Why Did The Studebaker Corporation Stop Building Vehicles

[TWChamp]

I don't know much about the final days of Studebaker, but I do remember my dad blaming the shut down on bad management decisions. I also remember my relatives, 40 miles north in Benton Harbor, saying how bad that was going to be for South Bend. I have read that the cars were still making a profit for the company when they closed the doors, so what was to be gained by shutting down? As far as I know they didn't sell any machinery nor buildings, so what was to be gained? Also it seems if they didn't get a large monetary income from shutting down, why not just sell it off to some employees or businessmen for a small amount?

[Skip Lackie]

There are at least a half dozen thick hard-cover books that tried to answer that question, so no one is gonna be able to cover all the bases here. The company made money in 1959, and a little bit in 1960. By 1962, it was losing a couple of hundred bucks on every vehicle they sold, and had had to shut the plant down for 6 weeks in 1961. They endured a strike by the UAW local 5. The new 1964 models had not been the success the company had hoped for. By December 1963. the company had a large inventory of unsold 1964-model cars, and another 3,000 leftover 1963s. The banks had already loaned the company $16.5 million and would not agree to loan any more to cover the losses of the automotive division without more collateral, something to which the board of directors would not agree. Several of those bankers were on the company board. The board had granted Sherwood Egbert a grace period to try to turn the company around with the Avanti, but that had not worked to their satisfaction. The non-automotive divisions were making money, and the modern Canadian plant provided a means to avoid penalty payments to dealers (for not providing a product) and the possible promise of continuing operation.

Your dad was right, but some of those bad decisions were made 5 or 10 years before the final blow came. They had not modernized the plant when they had the money to do so, and had placated the local union when a harder stand might have been better in the long run. And there's plenty to discuss about the 53-54 sedans, which were supposed to be the bread-and-butter cars. And the lack of funding for the truck division. And . . . . . .

[Stu Chapman]

As Skip said: And.........
Although this is a shameless plug, one of the books available is the one I wrote titled "My Father The Car: Memoirs of my life with Studebaker". In it I make it very clear that the Studebaker automobile did not need to be discontinued and in Canada we made some very viable efforts to continue. You can obtain my book from the Studebaker National Museum or the Avanti Owners Association International.

Stu Chapman

[56Golden]

<snip> As far as I know they didn't sell any machinery nor buildings, so what was to be gained?

Actually, they did!!!

They sold buildings, complete assembly lines ...AND even walked away from a new $81,000,000 government contract!!!

[Skip Lackie]

Actually, they did!!!

They sold buildings, complete assembly lines ...AND even walked away from a new $81,000,000 government contract!!!

Technically, they sold both the Army contract and the buildings (their most modern), fixtures, and parts necessary to assemble the Army trucks to Kaiser Jeep Corp.

[StudeMichael]

The top five reasons:

1) Antiquated factory facilities.

2) The President of Studebaker, Sherwood Egbert battling cancer.

3) Horrible dealer network.

4) Over paid factory workers due to Union always getting it's way.

5) It was planned strategically, hence the diversification program that started in the early 1960's.

Egbert hit the majority of these issues head on but once he could no longer work due to his illness it was over.

[SN-60]

Actually, at the time, the only reason that counted was.........STUDEBAKER COULD NO LONGER COMPETE WITH THE BIG GUYS!!!!

[56Golden]

Simply Unbelievable …when all those people who were NOT even there at ground zero (South Bend) before, during and after production stopped spin their tales …or should that be tails?

[Studebakercenteroforegon]

Another unfortunate reality - it was depressing the value of Studebaker Corporation stock if they continued to make automobiles.

[StudeMichael]

Simply Unbelievable …when all those people who were NOT even there at ground zero (South Bend) at the time and afterwards spin their tales …or should that be tails?

What are you referring to Jim?

[StudeRich]

What are you referring to Jim?

Most of us understand that, so it is best DROPPED right there!

The OTHER unsubstantiated "Story" is, that the "End" did come a little earlier than expected when the Sedan Decklid Form Die broke.
Remember EVERY Car they built in 1966 except the Wagonaire needed that Decklid!

This certainly was not THE reason, but I am sure it did contribute.

[BobPalma]

Most of us understand that, so it is best DROPPED right there!

The OTHER unsubstantiated "Story" is, that the "End" did come a little earlier than expected when the Sedan Decklid Form Die broke.
Remember EVERY Car they built in 1966 except the Wagonaire needed that Decklid!

This certainly was not THE reason, but I am sure it did contribute.

Here would have been an interesting scenario...if the broken die story was true, what if they had kept building out station wagons for several more days or weeks?

Then, the company's first and last products over its 114-year history would have been wagons! BP

[Skip Lackie]

Simply Unbelievable …when all those people who were NOT even there at ground zero (South Bend) before, during and after production stopped spin their tales …or should that be tails?

Along with Michael, I am uncertain about to whom you are referring. If it was me, I agree that I wasn't there when the plug was pulled. But I tried to summarize my understanding of what I have read in the three or four books on this particular subject. I wasn't in Pearl Harbor on 7 December 1941 either, but thanks to some good historians, I have a pretty good idea of what happened there on that day.

[57pack]

And I read some where in the past that Studebaker also saw the increasing government safety and emission mandates coming down the road. That also could have been a contributing factor.

[Stu Chapman]

Along with Michael, I am uncertain about to whom you are referring. If it was me, I agree that I wasn't there when the plug was pulled. But I tried to summarize my understanding of what I have read in the three or four books on this particular subject. I wasn't in Pearl Harbor on 7 December 1941 either, but thanks to some good historians, I have a pretty good idea of what happened there on that day.

Thanks Skip for your always-respected input. But, as you know, I was there, and part of the ongoing saga of less than corporate support. Despite anything anyone can project what might have happened if the door wasn't closed on Studebaker, the fact is, like so many other orphans created since that fatal day in 1966, it is highly unlikely that Studebaker would be here today.

But I will say it again. We could have made it work in Canada if only those exercising control from New York and South Bend had given us a reasonable level of support. As we now know, the Studebaker Corporation just didn't wish to continue building automobiles and trucks, but it wasn't economical to quit altogether in December 1963. If you read my book you know that we were working closely with more than one off-shore company in an attempt to make it work. Those companies all went on to greater heights in North America. It just would have been great if Studebaker could have continued for several more years as part of that success story.

For us in Canada the glass was well over half full those last three years. But for Messrs Guthrie and Burlingame the glass only held a couple of drops. Fortunately, SDC has kept Studebaker alive for another 50 years. I guess we should be happy for some small mercies.

Stu Chapman