Packard Forum Index » General

The Langworth book about Hudson was written in the mid 70s, when several of the officers of the company were still living. In his research Langworth also interviewed Nance. Langworth says that it was in his interview with Nance that Nance revealed Mason's grand plan to merge all four independents, including Studebaker, which Langworth had never heard of before. Roy Chapin was also interviewed for the book. He had never heard of this grand plan either, but then Chapin was a rather junior executive at the time so not necessarily privy to everything. Romney declined to be interviewed.

As Nance told the story, when Hugh Ferry was recruiting him in 51, Ferry told him of this grand plan, but that the stumbling block was Harold Vance, who Mason had not been able to come to terms with.

Nance said "The offer to me was to put Studebaker and Packard together so that later on the four companies could be brought together...He (Mason) had picked up Hudson, which was then for sale and being shopped, that was no secret...We agreed that Mason would take the Hudson-Nash end, and I would put Studebaker-Packard together, then we'd fold the two pieces together into one company."

Then Nance said "I wouldn't have gone into it just to take over Packard"

That this was a recruitment pitch from Hugh Ferry, in 51, puts a different light on it. If Nance understood there was a gentleman's agreement dating from 51 to leave Hudson for Nash to absorb, that would explain why Barit's approach to Packard in August 53 was declined. It might also explain why Nance didn't require any proper due diligence done on Studebaker before the merger was closed, as well as his fixation to merge with Studebaker at any cost.

But it raises more questions

-If the grand plan had been in existence since at least 51, and, as Nance claims, Hudson was already on board, then why would Hudson approach Packard at all? Langworth's first person interviews said the negotiations between Hudson and Nash took six months. The boards approved the merger on January 14th of 54, so an August contact with Packard would have come in the early days of negotiations with Nash. Nash and Hudson confirmed to the media that talks were underway in November of 53.

-If the grand plan was disclosed to Nance in 51, and was a condition of his joining Packard, then why was Nance ordering studies of every possible merger partner he could think of, including Kaiser, as Ward reports, if the four-way was already agreed in principle between Packard, Hudson and Nash?

-If the four-way was a done deal, why did Nance have further studies done that claimed millions and millions of dollars in savings by combining Packard with Studebaker, without consideration of American Motors?

That's adding up to a lot of money spent on studies for what was supposed to already be settled. A really expensive smoke screen to hide the grand plan?

So, from a vantage point of 20 years after the event, was Nance trying to cover his own rear by saying he had been double crossed by Nash, when the grand plan as he described had never existed? Did Ferry dangle the grand plan as a recruiting tool, when it didn't really exist, which Nance discovered to be fiction after he joined Packard, and he set off on his search for someone, anyone, to merge with? Did Mason pass the grand plan to Ferry via a mutual contact just to keep Packard away from Hudson, because Hudson was a good fit for both Nash and Packard, while Studebaker didn't fit with anyone or anything?

Good questions, each raises much doubt about the grand plan. I'd add one more historical fact to the brew: Nance went ahead in 1953 with a plan for an ever more differentiated Clipper and envisioned it as a separate brand. Why would he do that if Hudson were to be part of the grand plan, which the Clipper would directly compete?

I think all these kingpins liked the idea of a Big 4th but each saw himself as the CEO. Once Nance realized that he wasn't a shoe-in, which was probably soon after he took over or even before, he started beating his chest to make it look like his company was the biggest gorilla, the one that would do the buying rather than the one that would be bought.

Take a quick look at the 1951 Annual Report. The company has NO DEBT; $14.5 million in cash, $11.1 million in securities; $3.8 million in accounts receivable; $1.7 million in government payments due and $11.1 million in automobile inventory. Plus $32.3 million in real estate. I think that's about $650-$700 million currently that could be leveraged in today's financial markets into about $1.5 to $2 Billion. So if I were Mr. Nance and I didn't know how much money it took to compete in the auto market, I would think Packard could purchase a few small countries. The Big Four roll-up would just require the agreement of the Boards and CEO's. They should have started in 1951.

So, I believe that the reported Nance comments from 1951 are genuine views held at the time of his first meeting with Mr. Ferry.

Hi

The question really goes to who was the source and what was timeframe of the formulation of four-way merger plan. Was it truly the prescient revelation of a cigar-chomping Mason ruminating on the future of his industry while hunkered in a duck blind in Northern Michigan in 1946?

Multiple historians have written that Mason approached the principals of all four independents in 1946 with a glimpse of their futures a decade hence, only to be turned down. Again in 1948, he proposed a Nash and Packard merger, receiving the same response from the board. As a source for Ferry's knowledge of the plan, the 1948 discussion of the idea would be it. It many also have been an idea that was simply "in the air" in that go-go postwar period.

Nance, given the results of his direction of Packard, did have reason to "constructively modify" his recollections of the sources of ideas, and even events. JJN was reticent for two decades on his Packard years, only the overtures of Langworth and other PAC member broke through his reluctance to discuss that unfortunate episode in his business career.

Notice though that no plan ever seem to include Kaiser-Frazer as part of the grand merger plan. It was generally known throughout the industry in Detroit the crazy management methods going on at Willow Run. Of course, on that basis, Studebaker should have been excluded too!

Steve

The May 17, 1952 issue of "Business Week" devoted a full-page to Nance joining Packard. The headline read: "Nance's Idea: Merge Packard." The newsweekly reported that: "Nance intends to make Packard the nucleus of a big new auto company - big enough to join the Big Three, General Motors, Chrysler and Ford - in a new Big Four. Nance's idea is to merge Packard with one or more of the other independent auto producers, most likely Nash-Kelvinator. It was on the understanding that he could tackle something like this that Nance took the Packard job."

"Putting Packard together would be one way to cure some of the problems," Business Week concluded, "as well as add to the number of dealer outlets and widen the line. Such a union might sound attractive, too, to an outfit like Nash. If not, there are other possibilities. The Detroit Athletic Club bar has cooked up many a merger that never came off. But no one should be surprised to learn any day that Hudson, Studebaker, Nash, Packard or Willys really was involved in a merger made up of some combination of those named."

So -- while Langworth did not know about the four-way plan until his interview with Nance in the 1970s, it WAS being discussed around Detroit in the early 1950s.

It was on the understanding that he could tackle something like this that Nance took the Packard job."

Well, that confirms what he told Langworth with regard to the condition of him taking the job being that he had a mandate to execute a merger.

Barit was willing to sept aside. Vance and Hoffman stepped aside. Didn't it occur to Nance to ask just what Mason's intentions were? I mean, if you tell me that someone else, who is President of a company larger than mine, wants to merge with my company, my first question is "what happens to me?"

Again, the question comes up, given the details of the deal according to Nance, if he knew that structure going in, why did he conduct such a far ranging search for a merger partner? Why didn't Barit seem to know about the grand plan in the summer of 53 when he contacted Packard?

If everyone is being reasonably honest in how they were thinking, then there may have been a breakdown in precision of language. Someone said "Mason has an idea", which was heard as "Mason has an agreement in principle"

I don't think the whole merger thing would have worked anyway. Packard already had a nice lower priced car called the 110 which they dropped. The dealer penetration argument is about the only valid point. All the brands needed more points of sale. In the postwar area I like the Packards even though the Cadillac is better engineered, a Ford would blow Ultramamtic off the road, the Plymouth is head and shoulders better transportation, and the Chevrolet is a pleasant driving value for the money.

From the standpoint of technology sharing the whole concept was nuts. Engines could be, and were, bought from the big producers. Ditto transmissions. The only decent prospect was Nash. It's weird styling was reasonably tamed so the brand could stay in business long enough to buy (or copy) motors or transmissions from Ford or GM.

So the question is, suppose they merged and stayed in business through 1965. Then what? AMC got nothing from Hudson, Packard got nothing from Studebaker, and Willys (Jeep) got nothing from Kaiser. This whole merger mania stuff seems based on the conclusion that GM was proof that mergers couldn't fail. That ignores the fact that without Fisher body GM would have sunk faster than the Titanic.

My opinion is still that Packard's best bet for survival was to be absorbed by Ford to prevent the Edsel fiasco. If that happened who knows what a piece of @#$% the 2014 Packard would be.