Avanti:

Mr. Whitmer commented that if we keep running 8 per day, we’re going to have 10 too many jobs at the end of each week, and we already have some ahead of us. Dr. Lamberti remarked that we’re gambling on them not making 120 per week. When we get a little more exposure, we will be able to set up the proper rates.

Commercial Trucks:

Military Trucks:

We overshipped by 67 this month. In March we won’t be able to make the schedule. We have 455 to frame and 429 to be built, which will take us to about April 2 or 3; then we will have this contract out.

2. Brake Drum Runout

Mr. Whitmer is sending men to Detroit to help determine if they should leave off the finish operation and we should remachine them here. The problem is that the drums don’t hold the finish; that is, if the dealer does not take the brake drums off the car and turn them down, there is a problem. Also, even though they have a finish, if they sit on the shelf for 30 days, there is a problem. Normalizing isn’t the answer either – we’re trying to find out what is causing it. Dr. Lamberti mentioned that anything of this nature in cast iron can realign itself very easily. For instance, rail shipping can cause abrasion between two surfaces. Mr. Capsey said that on a check they ran regarding truck and rail shipping, there wasn’t such difference. The ones that were shipped by rail were worse, but there were no more of them.

SALES

1. Dealer Count

2. Inventory

3. Retail Deliveries

We expect retail to run 1,450-1,500 for the last 10 days of February, making 5,500 for the month. This would be a 25% increase over last February. Industry will probably be 150,000, so we will be at 1% for that period.

4. Linesetting

We are set for framing for the 6th and 7th, and production for the 11th and 12th, with 59 units short as of this morning. Dr. Lamberti noted that the factory has some problems in working at the present order rate. We also have commitment problems – materials are coming in in accordance with the schedule. Mr. Detzler said there is talk that the present order rate doesn’t substantiate our March schedule. The order rate is cars 152-155 per day, so right now, we’re looking at a 3-day per week production.

Mr. Gallagher told of our Union contract in connection with short work weeks. We have provisions in our contract that if you are not able to provide a department a 32-hour week, you have to reduce the work force the following month. We convinced the union that we couldn’t do this, and they gave us a release from it. (Every contract in the industry has the short week benefit.) The plan also provides that we reimburse the SUB fund for benefits paid because of lack of hours due to a schedule adjustment necessary to conform with order travel. We were able to get freedom from that on the 35-per-hour schedule; but in return, we gave the Union a letter of intent saying that we would consider scheduling alternate weeks rather than short weeks because in the short work weeks, the SUB fund is drained and will be exhausted by the time of model changeover. This letter of intent is not in the contract, but we have committed ourselves. Also, with the short work week, the worker can’t draw Indiana compensation which, in effect, causes the Union to subsidize the State payments. The Union can bring in a Grievance on this. Dr. Lamberti remarked that it is a very expensive way to run the plant too. This was discussed with Messrs. Egbert, Minkel, and MacMillan. We all hoped this would be the last one, and March should keep up – but it doesn’t look like it at this point. Now with competition shutting down some plants, maybe we can think about alternate weeks without as much harm to the image.

Mr. Detzler reported that sales has a cooperative advertising program for March which will provide advertising money for April. March is usually a good month for wholesale. The zone managers will be given a firm runout quota before they leave here today, and the orders covered by this quota will be through March and April. The runout quota will go out on the basis of 71,184. Sales is also asking the zone managers to approach the dealers with the idea that it is their responsibility to take their fair share of the runout quota. Sales did that to the Dealer Council, and only one dealer didn’t sign and turn in his agreement that this was his fair share and that he would order these cars. This is the sales approach to improve the order rate. (One dealer, Chaires of Tampa, said his quota wasn’t enough – he would be out of business if he didn’t sell more than that.)

5. Avanti

Dr. Lamberti observed that by our March 15 scheduling meeting, we should have it firmed up as to what we will do with the Avanti. Right now, we have orders for 3,066, and we have built about 2,561. Orders are coming in at the rate of about 10 per day.

Mr. Detzler said we lost initial impact of the Avanti program. The Dealer Council stressed that the factory should do and then advertise, not in the reverse. They mentioned the ’62 Hawk, the Avanti, and the Wagonaire. They feel that the impact on the Avanti is pretty well down to the low level, and it will take heroic effort on the part of the dealers and the factory to revive this interest. Mr. Feuer wondered about heroic efforts – if it is an attractive package, fairly priced, why should there be such a problem. Dr. Lamberti commented that it started from the fact that we were delinquent, but there are other things in the picture too: our dealers are not used to selling this type of car. Also, the quality of the car is better now. There is a certain amount of re-introduction to do on this car, but we have to do some development work on our dealers too. Our dealers are trying to get full gross. Mr. Detzler agreed that this is a real problem. T-Birds and Corvettes are sold at discounted prices by the dealers, but our dealers fail to recognize this and try to get full gross. Mr. Feuer didn’t understand why there should be so much markup – why not just 15%, for instance. Mr. Detzler explained that, in many cases, the customer just wants to know what he can get for his car. With the large markup, the dealer can use this to offer him more for his car.

Mr. Challinor pointed out that part of the program is for dealers in key markets to have demonstrators to loan out. This requires that the dealer have capital; otherwise, the Avanti eats up his credit line. Also, part of the problem is that small dealers don’t send their men to school and, therefore, if they sell an Avanti, they don’t know how to service it. Mr. Soelch observed then you don’t have a dealer’s car, so you only have a specialized group of dealers to sell it. Dr. Lamberti asked Mr. Detzler to explain the whole quality program next week.

As a matter of interest, Mr. Detzler told of Eli Spicer’s reaction to Mr. Egbert’s talk on the Avanti. Mr. Spicer is now determined that he is going to sell Avantis, and he required his salesmen to make 37 demonstrations in less than 5 days. From this they have two very good prospects.

Some dealers at the council meeting said they had not yet received their Avanti demonstrator, and Mr. Whitmer wondered if they were credit holds.

PARTS AND ACCESSORIES

1. Dealer Council

There was an agreement that we wouldn’t go into nuts and bolts at the Dealer Council meeting – it will be handled by letter. So Mr. Challinor had nothing to report on this.

2. Carter Carburetor – 6-cylinder

The Dealer Council members are rather critical on the carburetion. They were pleased with the carburetor that Mr. Challinor sent them, however. The only problem on the carburetor is that we are behind on the campaign. As of last week, we had received only 2,600 and there are 13,500 cars involved. They promised 5,000 this week, but Mr. Challinor doesn’t think they can possibly give us this many. It will take at least 2 more weeks to take care of this problem.

3. Avanti

The point and starting campaign is practically finished. Mr. Challinor sent individual letters to the dealers asking them to take a personal interest in this correction, and he got 76 answers from them to the effect that they had personally seen to it that the correction had been made.

A mailing is going out to the dealers with a letter over Mr. Egbert’s name to urge them to give quality service on the Avanti. Service is working with a select group of dealers and is trying to qualify more dealers to handle Avanti sales. Mr. Challinor will fill in the zone managers on the service programs in an effort to get an overall sales job done on all our products.

Service is setting up a program similar to the sales program in connection with a selective group of dealers, but they are limited as to how far they can go because the warranty is an obligation of the factory.

QUALITY CONTROL

1. Weather Seals

We haven’t had enough of the new weather seals to know how much better they are.

2. Headlining in Station Wagon

The headlining in the solid roof station wagons does not appear to be an acceptable job even though it is assembled with parts made to specifications. The lining seems to sag excessively, and Mr. Capsey asked Messrs. Lamberti, Hardig, and Whitmer to look at it.

3. Wet Engines

Mr. Capsey indicated that you can’t hold torque on the cork gaskets because the cork dries out. With the slow schedule, the problem is worse. The sealer that is being put around the main bearing cap helps. Dr. Lamberti observed that this is a chronic problem with our engines and asked about competition – Who has the best engine? Mr. Challinor answered that Chevy does, so we will pull the engine out of the Chevy we have and see how ours can be improved.

4. Quality Control Programs

The Avanti quality control program is all in now, and we’re coming along on the block tests on the 8. Mr. Capsey brought a chart showing the manpower on inspection.

PURCHASING

1. Tire and Rubber Companies

The union contracts for these companies expire between the middle of April and June 2. They expect a strike because the unions are asking for so much. Therefore, we have arranged with the rubber companies to stockpile for us 60 days’ supply of tires, motor mounts, and all rubber items. They are putting them into outside warehouses and won’t ship until we need them.

2. Steel Bank

Dr. Lamberti told Mr. Soelch to hold up on this until further word because Mr. Egbert has said not to release it until March 11. This doesn’t refer to our suppliers – just our own bank. Mr. Soelch will check on Program 7 that is going out.

INDUSTRIAL RELATIONS

1. Labor Relations

The Union in the Devon warehouse accepted our last contract. We wish they hadn’t because we have heard that the employees were sorry they had gone union; and if the Union had not accepted this contract, we could have played it for a year and maybe gotten out from under it.

The situation at Roselle, New Jersey, is up in the air. If the M-B home office doesn’t pull the rug, we may have a strike there. It is up to M-B to tell us where to go.

The Union is trying to get into Gravely. We’re sending a man down there to help on the communications program. The Union already has cards out, and the NLRB representative is pushing it, but we think we can keep the Union out.

2. Programs

We’re ready to put the political education or activities program to the people for a vote. After he gets a response to the bulletin, Mr. Gallagher may contact department heads to see that we have a good cross section.

We want to get the work simplification program active again. We would like to get some people in the program that are from non-manufacturing because work simplification also applies to areas other than manufacturing. Retention material will be supplied to the attendees, and there will be 8-10 conferences.

Dr. Lamberti said we have to do something in the way of a communications program. I know it costs money, but we will have to get some money from somewhere. (Dr. Lamberti will talk to Mr. Egbert about this.)

3. Schedule

If the plant must go down for a week, this would be the best week for it; but Messrs. Whitmer and Gallagher don’t believe there is time to notify the people. Dr. Lamberti will discuss with Mr. Egbert the effect closing the plant down for a week might have on the image.

LEGAL

1. Annual Report

This is completed and will be mailed the third week of March.

2. Rambler

Mr. Detzler reported that sales doesn’t have any more programs comparing our car against Rambler – it will be against another make.

FINANCIAL

1. Tooling

Last week, we committed $22,000 on the Lark for a total of just over $900,000; and $12,000 on the Avanti running changes, for a to-date total of $61,000.

INTERNATIONAL

1. Foreign Assemblies

Upon return from his trip to South America, Mr. van Merkensteijn reported that there is general deterioration in Columbia, and our prospects of getting in there with assembly are not good. In Chile, however, there is a good possibility that we will be submitting a plan that will involve investment in our assemblies; and Uruguay also looks good.

APPLIED RESEARCH

1. M44

The representatives from ATAC agree that it is not likely that all the paper work will be finished in time for the 2,001st truck. They realize there will be delinquency on the part of the Government. In most cases, the hardware will stay the same, but the drawings will change.

2. M602 CKD

We haven’t heard anything more on this.

3. E48

This unsolicited proposal should be finished by Wednesday of this week.

4. 25K Loader

The actual award will be announced April 5. Mr. Isley doesn’t think our chances look very good – apparently someone else has a lower price.

5. 3 Unsolicited Proposals

These are on schedule and will be out on time.

PUBLIC RELATIONS

1. Economy Image

We succeeded in getting the Regal 6 scratched from the Mobilgas Economy Run and substituted the V8 with the 307 gear, which doesn’t look too bad against the competition in that class. We may not win, but we may not look too bad.

Mr. Dredge feels there might be some point in planning an economy model for ’64 with proper carburetion, gear ratio, etc., and put one in the hands of each dealer and zone so that the car could be the basis for the Mobilgas or Pure Oil runs next year. We could have an economy-image car to travel with the performance-image car. Competition does this so that it can be selected by USAC. It isn’t a general-use car, but it can be made into a satisfactory car that people will accept simply by having the dealer change the carburetor.

2. PR Avantis

Mr. Dredge reported a problem they are having with their Avantis. He said as near as he can tell, it is an interference of the clutch linkage with the steering mechanism – the wheel locks. It occurs on stick-shift cars. Mr. Challinor will look into it.

MISCELLANEOUS

1. Car Leasing Program

Mr. Soelch told of the effect this program has created among the people in his department. He pointed out that the program begins with Group 5, and most of his people are Group 4. They can’t understand why, after so many years’ service, they can’t have a car and others, who have been here only 4 or 5 months, get one. Also, they have shown him the exact savings they would realize if they could drive a leased car from the Corporation. Mr. Whitmer echoed Mr. Soelch’s comments, and Dr. Lamberti asked both of them to make a list for him of the people involved. Mr. Gallagher reported that the SAE Union has demanded that they be included in this program. Dr. Lamberti observed that this type of program causes bad blood in our own organization – the cafeteria is another example. Mr. Gallagher asked about the reaction of the dealers and was told that Eli Spicer was very upset, both with the loss of the new car business and the effect it will have on his used car business. Mr. Challinor commented that we are in direct competition with our dealers, and Mr. Detzler agreed, saying the local dealers are particularly hard hit.

3-7-63

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