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Spent most of this year trying to get a general view of what was happening with the independents in the mid 50s: two books on Kaiser, one on Hudson, the Ward book about Packard, side trips to Hall-Scott and Curtiss-Wright. Started the Foster book on AMC this evening.

I have heard that Pat Foster doesn't like Jim Nance. Really believe it now. In his book on Hudson, Langworth left the impression that the Packard board, and Nance in particular, were drowning in their own hubris. Foster goes even farther, saying that, after announcing the Nash/Hudson merger in early 54, Mason gave a presentation to the Packard board, but Nance talked the board into rejecting the proposal, because Mason was proposing Nance only be the VP of the Packard/Clipper division, reporting to Romney. I have not seen specific information elsewhere to either confirm or deny that reported presentation to the board.

The real howler is Foster's presentation of the "reciprocity" dispute. According to Foster, while Hudson closed Detroit production operations in fall 54, they held on to the body plant, in anticipation of orders from Packard for stampings and bodies. Again, according to Foster, in late 54 Romney heard via the grapevine that Packard had taken an option to buy the Murray body plant.

If Romney was expecting body business from Packard in late 54, he was delusional, as Packard had leased Conner in May and was spending $12M moving final assembly into Conner. According to Ward, Packard signed the lease on Conner the day before AMC announced Hudson in Detroit would be shut down, so Packard would not have known that the Hudson body plant would be available.

Then we get to the interesting nugget. Ward reports that Chrysler wanted $8.75M for Packard to buy Conner. I knew from previous reading that the Hudson stamping plant was bought by Cadillac in 56 and used until Poletown opened. Foster reports the price AMC received for the plant: $2.1M, a quarter of what Colbert wanted for Conner. Tex Colbert knew he had Packard in a vice, and exploited it.

I know somebody whose father worked for Hudson and for Packard. He says the situation at Hudson was completely out of hand. Really bad.

Friends

I invited George Hamlin to speak at the 1995 annual dinner of the late Eastern Packard Club. His topic was this subject.

Before the Packard/AMC agreement Packard was quoted a set of prices for various body stampings. After the agreement was signed, the prices essentially doubled. George was reading us a list of price changes straight from a Studebaker/Packard document.

The change was directly laid at Romney's feet. It was a sobering moment and a room full of usually boisterous people was remarkably quiet.



Regards

John Harley

Hi

".....that the Packard board, and Nance in particular, were drowning in their own hubris."

Were truer words ever spoken! The decision to outsource body-making to Briggs in 1940-41 by Macauley, Gilman, Christopher et al seemed cost-affective and, because of pressing war work, expedient. Ultimately, it became a major cause for their downfall.

No one can blame Chrysler for trying to get all they could from the deal. After all, they could only sell that plant once. Even at $8.75M, Packard still couldn't swing it, leased Connor for five years which was a stopgap but that was all the plant was good for. Anything other than a modern body/assembly facility attached directly to Utica was going to be a stopgap. That is, if they intended to pursue the complete one-story plant concept to fruition.

There were a number of timing mismatches when it came to the advantages that could have been wrought. Packard needed their body plant but Hudson wasn't quite done using it. By the time AMC could lease it, Packard was locked into Connor. We assume the Hudson body plant might have worked out better than Connor though anecdotal evidence suggests it might not have been that much better a situation.

Bad blood between Nance and Romney right from the get-go scuttled whatever beneficial reciprocity operations might have strengthened both companies. As John Harley notes, company documents reveal the degree to which each side poisoned the well of any worthwhile cooperation possible.

Steve

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Langworth wrote his book about Hudson in the early 70s when Roy Chapin and Jim Nance were both still alive, and he interviewed them. Chapin commented on the poor condition of the Hudson plant, as it had not been maintained for "10, maybe 20 years"

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Not much different from Packard's experience with Briggs. Reportedly, the body prices Packard received for the first couple years were quite attractive, then the price soared.

No one can blame Chrysler for trying to get all they could from the deal. After all, they could only sell that plant once. Even at $8.75M

True, but there is a difference between a fair market price, and using Packard like a rented mule. I had posted a few months ago about the price Ford sold the original Lincoln plant to DTE for, also far less that what Chrysler wanted for Conner, and the Lincoln plant was larger.

Anything other than a modern body/assembly facility attached directly to Utica was going to be a stopgap. That is, if they intended to pursue the complete one-story plant concept to fruition.

We kicked around the plant alternatives in the "what if" threads last summer.

The bottom line was East Grand, in the mid 50s, wasn't that impossible a proposition. Cadillac's Clark St plant was built in the early 20s. Parts of Dodge Main were built before WWI. Both ran into the early 80s. If Cadillac had wanted a new plant in the 50s, they could have gotten one.

Anything other than a modern body/assembly facility attached directly to Utica was going to be a stopgap.

The money Packard sank into Utica was another thing that made them cash poor.

I took a look at the situation at Curtiss-Wright during that period. Roy Hurley and the board were looking for a fast buck. Instead of developing jet engines on their own, they licensed engines that were developed by others. With that mindset, if Packard had moved in 52 to sell Utica and the J-47 contract to C-W, before the Air Force started cutting the production rate to nothing, Hurley might have jumped at it as it would have been immediately profitable to C-W. Then Packard would have had a big portion of the money they needed to do a proper job of developing a new model.

There were a number of timing mismatches when it came to the advantages that could have been wrought. Packard needed their body plant but Hudson wasn't quite done using it. By the time AMC could lease it, Packard was locked into Connor. We assume the Hudson body plant might have worked out better than Connor though anecdotal evidence suggests it might not have been that much better a situation.

Another timeline inconsistency. Ward says that Hudson approached Packard about a merger, around August 53. Foster says that Barit approached Mason in June and they signed a memo of understanding in a room in the Book Cadillac hotel that month.

The best scenario we came up with in the "what if" thread was Packard merging with Hudson. With Packard the larger company, a stock swap would have Nance and the Packard board in charge. The Hudson body plant, fully equipped and staffed, would have been acquired essentially for free. The Hudson Hornet and Wasp, being in the same size and price range as the Clipper, could be replaced by retrimmed Clippers, powered by the Hudson 308, and production consolidated at East Grand.

Hi Steve203

The idea for Packard to sell Utica and the J-47 contract to C-W before the defense contracts were reduced is a good one....in hindsight. Though, I'd hard to imagine the board going for it at the time. Packard had become so dependent upon the cash flow and whatever profit generated by defense work for most of a decade by that point, they'd have viewed it as giving future profitable business.

A Packard-Hudson tie-up seemed to have more benefits than the principals at the time could see. The body plant was the big inducement, plus an established medium-priced make in Hudson rather than pushing Clipper. Separating Packard from a medium-priced line to enhance its prestige would have been much easier if that other car had another make name. In recent decades, we saw Acura, Lexus and Infiniti come to market for just that reason.

Steve

When I said I've been told things at Hudson were really bad, that includes labor problems. Hudson apparently had tremendous morale problems. We've been dealing (here and now) with temporary situations that improve once plants get straightened out, but apparently the entire Hudson labor situation warranted a layoff. Some of that could, of course, be assigned to a run down plant with toilets overflowing, no heat, broken windows etc., etc.; but build quality didn't vary with good weather either.

Most of these history books regard the rank and file as second class citizens without intelligence and not worth talking to. Well, just because someone isn't educated doesn't mean they aren't intelligent, and just because someone is educated doesn't mean they aren't stupid. When you sit down with people who worked the nuts and bolts side of these companies the result is very illuminating.

The idea for Packard to sell Utica and the J-47 contract to C-W before the defense contracts were reduced is a good one....in hindsight. Though, I'd hard to imagine the board going for it at the time.

True. I read somewhere that defense contracts generated half of Packard's revenue and 80% of their profit. The problem was that the money that Packard needed for new model development was tied up in the Utica plant. These days, it's routine for a company to build a plant, then sell it to a real estate investment company, and lease it back, to recover it's initial capital in a hurry. At that time, that type of sale and leaseback transaction was not common. The alternative would be for Packard to price the value of the plant, plus the discounted present value of the future profits under the contract. That way, Packard would recover the $15M they spent to build the plant, plus a portion of the profits from the contract, and get it all in a lump sum.

I started looking at C-W as a possible JV partner to pursue development of the jet engines Packard was developing in Toledo, when Packard lost it's government development contract in early 49.

There was crazy stuff going on at C-W.

C-W had come out of the war with a huge pile of cash, and stockholders started agitating for huge dividend payouts, instead of the money being invested in R&D on jet engines and airframes to use them. That pressure resulted in Paul Shields, an investment banker (Shields and Company is still around today), being made Chairman of the Board. Shields then packed the board with more bankers and financial people. In 48, Guy Vaughn, who had been President of C-W since the 30s was forced out.

Shields proceeded to cut the R&D budget to ribbons and fire half of C-W's engineering staff, to stoke up short term profits and dividends.

C-W had had a small jet development program, which was producing encouraging results. The new President of the company and the head of the jet engine program went to the board for a serious jet R&D budget in 49. Not only did the board refuse to give them a nickle, the board ripped into the President of the company for the $7M he had already spent on jets. The President resigned that day. In that environment, there is no way C-W would have formed a jet JV with Packard.

All that turmoil resulted in the Board hiring Roy Hurley away from Ford to be President. Hurley did get a little of the R&D budget restored, but he was more of a quick buck operator, which I'm sure that board liked. Rather than develop jets in house, Hurley went to England and bought licenses from Armstrong-Siddeley and Bristol. They had some success with the Sapphire, none with the Olympus.

With that environment, if C-W had had a shot at buying Utica, with it's experienced workforce and guaranteed profit J-47 contract in place, I think Hurley would have gone for it.

As you said, it's a matter of convincing the Packard Board that their choice is either be a "second source" defense contractor, or an automaker. They didn't have enough capital to do both.