Car Life speculates about why Studebaker shut down its South Bend plant

A March 1964 Car Life article offers a fascinating take on why Studebaker shifted production from its South Bend main plant to a much smaller one in Hamilton, Ontario — which turned the brand into an import from Canada.

Among the major players, Sherwood Egbert comes off the best in writer Gene Booth’s account. The recently departed Studebaker President was lauded for being a “dynamic spirit” who gave the automaker “more legitimate public notice than it had had since the days of [Raymond] Loewy’s ‘European style’ sports coupe” (1964, p. 12).

History books generally say that Egbert stepped down from the presidency in the fall of 1963 because of health reasons, but Booth didn’t mention that. Instead, he said Egbert was “forced out” with two years remaining on a five-year contract. Booth speculated that this could have been the result of differences with the company’s board of directors, such as Egbert’s “insistence on spending heavily to reengineer the passenger cars for 1965 in view of the obviously poor sales performance of the heavily restyled 1964 models” (1964, p. 12).

What kind of changes was Egbert advocating for 1965?

It’s unclear from the article what Egbert had in mind for 1965. Was he championing another round of incremental sheetmetal changes to Studebaker’s family cars and the Hawk along the lines of what Brooks Stevens had sketched? Or was it Loewy’s so-called Avanti II lineup, which had reached prototype stage, or Stevens’s low-slung concept cars?

My guess is that it was Door No. 1 — incremental changes. A full redesign would have been too cost prohibitive. Thomas E. Bonsall estimated that close to $20 million would have been needed to tool up for a major redesign even if it drew upon existing components (Bonsall, 2000). 

Studebaker had recently borrowed $25 million to purchase a non-automotive company, and the banks agreed to extend the payment time frame. “However, the banks refused to lend any more money for the auto division unless the corporation agreed to put up its acquired divisions as collateral. That was something the board was unwilling to do,” noted Patrick Foster (2008, p. 160).

Booth criticized ‘mediocre’ management, weak dealers

The only criticism Booth levied against Egbert was that he did not sweep out some of the “intellectual deadwood” when he was hired in 1961 (1964, p. 12).

Booth was also critical of the automaker’s board of directors. For example, he stated that Chairman Randolph Guthrie “pompously characterized” Studebaker’s 7,000 employees as having “bled us white” despite their years of loyalty and “consistently accepting less than industry standards in pay and fringe benefits” (1964, p. 12).

Perhaps the most eye-opening detail presented by Booth was that the automaker’s 1,800 dealers failed to cover 70 percent of the nation. This had spurred Egbert to open company stores in two-dozen large cities. To make matters worse, a goodly number of dealers sold less than 20 cars per year or placed an emphasis on other makes.

The Car Life article didn’t squarely address whether Studebaker management intended to stay in the automotive business. For example, there was no discussion about how much staffing capacity the downsized operations would have to update the styling and engineering of its cars. The only hint of the future was a quote from Egbert’s successor, Byers A. Burlingame, who said that “few major styling changes are planned during the next few years” (1964, p. 13).

Studebaker staff member Ed Reynolds later told Richard M. Langworth that there “was no engineering department at Hamilton, and no one from South Bend moved there. It was never intended to continue permanently. The move was to use up some of the material and parts on the shelves, and dealer franchises called for repurchase of all cars and parts should we stop building cars. So we kept building cars” (1979, 1993; p. 161).

A ‘blue sky’ idea is pitched for saving Studebaker

Booth seemed to assume that Studebaker’s weak dealer network doomed its prospects. “In the absence of hustling dealers, it is perhaps academic whether inspired and visionary company policies would have accomplished much anyway,” he lamented (1964, p. 13). Even so, Blooth argued that “there were many avenues that an alert management could have investigated” to generate higher automotive sales. For example:

“Studebaker could have negotiated the purchase of the forthcoming A-body frames and understructure from GM, perhaps the modern, lightweight 289 engines from Ford, design and fabricated its own exterior sheet metal and interior appointments, and assembled a really ‘all new’ car for the crucial 1964 marketplace with all of the quality workmanship for which the company us justifiably famous. Such ‘blue sky’ thinking is unfortunately alien in South Bend and what may have been — and still could be — a good idea died.” (1964, p. 13)

With the benefit of hindsight, Booth’s idea sounds implausible. Although purchasing engines was doable, it’s hard to see why General Motors would have been willing to share a brand-new platform in its first year of production. In addition, such an endeavor could have been costly unless Studebaker only modestly changed the styling of a GM car, such as the Chevrolet Chevelle.

Sporty-car bias colors article’s diagnosis of problems

Booth was overly optimistic about Studebaker’s prospects in the wake of South Bend’s closure. He noted that the demand for cars might surpass supply because the Hamilton plant could produce only 30,000 units with two shifts.

A new breakeven point wasn’t stated by Booth, but it was assumed to be much lower than the 110,000 figure that Egbert had achieved when South Bend was still open. Langworth (1979, 1993) later reported that Hamilton’s breakeven point was 20,000 units.

As it turned out, Hamilton had plenty of capacity for Studebaker’s new sales level. Production fell to under 20,000 units in 1965 and then down to roughly 9,000 units in 1966. However, the latter figure did not represent a full model year: Production ended in March of 1966.

Booth recognized that Studebaker didn’t have an easy situation ahead but he also did not explicitly discuss whether South Bend’s closure was the beginning of the end of automotive operations. Perhaps that was a bridge too far for a car buff magazine which relied upon advertising to explicitly discuss the specter of Studebaker cars becoming orphans.

“The greatest task before management is to rebuild public confidence in the corporation and its cars,” Booth concluded. That would require rekindling excitement in the automaker’s products. “Can Studebaker sedans, as imports, be as exciting as domestically produced Avantis and success on Bonneville’s Salt Flats” (1964, p. 13)? The implied answer seemed to be “no.”

Once again Car Life displayed its bias toward sporty cars. Earlier in the article Booth described the 1953 Loewy coupes as “keeping the company from sinking sooner into oblivion” (1964, p. 12). Despite legendary styling, I would argue that the coupes hastened Studebaker’s decline because they initially resulted in disastrous quality-control issues and over the long run undercut the automaker’s already shaky economies of scale (go here for further discussion).

NOTES:

Production figures are from Langworth (1979, 1993).

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RE:SOURCES

• Bonsall, Thomas E.; 2000. More Than They Promised: The Studebaker Story. Stanford University Press, Stanford, CA.
• Booth, Gene; 1964. “Goodbye, South Bend.” Car Life. March issue: pp. 12-13.
• Foster, Patrick; 2008. Studebaker: The Complete History. Motorbooks International, Minneapolis, MN.
• Langworth, Richard M.; 1979, 1993. Studebaker 1946-1966: The Classic Postwar Years. Motorbooks International, Osceola, WI.

ADVERTISEMENTS & BROCHURES:

• oldcaradvertising.com: Studebaker (1965)
• oldcarbrochures.org: Chevrolet Chevelle (1964); Studebaker Avanti (1964)

PHOTOGRAPHY:

• Milwaukee Art Museum Brooks Stevens Archives