s designers, featuring a sloping hood and low-set grille that successfully blended the existing lines with a preview of styling themes that would debut on the all-new &#8217;53 Studebakers.

But business results for 1952 were mixed. Sales of $586 million were a new record, and net income rose 13 percent to $14.2 million. But profits were far lower than 1948, 1949 or 1950 despite greater sales volume. The problem was high labor costs and low productivity, which had taken root during WWII&#8217;s huge demand for military products. Postwar conditions only exacerbated the problem. With the public clamoring for new cars, management wouldn&#8217;t risk a strike, caving in to wage demands and turning a blind eye to low productivity. By 1952 work standards at Studebaker were said to be among the lowest in the industry.

The soaring postwar demand for autos suddenly ended. Studebaker introduced all-new cars that year, and they proved the company&#8217;s undoing. Originally, the 1953 Studebakers were to have conventional styling. However, Raymond Lowey convinced management to authorize production of a stylish coupe with low-slung, very European styling. But then stylists went back and redesigned the sedans to incorporate elements of the coupe styling and that proved a colossal mistake &#8211; the awkward Euro-styling made the cars look small.

While public reaction to the &#8220;Loewy&#8221; coupe was outstanding, response to the new Commander and Champion sedans was tepid. Another problem was the discovery that the sales division had badly underestimated expected demand for the coupes while overestimating sedan sales. Also hampering sales were production delays caused by front-end sheet metal that would not mate to the body.

This all cost a great many sales, and Studebaker lost money on car production during the first quarter of 1953. April was profitable but in May production had to be cut when a supplier went on strike. Just as that problem was fixed Ford launched its historic Blitz, an attempt to wrest sales leadership from Chevrolet&#8217;s grasp. Ford factories shipped thousands of extra cars to dealers, forcing retailers to sell cars for a few dollars over invoice to clear the glut. Chevrolet followed suit and the two giants became locked in a battle that decimated Studebaker. Profits fell more than 80 percent to $2.68 million.

Via: AutoQuarterly
http://www.autoquarterly.com/featured_articles/article.php?id=1
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Everybody likes to keep it short and sweet, but the link above, and this link below, are the most informative articles I have seen on the history of the demise of the great Studebaker Corp.

http://www.autoquarterly.com/featured_articles/article.php?id=1#
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sorry - I stand corrected on the brakes.....

Rocky posted it - Stude was at a 100 years in 1952....Ford was just set to make 50.....Olds went away as well as Pontiac - which I would rather see than a Buick....Chevy....well you can't do away with apple pie.....

 

The company was in business a full 50 + years before it produced its first automobile in 1902, which was an electric thru 1911. 1904 was the first gasoline powered car.
They first were in business producing horse drawn wagons for farming and general transportation. Then wheelbarrows for the '49er Gold Rush. During the height of westward migration and wagon train pioneering, half of the wagons used were Studebakers. Then onto horse drawn Carriages,sulkies, five-glass landaus, broughams, clarences, phaetons, runabouts, victorias, and tandems. All of which were some of the finest built anywhere.
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