Minutes of July 1, 1963 meeting of Studebaker department heads.

This is the last meeting for which I have minutes. I will be reposting a few of the January '63 meetings for which I had posted only excerpts previously.

STAFF MEETING - July 1, 1963

ENGINEERING

1. Post Office Vehicle

This is just about completed. We have it in the cold room now running some defrosting tests. Also, we want to check the steering knuckle ball as there is a little tendency to pull to the left. All of our testing will be finished by the 15th, and George Nield will be here for the preproduction inspection on July 16, 17, and 18.

We expect to give all the prints to Purchasing by Wednesday night, and we will start production in August. If the prototype is approved August 1, we have to have 4 per day coming off the line 30 days after that. From the middle of August on, 30 or 40 will be going into the system. Then, in September, 30 days later, we must be up to 20 per day, which is the rate that will be maintained for the balance of the contract.

2. '64 Prototypes

All prototypes are completed. The station wagon is going to the proving grounds this morning.

3. E48

The rear axle is due Wednesday, but it will be several weeks before this unit is completed.

4. E13 Truck for Oregon

We hope to have the 6-cylinder engine in the E13 truck for the State of Oregon by Wednesday of this week.

5. Diesel Engines

We have received 5 engines, and we have 2 sets of parts waiting for a few more pieces from Perkins which were supposed to have been shipped out Friday. By the first of next week, we should have material for 4 more engines, but it will be about 2 weeks before we can get started on the first one. As soon as we are finished with the Post Office van, we will start on these.

6. 1965 Model Passenger Cars

We had a meeting with Kip Stevens a week ago Thursday and went over some proposals on the '65 program. Now he is working on some renderings. We will have one job that will be longer by 6(?) or 7(?) to see what it looks like. We are making some studies and, of course, it will all have to be analyzed and approved as to cost. We're roughing it out on our original clay model.

7. 1965 Model Truck

We have a truck pretty well along that you can get in and out of, and we expect to get it finished by the week of the 8th. The first mockup will have a pickup-type box on it, we will have the van type later on. This is a (?)-ton and (?)-ton truck that is completely new and a 1(?) wider than the Econ-O-Liner. We widened the tread so that you can put a complete sheet of plywood in between the wheel housings.

8. Police Cars

A chat Mr. Egbert had with a policeman in the State of Washington triggered an idea to offer roll bars and disc brakes on all state bids. Since the legislatures of most states advocate safety, it is an opportunity to sell them these distinctively Studebaker safety features on state vehicles. Mr. Egbert asked Mr. Hardig to see how much trouble it would be to put a roll bar in our '64 car and what the premium would be. He also asked Mr. Dredge to draft a letter to all governors pointing up that Studebaker has been pushing safety with padded dash, full headroom, etc., and that now we can offer a roll bar and disc brakes as additional protection to the officer who risks his life every time he chases someone. If we get any kind of reasonable response from the governors, we should get on with the specifications and begin offering them on all state bids before our competition can react.

Mr. Dredge commented that at the driving demonstration PR held at the proving grounds for the State Police, the officers found it hard to believe how well our short-wheelbase cars handle with the traction bars and sway bars on them.

MANUFACTURING

1. Shipments Month To Date

Larks and Hawks 3,958* 62,721 Avanti 3,696 Commercial Truck 5,748 Military Truck 481 1,201

*Against a schedule of 4,000

Of the 348 Lark and Hawk not-okayed cars, 143 need transmissions. In addition to the okays we have yet to ship, there are 2,544 at Chippewa and 1,235 at Olive Street, for a total of 3,779.

2. Production

As far as the production operation is concerned, nothing will be working on Friday, July 5. We don't need the military trucks, and we will be able to save some indirect labor costs by closing down all the production plants.

3. Union

People from the tool room, plant engineering in the body plant, and some production people refused to go to work this morning because the gate they were using was closed to save money. There are 75 to 80 people involved, and the steward in that area is a troublemaker. Mr. Egbert commented that if they don't come back in the morning, we should farm out the work.

5. Di-Noc

We started the laminated Di-Noc material on the instrument board Friday morning, and most of the balance of the material will be here by the end of the week. While waiting for the new Di-Noc, we painted the instrument board and the other parts black and put black wheels on the Avantis with all black interiors. As soon as we had the new instrument panels in, we started putting them on all the way across the board. There shouldn't be more than 35 to 40 black jobs coming through. The zones have been notified that we will send them replacement material for the cars that went out with the paste-on Di-Noc. The cars with the black painted parts will not be changed. Service expects to be able to make this change within three weeks.

According to the vendor, the original paste-on type Di-Noc may never be satisfactory. They will be on vacation for two weeks, and they expect it to be about two months before they can work out something. Dr. Lamberti commented that actually, the laminated arrangement was what we wanted to do in the first place, but we went to the paste-on Di-Noc in the interest of speed. Also, the laminated way is the least expensive because of the labor involved in cementing the Di-Noc on. When Avanti production starts up again, the laminated Di-Noc will all be in the system.

In connection with those cars with black painted parts, Mr. Dredge remarked that some of the strongest praise we received from the Press was on the black painted instrument panels in the Larks for '64.

The group was cautioned to maintain complete security on this Di-Noc problem because it could be damaging if it got into print.

PARTS AND ACCESSORIES

1. Avanti Quality

Mr. Challinor reported complaints on 3 Avantis where the headliners were drooping down because the adhesive was breaking loose (the headlining delaminates). He also mentioned the insulation on the hood and said that on one Avanti, the weather seal came loose when he opened the door. In addition, the material is sagging in the area of the roll bar. Mr. Shuman has looked at these cars and is making up a report. It is possible that the old type of cement was used. According to Mr. Capsey, the type we are using now holds all right.

In connection with the cars shipped to Las Vegas, Mr. Challinor wondered if instead of wax, they might have put on the same kind of material that is used on the Lark line, since it was so difficult to get it off. Mr. Whitmer explained that the material used on the Lark line on rail shipments was used because the wheels on the rails created a metal dust which affected the sheet metal on the cars. However, on the Avanti, there is no problem like that, and wax is used.

2. Hawk Quality

Mr. Challinor has been receiving complaints about the bunching up of the door seal rubber on the A post at the high point of the door.

QUALITY CONTROL

1. Expando Trucks

Mr. Capsey reported that we will send someone over to Elkhart to establish standards at the Bock Welding and Iron Works because they will contribute a lot to the fabrication of this truck. Sales have no particular complaints on this truck, but they feel that if we can get some good experience with the Detroiter, it could mean a lot of business for us. The customer, Detroit Mobile Homes (Alma, Michigan), replaces the units every 2 years.

Mr. Hardig asked if Engineering could have one of those trucks back for about a week to make some checks. Engineering could fit it into the schedule in about 3 weeks.

2. Trim on '64 Model

Because of our early start on the new model, we will be able to head off some troubles on the trim panels. These pieces were made to the same pattern we use, but in the assembly of the die-electric trim, there is too much shrinkage. However, we have ample time to get in larger pieces which should avoid a problem.

3. Pistons

Mr. Capsey reported again that Quality Control will send some people to Continental and Oldsmobile to check sizes. Dr. Lamberti suggested that he talk to Mr. Gierke before he sends anyone up there because while Olds uses only 10 sizes, Fiat uses only 3, which they can do because they have slightly greater tolerances because of their higher rpm. (We have about 20 sizes.) Fiat has the same piston going into their cars this fall that are going into our 6-cylinder in the '64s: Both aluminum.

PURCHASING

1. Post Office Vehicle

We haven't placed any purchase orders yet, and Mr. Soelch mentioned several changes which we don't have yet. Dr. Lamberti remarked that the bill of material is about 98% complete, and we will have the prints by Wednesday. Special wording to be shown on the purchase orders and account numbers to use will be determined at a meeting this afternoon at 3 o'clock in the Board Room.

2. '64 Model

The men are checking the vendors on some of the items. We are on schedule.

LEGAL

1. Workmen's Compensation Claims

Mr. Feuer stated that a third group settlement was being proposed for 43 Detroit Workmen’s Compensation claims at a total settlement amount of $135,300. This averages out to $1,350 per claim in comparison with the average settlement amount of $3,300 in the 85 claims settled to date. Including the proposed settlement, a total of 128 claims will have been settled for a total cost of $418,050. Since 439 claims have been filed to date and 128 settled, there remains a balance of 311 claims still to be settled. In 1961, there were 158 claims filed; in 1962, 207; and in the first 6 months of 1963, 74 claims were filed for an average per month each year of 13 in 1961, 17 in 1962, and 12 so far in 1963. The average age of people in the third group was 60 years, with 13 over 65; but they still can make claims even though they are no longer part of the labor force. The recent filings have been cases in which several other employers are involved, so there is a possibility of getting contributions from these other employers.

The total of 439 claims, assuming an average cost settlement of $3,300 each, represents a liability of $1,452,000.

It was pointed out that most of the present claimants have reached the full $10,500 of accrued compensation allowed under the Michigan Act and that their claims, until settled, are drawing interest at the rate of approximately $600 per year. It was indicated that the present group of claimants, with the interest factor figured in, had claims which would represent a cost to the Corporation of $11,800 if the cases were tried and lost. Therefore, even if only 11 of the 43 claims were won by claimants, the cost to the Corporation would be equivalent to the settlement amount. It is not conceivable that the Corporation could successfully defend 32 of the claims and lose only 11, particularly since the Corporation's own doctors had diagnosed 15 cases of emphysema in the group.

In settlement negotiations, the Rothe firm which handles the majority of the claims indicated that if the 200-odd claims which are currently pending and are being handled by this firm would be finalized in 1964 that the Rothe firm would agree not to handle further claims against the Corporation or refer such claimants to other law firms, and they would agree to work out a more favorable basis of settlement as a per-claim average than has been the case in the past. This proposal of the Rothe firm will be explored further.

When there is a settlement, the claimants receive 80% of the money and the legal counsel receives 20%.

2. Chippewa

Negotiations for the Industrial Relations Building at the Chippewa plant were supposed to have been on a confidential basis. However, the other side didn't know they were confidential and released the information to the Press. Then, when we decided we didn't want them to use the property, they asked Studebaker to give the reason in the press release. We didn't want to give the real reason, which made it a rather impossible situation.

FINANCIAL

1. Tooling

Last week, commitments were $65,000, for $4.5 million committed to date and $2.1 uncommitted.

INTERNATIONAL

1. Argentina

We plan to ship 96 units to Argentina in early August, all 7E7's. We expect to get somewhere around 300 to 400 E7's, which would get into the 8E7's. This will require constant watching on the financial end of it.

2. Chile

We completed our investment in Chile as has been announced.

3. Columbia

We have received a decree from Columbia and are now trying to get local investors there to come up with enough capital. We hope to get this accomplished this year.

4. M602 CKD

Two Turk officials and a man from ATAC are here to investigate the M602 CKD.

APPLIED RESEARCH

1. (?)-Ton Vehicle

We have not yet heard the disposition of this request.

2. 8-Ton and 2(?)-Ton

We sent these contracts in last Wednesday, and we should have the signed contracts returned to us today. There will be two technical supervisors for engineering work here from ATAC this afternoon and tomorrow to see that we are doing the job the way they want it.

3. Marine Corps Aircraft Loader

We heard last week that this is being let piecemeal; that is, two small firms will each be given a contract to build one prototype rather than two to one vendor.

4. 5-Ton

Tomorrow there will be a delegation from MOCOM to visit the plant and get acquainted with the people who will work on the 5-ton.

5. M602 CKD

We haven't heard anything on this, but it should be in soon.

6. M151

Work is proceeding on the technical proposal.

7. Turtle

The Turtle for the Italian Army is being reworked and should be ready for delivery by July 15. As soon as we get it in operation, we will let PR know, probably by tomorrow.

8. VEA on 5-Ton

This is one of the subjects MOCOM will discuss tomorrow. We understand they are going to compete with the VEA (Vehicle Engineering Agency) for the 5-ton truck and that Studebaker and International Harvester are under consideration. Diamond T has had it for a number of years, but apparently the people at MOCOM are unhappy with the way they are handling it. The RFP on this will be out within six months. It amounts to about 50 people with a dozen engineers and the rest are packaging people, quality control, etc. The VEA would give a real advantage on the production end of the 5-ton. It is a cost-plus-fixed-fee contract. We will find out more about what they expect on this tomorrow.

9. Personnel

We are in the process of hiring more people to work on our R & D projects. The manpower peak occurs in October, November, and December of this year, and there will be about 20 people at that time: 4 engineers and the rest will be layout men, draftsmen, and detailers.

PUBLIC RELATIONS

1. Drag Races

Mr. Dredge reported a few things that are being encountered in our cars on the local drag strip: a problem with the shift linkage on the 4-speed shifts in the stress of shifting fast through the gears, some problems with the clutch release, and some trouble with vapor lock on the Lark. Dr. Lamberti asked Mr. Capsey to take the information back to his group and check it out.

Mr. Dredge explained that we're trying to find out some things on the R2 Larks for owners who are appearing at these runs. (Yesterday, there were 4 or 5 new Studebakers at the drag strip.) Our interest is to try and assist in performance so we don't look bad before the spectators. These affairs draw crowds of around 1,000 people.

2. Security

Mr. Dredge indicated concern about the lack of a security system at Studebaker and compared it to other automobile manufacturers who require a name badge, a log, etc. He said there is a standing offer in Detroit of $250 for pictures of our '64 cars, and he doesn't feel it would be any great feat to obtain these pictures. Mr. Hardig commented that we used to have a guard at every door who asked to see a pass whenever anyone wanted to enter, but we dispensed with those personnel as an economy measure. Dr. Lamberti observed that on his trips to Chrysler, AMC, and Olds, he has not encountered any trouble getting into the various plants and added that the only people who keep a tight security are missile people and people connected with Government secret business. Mr. Isley remarked that at most offices where there is security, they have a buzzer not a guard.

3. Avanti

Mr. Dredge noted that we're getting constant inquiries about the Avanti when we show the '64 line. He asked if Engineering could build an Avanti with square lamps and the new grille for PR pictures between now and the end of the month. Mr. Hardig replied that it would not be possible to build a car but suggested that he use Mr. Egbert's car which should be back within a week. Mr. Feuer commented that we are in the position where we aren't saying we will have a '64 Avanti.

MISCELLANEOUS

1. Left-Turn Arrow

Mr. Hardig mentioned the difficulty in turning left from Sample Street into the Engineering gate and suggested that an arrow be added to the stop light. Malcolm Eddy will check into this and Legal will help him follow through.

2. Scheduling Meeting

There will be a scheduling meeting before July 15 since there wasn't one in June. Also, we need to determine the Avanti rate. Right now, we plan to run 18 Avantis per day here on August 12 and in Ashtabula on August 5.

Dr. Lamberti remarked that the next program will be Program 12 and that October can be changed, but we need to keep August and September firm on model mix to keep it rolling. Mr. Bender commented that Sales is assuming that August and September are very firm. We are trying to make October firm also. We are endeavoring to get a sampling order and orders for October also so that we can have a good guide line.

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