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Great point, didn't know Packard had a problem with rust. Wonder what other issues were lurking in those days.

Back to the original question only slightly off. I was in the optomotrists office on wed. and they had a copy of hemmings collectors digest and there was an article on how the author thought that Studabaker auto division could have survived a lot longer that it did by diversifying ibnto other areas of business.

I thought Studebaker as a corporation was starting to be pretty well diversified in the early 60's. The auto division was just one of several was it not? Did the author give a time frame when he thought that should have happened?

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Howard, Wikipedia lists --> several non-auto activities of Studebaker such as Clarke (Floor Machine Division), Schaefer (Commercial Refrigeration Division) and Trans International Airlines to name but a few.

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Thanks to the work of Brian (BH) & BigKev we are able to compare this with the situation in the mid-fifties. According to the --> company's 1957 annual report Studebaker was focused on car production at that time.

Don't know what you think but to me it looks like a big jump within short time (the difference between evolution and revolution consists of controllability).

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That's great info. As to the question of the need for diversification, the history of many auto companies past and present suggests that venturing into non-auto businesses tends to hurt the overall company. Nash was an exception with Kelvinator and they got a great A/C system out of the arrangement.

GM bought aero companies such as Hughes back in the 80s, didn't help. Ford went on a non-auto (and auto) buying spree in the late 90s and has since gotten back on track, or at least stopped the bleeding, by divesting all but the core Ford and Lincoln product. If Romney had thrown up his hands in late 1954 and concluded that the industry was too tough a nut to crack for an Independent he might have spent the '56 Rambler money on non-auto businesses. Would it have paid off as handsomely as the mega bucks that AMC earned over the next 10 years? Packard chased after non-auto work post-war with money that could have updated its cars. Then they spent more money chasing after a presence in the low priced field. Diversifying invites risk and diverts money, talent and management attention. It seems to make the most sense when one is either on top of their core business or desperately trying to abandon their core business.

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I wouldn't count on Japanese voices of the approval. The NYSE listed company Toyota is the worldwide third biggest industrial corporation not despite but because of its 522 daughter companies. I hope you feel supported by the following real judgement of Solomon:

Toyota is another exception.

Am not sure when they acquired all these companies. If it was from a position of strength and/or to bring Toyota parts suppliers into the fold, am not surprised. If they did it because they didn't know how to make money making cars, would be very surprised. Have they ever had trouble making money on cars?? Maybe lately, otherwise they've been on a role for decades. Neither Packard nor Studebaker were on a role when they merged and later diversified. I guess I'm of the camp that says get your personal life in order before making marriage proposals.

Friends

Read the Kimes book,The Fall of the Packard Motor Car Company, and Master Motor Builders. After the war, 50% of Packard's business and 80% of their profits was non-auto, mostly defense. The figures are in black and white year to year in Mr. Neal's book. The non auto business subsidized the auto business.

"Engine Charlie" Wilson, Chairman of General Motors, became Eisenhower's Secretary of Defense. During his confirmation hearings he uttered the famous words " What's good for the country is good for General Motors and what's good for General Motors is good for the country"

You can guess what happened next. Packard soon lost their defense business to General Motors for 'security reasons" This was after PMCC had kept their defense billing under the cost plus 3% rate during WWII and almost immediately after building the Utica jet engine plant. Is your blood boiling yet?


At some point in the early 60's the Studebaker board decided that there were easier ways to make money than manufacturing cars, just as Everett Loban Cord and others did before. They got into other businesses

Regards


John Harley

Great recap, can't argue with the numbers and we've all read the same books. I can't help but suspect there is more to this though. Historians never get it exact, they don't know every detail. They can't. Now, I don't' know if this Wilson guy blatantly set about to torpedo Packard. Or less seriously, if he simply wanted to greedily line the pockets of GM, and Packard just got in the way.

Could it have primarily been a simple risk analysis that the military did? Maybe they concluded that Packard in the early 50s was not looking competitive on the auto front and therefore was a higher risk for defense work. Or wasn't capitalized enough to ramp up in quantities that would give the military economies of scale. Maybe it was psychology. The Packard that America turned to and depended on in 1941 was not the same Packard in 1953. If Packard had gotten their act together post-war they might not have looked weakened in the eyes of the military. If Ike had a stunning Packard parade car to ride in rather than a Lincoln or Imperial, this whole thing could have turned out differently. Packard had more control of their destiny than history may suggest. I constantly see stories by the auto writers about the internal goings on of today's Big 3 and sometimes I laugh out loud at how completely wrong they got it.

I accept your arguments but will leave open the possibility that there are unknowns at play here.

Mahoning


Packard was just in the way of opportunism and was small and fragile enough at the time that no one would make much noise. No one was questioning GM at that point, and they had already rolled over light rail transit by then.

But, consider the potential Congressional hearings and blogs today if it happened now...

By the way. GM sued the government over damage done by the Air Force to the Opel plants that Hitler had seized. Don't know if they got the money, but it contrasts with Packard's attitude..

Regards


John Harley