Studebaker and the pension debate

[Studebaker Wheel]

I have posted maybe 300 or so images on the South Bend, Indiana FB history site. It is quite common to receive responses to the effect that Studebaker screwed their workers out of their pensions (54 years ago). I have tried in a tactful manner to relate that that was not the case. But still the comments continue. So I posted this message (below in italic) tonight on that site along with the article that I am posting here. Just thought some might have an interest.

Studebaker and the Pension issue - I have posted over 300 images here in the past few years. Some, maybe most, had a Studebaker connection. On occasion I will receive one or more comments re Studebaker’s failure to live up to their pension obligations when the plant closed in 1963. Sad to say after 54 years many still hold a grudge. Even my recent innocuous post re the employee publication The Studebaker Spotlight generated three such negative responses. I am not inclined to respond to every negative comment but feel an obligation to set the record straight when some who may not be privy to all the information make mis-informed statements. However for those who are really interested in the facts I submit the article below that appeared in the December 8, 1973 issue of the Michiana section of the South Bend Tribune. The article, I believe, explains about as succinctly as possible the facts related to the issue. I have removed paragraph four and enlarged it for special emphasis. I doubt that it will heal any wounds or appease everyone but maybe help some understand better the true facts re the unfortunate pension issue. R. Quinn

[wittsend]

I guess this comes down to "disclosed" and "assumed." When employess were hired was it disclosed to them that this is how the pension worked? That seems a primarily union responsibility and secondarily Studebakers. Or did the employees just assume that obligations would be met because had the process run its course they should have. This might be an "I didn't ask, they didn't tell" situation.

Ther college district I worked for cut the new hire pay rate when the economy tanked. Somehow that flew under my radar (I was already a 17 year employee). When things got a bit better and marginal raises were given I was shocked to find I received none. Came to find out that until the pay rate of the new hires equaled mine (top of scale) I would not be getting any raise. Still everytime the raises were give it was stated (in house memo's, emails, news outlets) EVERYONE would receive one. When I factored the current rate of raises (or really the lack of) and the number of years until retirement (10), added in the fact that there was no raise for 5 years prior..., I would be going 15 years without a raise to the point of retirement. Funny how "wordsmithing" works.

[Kurt]

The company quit making cars,but it did not cease to exist. They could have assumed the liability and met the obligation. If they would have gone bankrupt then that would be different.

The truth is the way it was written they didn't have to pay and they chose not to.

The workers at the Studebaker plant were not saints and the 1962 strike were events that sped up the South Bend shut down but still they didn't ruin Studebaker. The management did.

At the end of the day, the lesson is you should save some money on your own. That way if a promise is broken or bad things happen you have your own money that you saved.

[jackb]

PBS did a little bit on Studebaker in one of their "Frontline" specials. I believe it was called "The Fleecing of America". Had a small bit on Union officials retiring to a Carribean island after the plant shut down...

[JRoberts]

Thank you for posting this information. I had always heard that employees were upset when Studebaker gave up its automobile part of the company and assumed they were correct, but I never knew all of these details. I am not saying the employees were wrong. Heck , I would have been upset too, but these details posted here show the details to the pension question.

[DEEPNHOCK]

The attitude of a LOT of South Bend residents was not a good one after the shut down.
Driving to South Bend for a few Int'l meets in the early 1970's was not always fun.
If you did not know the town, and you got off known avenues, you could have rocks thrown at you.
BTDT...
But that was then, and this is now.
Go to the west side and the south side of Chicago, and today they shoot at you.
Pick your poison...

[Cowtown Commander]

Thanks for providing the details Richard. Unfortunately the closing of Packard eight years earlier gave the company much experience in how to close down an automotive division with minimal loss for the corporation. For some reason the treatment of the Packard workers is not discussed much.
As a part of our college Senior trip I toured Minneapolis Moline two weeks before it closed. It was so depressing to see 70 lathes with only two in operation and tractors being pushed by hand down the production line.
In 1974 the government established the Federal Pension Insurance Corporation to try and prevent situations like Studebaker & Minneapolis Moline but I think the closures of the steel plants may have depleted the fund.

[Flashback]

I worked for Armco Steel from 73, til 90, on a 20 year retirement plan. After 17 1/2 years the company had sold out our division and all our benefits went away. What at that time was about 17 hundred a month retirement went to almost a tenth of that. I learned a quick lesson on the difference between a contributory nd a non-contributory plan. I began drawing one hundred and seventy eight dollars a month seven years ago on a plan I thought I was going to start drawing about 17 hundred on in 1993. O-WELL

[DEEPNHOCK]

I hate to hear about pension screwings......

[8E45E]

The company quit making cars,but it did not cease to exist. They could have assumed the liability and met the obligation. If they would have gone bankrupt then that would be different.

The truth is the way it was written they didn't have to pay and they chose not to.

The workers at the Studebaker plant were not saints and the 1962 strike were events that sped up the South Bend shut down but still they didn't ruin Studebaker. The management did.

More information here: http://forum.studebakerdriversclub.c...ighlight=erisa

Craig

[Guido]

Thanks for providing the details Richard. Unfortunately the closing of Packard eight years earlier gave the company much experience in how to close down an automotive division with minimal loss for the corporation. For some reason the treatment of the Packard workers is not discussed much.
As a part of our college Senior trip I toured Minneapolis Moline two weeks before it closed. It was so depressing to see 70 lathes with only two in operation and tractors being pushed by hand down the production line.
In 1974 the government established the Federal Pension Insurance Corporation to try and prevent situations like Studebaker & Minneapolis Moline but I think the closures of the steel plants may have depleted the fund.

Minneapolis Moline, Oliver and Cockshutt were all bought by White in the early 1960's. Cockshutt production was shut down and they became rebadged Olivers. In 1965 they shut down Oliver crawler production and by 1975 all three brands were gone and all tractors and machinery carried the White name. Eventually White became part of Agco.

[Guido]

One of the driving forces behind ERISA (Employee Retirement Income Security Act of 1974) was the Studebaker retirement issue.

[Jessie J.]

Studebaker Corporation's foray into diversification was profitable and protected stockholders. Was it at the expense of the workers and their pension funding?
Is there an accounting of whether, or how much this diversification drive depleted the core Automotive Division's assets? Or added to an overall Co. debt load that negatively affected the Automotive Division's ability to obtain necessary funds for ongoing infrastructure improvement and Product Development?

It appears to me that much of the Automotive Divisions decline was the result of a series of deliberate Corporate Boardroom decisions that effectively strangled Studebaker's Automotive Division into market obsolescence and non-competitiveness. Diversification boosted stock value and investors returns, at the expense of the workers jobs and fully funding the pension obligations.

Can't help but wonder how Studebaker would have fared if all of that $$$$$$ and credit-line that went into engaging in years of diversification, had instead had been reinvested into the updating and improving their core product. All new bodies, updated engines and transmissions etc.
This would have certainly had an effect on the desirability and marketability of Studebaker automobiles, as well as positioning the Company in a much stronger position regarding forming new manufacturing alliances. Could have been a much more desirable companion to MB or VW, or any of a half dozen other auto manufactures.
The course of the path not taken will never be known.
.

[Studebaker Wheel]

The corporation had a legal obligation to make contributions into the pension fund at an agreed upon level (that is a level agreed to by the union). That contribution was made. As stated in the article and attested to by the union no money was withheld or misappropriated.

[doug]

Thanks for the added information.