Studebaker

Studebaker (English pronunciation: /ˈstjuːdəbeɪkər/ STEW-də-bay-kər) Corporation was a United States wagon and automobile manufacturer based in South Bend, Indiana. Founded in 1852 and incorporated in 1868[1] under the name of the Studebaker Brothers Manufacturing Company, the company was originally a producer of wagons for farmers, miners, and the military.

Studebaker entered the automotive business in 1902 with electric vehicles and in 1904 with gasoline vehicles, all sold under the name "Studebaker Automobile Company". Until 1911, its automotive division operated in partnership with the E-M-F Company and the Garford Company of Elyria, Ohio. The first gasoline automobiles to be fully manufactured by Studebaker were marketed in August 1912.[2]:p231 Over the next 50 years, the company established an enviable reputation for quality and reliability.[3] The South Bend plant ceased production on December 20, 1963, and the last Studebaker automobile rolled off the Hamilton, Ontario, Canada, assembly line on March 16, 1966.

According to the official Studebaker history published in 1918, three German men named Studebecker or Staudenbecker[4] —Peter (aged 38), Clement (36), and Henry (28)—sailed on the ship Harle from Rotterdam, Holland, and disembarked at Philadelphia on September 1, 1736.[5]:p.11 They had bought their tickets in Krefeld, Germany. Two of the men were accompanied by their wives. They moved on from Philadelphia to Germantown and, sixty-two years later, persons named Studebaker were recorded as paying taxes in York County, and were described as "blacksmiths and woodworkers".[6]:p.3 These were Peter Studebaker (1747–1812) —probably a son of the immigrant Clement Studebecker (1700–1762) and his wife Anna Catherine[7]—and his son Peter Studebaker Jr.[5]:p.11

In Albert Russel Erskine's official history, Peter Studebaker is reported to be the father of John [Clement] Studebaker and thus grandfather of the five Studebaker brothers of South Bend, Indiana.[5]:p.13 However, this conflicts with a genealogy produced later, in which John's father is identified as Clement Studebaker (1758–1840).[8] In any event, John Studebaker (1799–1877) moved to Ohio in 1835[2]:p228 with his wife Rebecca (née Mohler) (1802–1887)—and taught his five sons to make wagons. They all went into that business as it grew to gigantic proportions with the country.

The five sons were, in order of birth: Henry (1826–1895), Clement (1831–1901), John Mohler (1833–1917), Peter Everst (1836–1897) and Jacob Franklin (1844–1887). The boys had five sisters.[9] Photographs of the brothers and their parents are reproduced in the 1918 company history, which was written by Erskine after he became president, in memory of John M.,[5]:p.5 whose portrait appears on the front cover.

South Bend operation
Clement and Henry Studebaker, Jr., became blacksmiths and foundrymen in South Bend, Indiana, in February 1852.[2]:p229 They first made metal parts for freight wagons and later expanded into the manufacture of complete wagons. At this time, John M. was making wheelbarrows in Placerville, California. The site of his business is California Historic Landmark #142.[10]

The first major expansion in Henry and Clem's South Bend business came from their being in the right place to meet the needs of the California Gold Rush that began in 1849. From his wheelbarrow enterprise at Placerville, John M. had amassed $8,000. In April 1858, he quit and moved out to apply this to financing the vehicle manufacturing of H & C Studebaker, which was already booming because of a big order to build wagons for the US Army. In 1857, they had also built their first carriage—"Fancy, hand-worked iron trim, the kind of courting buggy any boy and girl would be proud to be seen in".[6]:p.24

That was when John M. bought out Henry's share of the business. Henry was deeply religious and had qualms about building military equipment. The Studebakers were German Baptists, a religion that viewed war as evil. Longstreet's official company history simply says "Henry was tired of the business. He wanted to farm. The risks of expanding were not for him".[6]:p.26 

Expansion continued from manufacture of wagons for westward migration as well as for farming and general transportation. During the height of westward migration and wagon train pioneering, half of the wagons used were Studebakers. They made about a quarter of them, and manufactured the metal fittings for other builders in Missouri for another quarter-century.

The fourth brother, Peter E, was running a successful general store at Goshen which was expanded in 1860 to include a wagon distribution outlet.[6]:p.28 A major leap forward came from supplying wagons for the Union Army in the Civil War (1861–65). By 1868, annual sales had reached $350,000.[2]:p229 That year, the three older brothers formed the Studebaker Brothers Manufacturing Company—Clem (president), Peter (secretary), and John M. (treasurer).[6]:p.38 By this time the factory had a spur line to the Lake Shore railroad and, with the Union Pacific Railroad finished, most wagons were now dispatched by rail and steamship.

World's largest vehicle house
In 1875, the youngest brother, 30-year-old Jacob, was brought into the company to take charge of the carriage factory, making sulkies and five-glass landaus. Following a great fire in 1874 which destroyed two-thirds of the entire works, they had rebuilt in solid brick, covering 20 acres (81,000 m2) and were now "The largest vehicle house in the world".[6]:p.43 Customers could choose from Studebaker sulkies, broughams, clarences, phaetons, runabouts, victorias, and tandems. For $20,000 there was a four-in-hand for up to a dozen passengers, with red wheels, gold-plated lamps and yellow trim.

In the 1880s, roads started to be surfaced with tar, gravel, and wooden blocks. In 1884, when times were hard, Jacob opened a carriage sales and service operation in a fine new Studebaker Building on Michigan Avenue, Chicago. The two granite columns at the main entrance, 3 feet 8 inches (1.12 m) in diameter and 12 feet 10 inches (3.91 m) high, were said to be the largest polished monolithic shafts in the country.[11] Three years later in 1887, Jacob died—the first death among the brothers.

In 1889, incoming President Harrison ordered a full set of Studebaker carriages and harnesses for the White House. As the twentieth century approached, the South Bend plant "covered nearly 100 acres (0.40 km2) with 20 big boilers, 16 dynamos, 16 large stationary engines, 1000 pulleys, 600 wood- and iron-working machines, 7 miles (11 km) of belting, dozens of steam pumps, and 500 arc and incandescent lamps making white light over all".[6]:p.54 The worldwide economic depression of 1893 caused a dramatic pause in sales and the plant closed down for five weeks, but industrial relations were good and the organized workforce declared faith in their employer.

Family association continues
The five brothers died between 1887 and 1917 (John Mohler was the last to die). Their sons and sons-in-law remained active in the management, most notably lawyer Fred Fish after his marriage to John M's daughter Grace in 1891.[12] "Col. George M Studebaker, Clement Studebaker Jr, J M Studebaker Jr, and [Fred Sr's son] Frederick Studebaker Fish served apprenticeships in different departments and rose to important official positions, with membership on the board."[5]:p41 Erskine adds sons-in-law Nelson J Riley, Charles A Carlisle, H D Johnson, and William R Innis.

In 1895, John M. Studebaker's son-in-law Fred Fish urged for development of 'a practical horseless carriage'. When, on Peter Studebaker's death, Fish became chairman of the executive committee in 1897, the firm had an engineer working on a motor vehicle.[6]:p.66 At first, Studebaker opted for electric (battery-powered) over gasoline propulsion. While manufacturing its own Studebaker Electric vehicles from 1902 to 1911, the company entered into body-manufacturing and distribution agreements with two makers of gasoline-powered vehicles, Garford of Elyria, Ohio, and the Everett-Metzger-Flanders (E-M-F) Company of Detroit and Walkerville, Ontario). Studebaker began making gasoline-engined cars in partnership with Garford in 1904.[13]

Under the agreement with Studebaker, Garford would receive completed chassis and drivetrains from Ohio and then mate them with Studebaker-built bodies, which were sold under the Studebaker-Garford brand name at premium prices. Eventually, vehicles with Garford-built engines began to carry the Studebaker name. Garford also built cars under its own name and, by 1907, attempted to increase production at the expense of Studebaker. Once the Studebakers discovered this, John Mohler Studebaker enforced a primacy clause, forcing Garford back on to the scheduled production quotas. The decision to drop the Garford was made and the final product rolled off the assembly line by 1911, leaving Garford alone until it was acquired by John North Willys in 1913.

E-M-F
Studebaker's agreement with the E-M-F Company, made in September 1908[5]:p47 was a different relationship, one John Studebaker had hoped would give Studebaker a quality product without the entanglements found in the Garford relationship, but this was not to be. Under the terms of the agreement, E-M-F would manufacture vehicles and Studebaker would distribute them exclusively through its wagon dealers.

The E-M-F gasoline-powered cars proved disastrously unreliable, causing wags to say that E-M-F stood for Every Morning Fix-it, Easy Mark's Favorite, and the like.[2]:p231 Compounding the problems was the infighting between E-M-F's principal partners, Everett, Flanders, and Metzger. Eventually in mid-1909, Everitt and Metger left to start a new enterprise.[14]:p88 Flanders also quit and joined them in 1912 but the Metzger Motor Car Co could not be saved from failure by renaming it the Flanders Motor Company.

Studebaker's president, Fred Fish, had purchased one-third of the E-M-F stock in 1908 and followed up by acquiring all the remainder from J. P. Morgan in 1910 and buying E-M-F's manufacturing plants at Walkerville, Ontario, Canada, and across the river in Detroit.[15]

In 1911, it was decided to refinance and incorporate as the Studebaker Corporation. The company discontinued making electric vehicles that same year.[6]:p.71 The financing was handled by Lehman Brothers and Goldman Sachs who provided board representatives including Henry Goldman whose contribution was especially esteemed.[5]:p.76

After taking over E-M-F's facilities, Studebaker sought to remedy the customer dissatisfaction by paying mechanics to visit each disgruntled owner and replace defective parts in their vehicles, at a total cost of US$1 million. The worst problem was rear-axle failure. Hendry comments that the frenzied testing resulted in Studebaker's aim to design 'for life'—and the consequent emergence of "a series of really rugged cars... the famous Big and Special Sixes".[2]:p231 From that time, Studebaker's own marque was put on all new automobiles produced at the former E-M-F facilities as an assurance that the vehicles were well built.

Engineering advances from WWI
The 1913 six-cylinder models were the first to employ the important advancement of monobloc engine casting which became associated with a production-economy drive in the years of World War I. At that time, a 28-year-old university graduate engineer, Fred M. Zeder, was appointed chief engineer. He was the first of a trio of brilliant technicians, with Owen R. Skelton and Carl Breer, who launched the successful 1918 models, and were known as "the Three Musketeers".[2]:p234 They left in 1920 to form a consultancy, later to become the nucleus of Chrysler Engineering. The replacement chief engineer was Guy P. Henry who introduced molybdenum steel,[2]:p236 an improved clutch design[16] and presided over the six-cylinders-only policy favored by new president Albert Russel Erskine who replaced Fred Fish in July 1915.[2]:p234

John M. Studebaker had always viewed the automobile as complementary to the horse-drawn wagon, pointing out that the expense of maintaining a car might be beyond the resources of a small farmer. As a result, the manufacture of horse-drawn vehicles was not wholly ceased until Erskine ordered removal of the last wagon gear in 1919.[6]:p.90 To the cars, Studebaker added a truck line, which later replaced the horse-drawn wagons. Buses, fire engines, and even small rail locomotives were produced using the same powerful six-cylinder engines.

First auto proving ground
In 1925, the corporation's most successful distributor and dealer Paul G. Hoffman came to South Bend as vice-president in charge of sales. In 1926, Studebaker became the first automobile manufacturer in the United States to open a controlled outdoor proving ground on which, in 1937, would be planted 5,000 pine trees in a pattern that spelled "STUDEBAKER" when viewed from the air. Also in 1926, the last of the Detroit plant was moved to South Bend under the control of Harold S Vance, vice-president in charge of production and engineering. That year, a new small car, the Erskine Six was launched in Paris, resulting in 26,000 sales abroad and many more in America.[6]:p.91 By 1929, the sales list had been expanded to 50 models and business was so good that 90 per cent of earnings were being paid out as dividends to shareholders in a highly competitive environment. However, the end of that year ushered in the Great Depression that saw many layoffs and massive national unemployment for several years.

Facilities in the 1920s
Studebaker's total plant area was 225 acres (0.91 km2), spread over three locations, with buildings occupying seven-and-a-half million square feet of floor space. Annual production capacity was 180,000 cars, requiring 23,000 employees.[2]:p237

The original South Bend vehicle plant continued to be used for small forgings, springs, and making some body parts. Separate buildings totaling over one million square feet were added in 1922–23 for the Light, Special, and Big Six models. At any one time, 5,200 bodies were in process. South Bend's Plant 2 made chassis for the Light Six and had a foundry of 575,000 sq ft (53,400 m2), producing 600 tons of castings daily.[2]:p236

Plant 3 at Detroit made complete chassis for Special and Big Six models in over 750,000 sq ft (70,000 m2) of floor space. Plant 5 was the service parts store and shipping facility, plus the executive offices of various technical departments.[2]:p236 All of the Detroit facilities were moved to South Bend in 1926.[6]:p.91

Plant 7 was at Walkerville, Canada, where complete cars were assembled from South Bend, Detroit, and locally-made components for the Canadian and British Empire (right-hand-drive) trade. By locating it there, Studebaker could advertise the cars as "British-built" and qualify for reduced tariffs.[2]:p237 This manufacturing facility had been acquired from E-M-F in 1910 (see above). By 1929, it had been the subject of $1.25 million investment and was providing employment that supported 500 families.[15]

Impact of the 1930s depression
Few if any industrialists were prepared for the Wall Street Crash of October 1929. Though Studebaker's production and sales had been booming, the market collapsed and plans were laid for a new, small, low-cost car—the Rockne. However, times were too bad to sell even inexpensive cars. Within a year, the firm was cutting wages and laying off workers, but not quickly enough. Erskine maintained faith in the Rockne and rashly had the directors declare huge dividends in 1930 and 1931. He also acquired 95% of the White Motor Company's stock at inflated price and in cash. By 1933, the banks were owed $6 million, though current assets exceeded that figure. Instead of reorganizing in receivership, Erskine committed suicide, leaving it to successors Harold Vance and Paul Hoffman to deal with the problems.[6]:p.96-98

By December 1933, the company was back in profit with $5.75 million working capital and 224 new Studebaker dealers.[6]:p.99 With the substantial aid of Lehman Brothers, full refinancing and reorganization was achieved on March 9, 1935. A new car was put on the drawing boards under chief engineer Delmar "Barney" Roos—the Studebaker Champion. Its final styling was designed by Virgil Exner and Raymond Loewy. The Champion doubled the company's previous-year sales when it was introduced in 1939.[6]:p.109

World War II
From the 1920s to the 1930s, the South Bend company had originated many style and engineering milestones, including the Light Four, Light Six, Special Six, Big Six models, the record-breaking Commander and President, followed by the 1939 Champion. During World War II, Studebaker produced the Studebaker US6 truck in great quantity and the unique M29 Weasel cargo and personnel carrier. After cessation of hostilities, Studebaker returned to building automobiles that appealed to average Americans.

Studebaker prepared well in advance for the anticipated post-war market and launched the slogan First by far with a post-war car. This advertising premise was substantiated by Virgil Exner's designs, notably the 1947 Studebaker Starlight coupé, which introduced innovative styling features that influenced later cars, including the flatback "trunk" instead of the tapered look of the time, and a wrap-around rear window. Exner's concepts were spread through a line of models like the 1950 Studebaker Champion Starlight coupe[17] The new trunk design prompted a running joke that one could not tell if the car was coming or going.

Hamilton, Ontario plant
On August 18, 1948, surrounded by more than 400 employees and a battery of reporters, the first vehicle, a blue Champion four-door sedan, rolled off of the Studebaker assembly line in Hamilton, Ontario, Canada.[18] The company was located in the former Otis-Fenson military weapons factory off Burlington Street on Victoria Avenue North, which was built in 1941. Having previously operated its British Empire export assembly plant at Walkerville, Ontario, Studebaker settled on Hamilton as a post-war Canadian manufacturing site because of the city's centrality to the Canadian steel industry.

Industry price war brings on crisis
Studebaker's strong post-war management team including president Paul G Hoffman and Roy Cole (vice-president, engineering) had gone by 1949[2]:p252 and was replaced by more cautious executives who failed to meet the competitive challenge brought on by Henry Ford II and his Whiz Kids. Massive discounting in a price war between Ford and General Motors could not be equalled by the independent carmakers, for whom the only hope was seen as a merger of Studebaker, Packard, Hudson, and Nash into a third giant combine. This had been unsuccessfully attempted by George W. Mason. In this scheme, Studebaker had the disadvantage that its South Bend location would make centralization difficult. Its labor costs were also the highest in the industry.[2]:p254

Losses lead to merger with Packard
Ballooning labor costs (the company had never had an official United Auto Workers [UAW] strike and Studebaker workers and retirees were among the highest paid in the industry), quality control issues, and the new-car sales war between Ford and General Motors in the early 1950s wreaked havoc on Studebaker's balance sheet.[2]:p254-255 Professional financial managers stressed short-term earnings rather than long-term vision. There was enough momentum to keep going for another ten years, but stiff competition and price-cutting by the Big Three doomed the enterprise.

From 1950, Studebaker declined rapidly and, by 1954, was losing money. It negotiated a strategic takeover by Packard, a smaller but less financially troubled car manufacturer. However, the cash position was worse than it had led Packard to believe and, by 1956, the company (renamed Studebaker-Packard Corporation and under the guidance of CEO James J. Nance) was nearly bankrupt, though it continued to make and market both Studebaker and Packard cars until 1958.[2]:p254 The "Packard" element was retained until 1962, when the name reverted to "Studebaker Corporation".

Contract with Curtiss-Wright
A three-year management contract was made by Nance with aircraft maker Curtiss-Wright in 1956[19] with the aim of improving finances.[2] C-W's president, Roy T. Hurley, attempted to cure Studebaker's ruinously lax employment policies. Under C-W's guidance, Studebaker-Packard also sold the old Detroit Packard plant and returned the then-new Packard plant to its lessor, Chrysler. The company became the American importer for Mercedes-Benz, Auto Union, and DKW automobiles and many Studebaker dealers sold those brands as well. C-W gained the use of idle car plants and tax relief on their aircraft profits while Studebaker-Packard received further working capital to continue car production.

Last automobiles produced
The automobiles that came after the diversification process began, including the redesigned compact Lark (1959) and the Avanti sports car (1962), were based on old chassis and engine designs. The Lark, in particular, was based on existing parts to the degree that it even utilized the central body section of the company's 1953–58 cars, but was a clever enough design to be popular in its first year, selling over 130,000 units and delivering a $28.6 million profit to the automaker. "S-P rose from 56,920 units in 1958 to 153,844 in 1959."[20]

However, Lark sales began to drop precipitously after the big three manufacturers introduced their own compact models in 1960, and the situation became critical once the so-called "senior compacts" debuted for 1961. The Lark had provided a temporary reprieve, but nothing proved enough to stop the financial bleeding.

There was a labor strike at the South Bend plant[21] starting on January 1, 1962 and lasting 38 days.[22] The strike came to an end after an agreement was reached between company president Sherwood H. Egbert and Walter P. Reuther, president of the UAW.[23] Despite a sales uptick in 1962, continuing media reports that Studebaker was about to leave the auto business became a self-fulfilling prophecy as buyers shied away from the company's products for fear of being stuck with an "orphan". NBC reporter Chet Huntley made a television program called "Studebaker—Fight for Survival" which aired on May 18, 1962.[24] By 1963, all of the company's automobiles and trucks were selling poorly.

Exit from auto business
Closure of South Bend plant, 1963

After continued poor sales of the 1964 models and the ousting of president Sherwood Egbert, the company announced the closure of the South Bend plant on December 9, 1963, and produced its last car in South Bend on December 20. The engine foundry remained open to supply the Canadian plant until the end of the 1964 model year, after which it was also shuttered. The Avanti model name, tooling, and plant space were sold off to Leo Newman and Nate Altman, who owned a Studebaker dealership in South Bend. They revived the car in 1965 under the brand name "Avanti II". (See main article Avanti cars (non-Studebaker).) They likewise purchased the rights and tooling for Studebaker's trucks, along with the company's vast stock of parts and accessories. Trucks ceased to be built after Studebaker fulfilled its remaining orders in early 1964.

Limited automotive production was consolidated at the company's last remaining production facility in Hamilton, Ontario, Canada, which had always been profitable and where Studebaker produced cars until March 1966 under the leadership of Gordon Grundy. It was projected that the Canadian operation could break even on production of about 20,000 cars a year, and Studebaker's announced goal was 30,000–40,000 1965 models. While 1965 production was just shy of the 20,000 figure, the company's directors felt that the small profits were not enough to justify continued investment. Rejecting Grundy's request for funds to tool up for 1967 models, Studebaker left the automobile business on March 16, 1966 after an announcement on March 4.[25] A turquoise and white Cruiser sedan[18] was the last of fewer than 9,000 1966 models manufactured. In reality, the move to Canada had been a tactic by which production could be slowly wound down and remaining dealer franchise obligations honored.

The closure adversely affected not only the plant's 700 employees, who had developed a sense of collegiality around group benefits such as employee parties and day trips, but the city of Hamilton as a whole; Studebaker had been Hamilton's tenth largest employer.[18]

Many of Studebaker's dealers either closed, took on other automakers' product lines, or converted to Mercedes-Benz dealerships following the closure of the Canadian plant. Studebaker's General Products Division, which built vehicles to fulfill defense contracts, was acquired by Kaiser Industries, which built military and postal vehicles in South Bend. In 1970, American Motors (AMC) purchased the division, which still exists today as AM General.

Studebaker's proving grounds were acquired by its former supplier, Bendix Corporation, which later donated the grounds for use as a park to the St. Joseph County, Indiana, parks department. As a condition of the donation, the new park was named Bendix Woods. The grove of 5,000 trees planted in 1937 that spelled out the Studebaker company name still stands and has proven to be a popular topic on such satellite photography sites as Google Earth.[26] Today, the former proving ground is owned by Robert Bosch GmbH and it continues to be active some 80 years after it was built.

After 1966, Studebaker and its diversified units were acquired by Wagner Electric in 1967. Subsequently, Studebaker was then merged with the Worthington Corporation to form Studebaker-Worthington. The Studebaker name disappeared from the American business scene in 1979, when McGraw-Edison acquired Studebaker-Worthington. McGraw-Edison was itself purchased in 1985 by Cooper Industries, which sold off its auto-parts divisions to Federal-Mogul some years later. As detailed above, some vehicles were assembled from left-over parts and identified as Studebakers by the purchasers of the Avanti brand and surplus material from Studebaker at South Bend. (See article Avanti cars (non-Studebaker).)

Founder, Anderson was no newcomer to the road transport industry. His involvement began in 1934 when he bought a two ton Studebaker truck and started a carrying business between Brisbane and Toowoomba. Quick to realise the potential of the road transport industry even then, he soon purchased another three trucks. His business was called Cyril Anderson Transport which eventually became Western Transport and one of Australia’s greatest transport stories.