Re: PREwar Studebaker opinions

Posted by 58L8134 On 2009/10/15 13:55:37

Hello Gentlemen

"So Studebaker effectively bumped off two Luxury make in its lifetime. I guess hindsight isn't twenty-twenty after all, or Packard would have thought twice."

This opinion seems to be rife in the old car world but an examination of the facts brings one to a contrary conclusion.

Reading carefully the posting from the P-A website above, one finds that P-A was bought in 1928 at a time of financial strength by Studebaker Corporation. President Albert Erskine bought P-A as part of his plan to develop full market coverage for the corporation in the GM model. Throughout their ownership, considerable investments were made in P-A products and facilities in an effort to modernize both. The Receivership into which Studebaker fell in 1933 came about because of over-optimistic policies of Erskine and his board. P-A was only sold off to a private investment group in 1933 in order to raise funds for Studebaker Corporations' own survival as part of the receivership plan. P-A by this juncture had become a real financial drain on the corporation.
The new owners had their opportunity to try to make it a profitable enterprise, something that was virtually impossible for an independent luxury carmaker in the mids of the Depressions. The P-A demise in 1938 was fully five years after Studebaker relinquished control.

Factors not stated in the posting at the time of the Studebaker purchase was that P-A was in poor financial condition, with an antiquated factory and outdated product lines. Their factory was largely a hand labor operation, their Series 80 was uncompetitive and the large Series 36 completely antiquated (a giant T-head six). Worst of all, P-A lacked development money to create new product lines. Herein Studebaker truly came to the rescue with funds to develop the new Eights for 1929. If not for Studebaker purchasing and investing considerable money in P-A when it did, P-A would have gone the way of Locomobile.

Fast forward twenty plus years, Packard management decided combining with Studebaker offered an avenue for survival in the overheated market of the time. Remember, structurally, it was a buyout by Packard of Studebaker without thorough examination on the part of either party of the others business condition.

As they say, no one twisted Packard's arm to do so. The fact that Studebaker was in worse financial shape, only to be revealed once the deed was done, speaks only of the automotive industry management inexperience that Nance and his men brought to this decision.

To Nance's credit, he understood product content and promotion in appealing to buyers; this resulted in more appealing and interesting cars. But his lack of automotive industry experience with finance and management, displayed by the Studebaker purchase and the disastrous move to Connor Avenue are truly the decisions that drained the corporation's resources and lead to the collapse.
Studebaker may have been the millstone, but he and his people are ones who hung it around their necks!

Thanks for reading my diatribe, hope it gives you a broader perspective on these events. I welcome dissenting views as long as they're civil.

Steve