Avanti:

We worked Saturday and got 11 okayed. Total okayed last week, 80; built, 91.

Commercial Truck:

Military Truck:

We have 81 for January which is ahead of schedule.

2. Linesetting

Mr. Whitmer stressed the fact that we’re going to be in trouble if we don’t get linesettings. We’re in trouble in our motor room. We have to have more time to build the engines. The discussion which followed covered these points:

a. Mr. Bender said that there was framing through Thursday, the 10th, but Mr. Whitmer pointed out that 15 SY2’s and 25 VY2’s are missing in the model mix for production tomorrow, the 8th.

b. Beyond framing through the 10th, sales has five additional days by volume, but they are not the proper model mix.

c. Shipping went up to 300 units per day the last few days of December, but for the first three days in January, the rate has been roughly 80 per day. There are 2,148 units at Chippewa, 768 in the trucking yard, and 324 in the railroad yard. Out of a 3,000-unit pot, we’re pulling about 80 per day.

d. Production is at 280 per day, and orders are coming in at 150-170 per day. We haven’t hit 280 orders per day for 3 weeks. We will have to make a decision whether we work 5 days this week or 4.

e. Mr. Whitmer is concerned about cars coming down the line without engines. If we’re going to work Friday, he needs to know it ahead of time so we can build the engines.

f. The next scheduling meeting will be on the 15th. We have to think about the runout situation because the next program will commit us, and we have material through April – because of the cutback.

3. Avanti

Mr. Minkel asked about production because, he said, “the bloom is off the rose” on the Avanti and sales will have to whip up some excitement; they don’t want to, however, if the cars will not be available. Mr. Lamberti replied that we expect to get the 2,000 Avantis for January, February, and March. Ashtabula is shipping over 100 per week, and we get 20 off the line in the last 2 days. There should be at least 400 for January, and there will be an increase from this point forward.

SALES

1. Dealer Count

2. Retail Deliveries

Last 10 days of December (First Final) 1,643*
vs. Last Year 2,258
Estimated month of December 5,000

*The final will probably be somewhere in the area of 1,650, which will be about .9% of industry.

3. Inventory

*These are being purified this week. Some of them will be shipped out to the zones or put back into inventory here.

**Territory consigned cars not included.

4. Boiler Room Operations

Mr. Minkel commented that we don’t know whether the orders are additional or if we just anticipated them. We will not have received a full report from all of the dealers until today because we only get weekly reports on some of them. The operation center has been open from 7 in the morning until 10 at night, 7 days a week. However, it will not be open next Sunday because 6 men worked yesterday and only received reports from 2 dealers. Only 4 zones have dealers who stay open on Sunday with only about 5 dealers in each zone. Every man in Sales is working on shifts. Mr. Minkel and Mr. Bender said the dealers they call seem enthusiastic, but this must be discounted because the dealers always talk that way to them – they may talk differently to the district manager. However, Mr. Minkel says the dealers are doing things they haven’t done before. The price leader has given them hope of actually penetrating the market. They have said that price was not a primary factor against sales, but the attitude they have toward this promotion belies what they said. The dealers are advertising $1,644-$1,795, depending upon the area of the country and the willingness of the dealer to sell at below his cost.

Mr. Minkel feels that the training and promotion program put out with this program is probably more responsible than anything else because it is geared at Rambler and shows the dealers how to advertise our car against Rambler – pointing out the features we have and putting price tags on them. The dealers are convincing themselves that they have a car that can be sold against Rambler.

It is Mr. Minkel’s feeling that a program like this can only be put on once in a while, and you can’t carry it on indefinitely because the people won’t stand for it. You pull it once, and then you try something else. In about another week, we will begin hearing from the dealers complaining about the present program. We don’t know how much extra advertising we’re getting out of the dealers’ pockets. The extra advertising will be from the amount of money that we put in.

PARTS AND SERVICE

1. Water Leaks

We have increased complaints on product as a result of the cutback, according to Mr. Challinor, and the water leaks are still the most serious dealer and owner complaint. Canada feels they have the problem solved by diversion of the water. It is not a quality control problem – it is an engineering problem.

QUALITY CONTROL

1. Door Openings

These are a little better but not smooth enough yet. We’re trying every sealer we can get a hold of. Mr. Capsey expects to finalize the program on the door fits before the week is over. He said part of the problem is caused by the floor being unlevel. The body is only partially welded at one location and then moved, and it is possible that distortion is actually being welded into the body. Mr. Whitmer noted that we are correcting all the framing trucks, but in spite of this, we might have to level the area of welding because we do some welding outside the framing fixtures. We may even have to level the whole line, including upstairs.

2. Ross Steering Gear

Mr. Capsey remarked that we used to use a gear made at the Ross plant in Canada where the quality control seems to be better. He wonders if we could get a better gear at a better price from there and, at the same time, use it to offset some of our imports into Canada.

3. Thermostat and Speedometer Cable

The problem is mostly assembly. Most of the complaints on the speedometer cable are earlier serial numbers – before Mr. Capsey found the worker kinking the cable. On the thermostat, it could be the gauge. The only way it can be corrected is to go to a different thermostat. Mr. Lamberti observed that a sampling check should be made during cold weather on all electrical parts: wiper switches, ignition switches, blower switches, etc.

4. Avanti Batteries

Quality control recharges the batteries, but they still go down. Mr. Capsey believes the problem could be inherent in the battery itself because it is long and flimsy. However, there is not enough room for another kind.

PURCHASING

1. 1964 Model

Now that the lead times have been established, Mr. Soelch needs to know the volume. He will send out prints in the next couple of weeks and needs accurate volume. Because vendors based their prices on larger volume last year and previous years (that didn’t materialize), Mr. Soelch anticipates higher prices on the ’64 model.

2. Army Truck

We started to order the material last week. We haven’t sent anything out – should have an answer today or tomorrow.

3. Truck Axle

Clark has brought in another price increase. This is the axle that Rockwell Standard will spend $400,000 for tooling if we guarantee 3 years’ business. Mr. Soelch has told them that we couldn’t give them a 3-year guarantee. However, he feels that if we would stay with some models and drop some others and they would not charge us for the unabsorbed tooling, we should go ahead on it because we can save a lot of money, about $3 per axle on a ½-ton truck. It would take 120 days tooling time and 150 days to get it into production. Mr. Minkel mentioned that Sales does not intend to go out of the truck business.

INDUSTRIAL RELATIONS

1. Cutback

Automotive roll as of January 4, 1963:

There have been 74 salaried people separated: Accounting, 5; Engineering, 6; Sales, 10; Industrial Relations, 2; Styling, 0; Manufacturing, 43; Parts and Service, 8; Purchasing, 0; Total, 74.

Total hourly laid off since November 16, 1962: 1,518

Cutback has accounted for 2,218 employees.

LEGAL

1. Dealer Advertising

Sales consulted Mr. Feuer regarding problems that might arise on price advertising and issued a bulletin to the field telling them what they could and could not do. It is illegal for the factory to dictate price or for dealers to get together and set a price. Dealers can operate independently and advertise the same price, but they can’t band together. However, various dealer groups are combining together to advertise price in their localities. (The zone manager stopped one case in Chicago.) A Denver dealer told Mr. Minkel that the 4 dealers in Denver had agreed on price and advertised as an association. Mr. Minkel advised against it, but the dealer told him their attorney had said they could advertise the price as an association. Mr. Feuer remarked that most of the cases have been brought against associations.

2. M602 Memo

Mr. Feuer questioned the wording in the memo on pricing of the M602 vehicles. He felt the statement. “…information concerning Reo’s bid was obtained…,” could be misleading. Mr. Lamberti explained that the statement does not mean there is a conspiracy between Studebaker and Reo. We often have considerable information, e.g., when bidder changes suppliers. Our information is quite complete whenever we bid on something; we visit the plants, etc. The intent of the memo was to present to the people just how the bids are put together and the ramifications of the bids of others so that next time we will be in a better position to make an intelligent bid.

FINANCIAL

1. Labor Performance

Mr. Rickus reported that the line speed changes have affected performance: 39.4% off standard last Thursday, although it has gone up a little on an accumulative basis.

2. Inventory

We went into the month with 7,100 1963 passenger cars in the division, got up to 8,100 during the month, and ended the month with 6,700. We sold 5,500 and produced 5,100, reducing inventory by 400 units during December.

Not okayed 200 Okayed but not shipped 3,600 Zones and retail stores 2,900 Total 6,700

INTERNATIONAL

1. Longshoremen Strike

The strike is still on, and the 2 parties have met together for the first time since the strike started. At the moment, export wants to keep boxing this week, but it depends on how things look by Thursday and Friday whether they will continue. International is keeping in touch with Production Control.

2. Belgium Cars

There have been 97 cases – approximately 90 units – put back into the schedule for boxing about the end of the month.

3. Realignment

Mr. van Merkenstejn is in Europe this week, and the result of his trip will be a reorganization of the field force in terms of territory.

APPLIED RESEARCH

1. M602

International Harvester bid $5,033 per unit against our bid of $5,191. Apparently Reo was higher than we were. We haven’t quite figured out how other companies are able to bid that much less unless they are buying the contract. IH took this bid at less than variable costs, so it was an out-of-pocket situation. They lost the 5-ton contract to White, and as a result, they have had orders to get back into the military truck business. This is the first time they have built a 2½-ton truck.

Nothing further on the CKD. It is in Washington, and a decision is expected before too long.

2. M113

Our bid is due a week from today. The bid opening is at 2 o’clock on January 14. The rough prices are to be in by Wednesday, and there will be a final meeting sometime after Wednesday on the final price.

3. M44

The first-round negotiation for finalizing the contract is set for January 9 – Wednesday of this week. Prices are mostly in for that negotiation.

4. 25,000 lb. K Loader

The technical proposal is due January 21. We see no problem in getting that one out.

5. Turtle

We haven’t received any more requests for units. We’re checking to see what can be done on the Army’s small development requirement approval.

PUBLIC RELATIONS

1. Jacksonville Lease

Mr. Whitmer asked if the lease had been signed, and Mr. Feuer replied that there has been a verbal agreement but nothing on paper. Mr. Minkel said he has asked Mr. DeFranco to hold up until we are ready to do business down there which won’t be for about 4 or 5 weeks.

GENERAL

Diesel Equipment Superintendent magazine advertised in their December issue that 2,587 Army trucks using GM diesel engines had been awarded. Continental called right away. It seems that the item had been on overset since last June, and the fellow on the desk assumed it was Detroit Diesel. He is no longer with the paper.

1-9-63

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