2. Las Vegas Avantis

All the 78 Las Vegas cars are finished, with 51 okayed and 27 yet to okay.

3. Phaseout

Our biggest phaseout problem is the parts shortages. We have 141 cars without transmissions. In a couple of days, we will have another 240 in addition to the 141. This causes a handling problem because the cars are immobile. Also, we have a storage problem. (These cars are without other parts also.)

4. Military Trucks

There are load Nos. 35 through 40 that are finished and approved with the exception of an additional pair of welds. The vendor will add the additional welds in our plant at his expense.

SALES

1. Dealer Count

2. Retail Deliveries (5/31)

10-Day Period Month

*Our runout estimate was 6,200

3. Inventories

Retail Stores 1,185

PARTS AND ACCESSORIES

1. Trailer Equipment

AMA has asked Mr. Challinor for data re trailer equipment on our cars. Also, we are getting requests from individuals about what they should order on their car to haul a trailer. Mr. Dredge stated that there was a meeting on this last week, and there is a brochure in process which will be a good, complete report. As a result of stories in trailer and camper magazines, we are also getting requests regarding pickup trucks. They want to know what options the trucks have and what they can order on their trucks which will make them particularly suitable for camper equipment.

2. 6-Cylinder Engines

At Mr. Egbert’s request, Mr. Challinor read a letter from the Gardner, Massachusetts dealer about the need for additional power on the 6-cylinder engine. Mr. Hardig indicated that the new 185 hp engine is being considered for a ‘64½ model. He showed a chart indicating the improvement in performance that would be secured with the new engine. When Mr. Minkel wondered about the introduction of it, Mr. Hardig suggested making it an option. Mr. Minkel felt that the ’64 should be priced lower in anticipation of the new engine.

Mr. Challinor commented that it is difficult to sell the State of California on our 6-cylinder model. He added that on engine claims alone in 1961 and 1962, we have spent $50,748; 1961, $34,287 and so far on 1962, $16,461. Dr. Lamberti observed that we’re making an analysis on a new engine, but this is a tremendous expense for the Corporation – it would cost millions.

QUALITY CONTROL

1. Avanti

We still have 45 old bodies in the warehouse. We’re trying to turn them at 5 per day and will try to get them out before the changes go in.

We have been putting 2 okayed Avantis out on a 50-mile check each day. So far, we haven’t found any major defects.

2. Pistons

We’re trying to cut down the inventory on pistons. If we can go to a measured select of size instead of fitting them individually, we would be able to hold down the inventory and keep just as good clearances. Continental has done what we intend to do, so we will check with them on their procedure. Dr. Lamberti suggested that the quality control men also visit Oldsmobile because they are doing the same thing there, and their system is better than Continental’s.

3. Quality Control Index

We’re strengthening the quality control organization by adding a quality engineer. We’re developing a quality control index for each of the floors: we pull off 25 cars on each floor and plot the defects. We’re also developing a customer reliability index: quality control is checking the cars before they go to Lot 151. (This check is showing more defects on the Avanti than on Larks and Hawks all the way across the board.) Mr. Challinor will meet with Mr. Capsey to see if there is anything that service can add to the program.

PURCHASING

1. ’64 Model

We are on target.

2. Pilot Jobs

Beginning the first week of July until about the 20th, we intend to put about 25 to 30 units into the line as pilot jobs to get the problems pretty well shaken out before cars come off the final line on August 12.

INDUSTRIAL RELATIONS

1. New York Retail Service Center

The New York Retail Service Center signed a new contract with UAW Thursday at a cost of approximately 15 cents per hour for the one-year agreement. The big cost item in New York is the system of paying incentive.

2. Clarke Floor Machine

The UAW sent them a letter Friday (they do not have a union up there now) requesting that they sit down to negotiate. Mr. Gallagher reported that industrial relations had posted a bulletin a week earlier saying we have completed an improvement in our pension plan. The timing on this was very good inasmuch as this is a strong point in the union appeal, and legally we could not have posted the bulletin after the Company had been approached by the union.

3. Union Election – South Bend+

Those who have been reelected are V.P. Fox, the financial secretary, the recording secretary, 2 night divisionals, and the divisional at Plant 8. All others are in runoffs. All present incumbents look good, especially the one in the machine shop – the one in final line may be close. We anticipate Frick going back in: Bill Ogden is Frick’s opponent. The runoffs will be Wednesday and Thursday of this week.

4. Savings Bond Program

This campaign is finished. It was an extremely soft sell, but we picked up 16% -- went from 6% to 22%.

5. Avanti Schedule

We put manpower in on a temporary basis originally, and the union has already ignored the expiration of that agreement for about 2 or 3 weeks. We can probably run out the rest of the present month. However, Mr. Gallagher asked about holding the 15-unit schedule; that is, if we don’t plan to hold to that, we should make the adjustment at the end of the month.

FINANCIAL

1. Inventory

The reduction in the production material inventory has leveled off. Finished inventory of Larks and Hawks went up about 1,100 in May. We built that many more than we sold, through Thursday. Avanti inventory went up 60 in May. So far in June, Lark and Hawk inventory has increased 400 and Avanti 35.

2. Tooling

Last week, there was $80,000 committed, making a total of $4.4 million and $2.3 million to go.

INTERNATIONAL

1. Chile

We expect to get word today or tomorrow from Mr. Van Merkensteijn that the bank of Chile has agreed upon the appraisal.

2. Argentina

We shipped the first lot to Argentina this week. Mr. Van Merkensteijn is taking a financing plan there that has been approved here, and we hope to add Argentina boxing to our ’64 model requirements.

3. Boxing

The boxing plant is testing two experimental plywood boxes that are to go to Australia. If these are successful, we could reduce our boxing inventory and lead time because the supplier is in Niles, Michigan instead of Georgia.

APPLIED RESEARCH

1. Study Contracts

We are expecting to receive contracts on the 8-ton study, the 2½-ton study, and the 1/8-ton study. These are 3 of the 4 study contracts to be awarded on a cost-plus-fixed-fee basis.

2. 5-Ton

Momentarily, we are expecting to hear on the award of the 5-ton contract. This is a 2-year contract for about $80 million, and production of the trucks will follow right after the present military truck production contract is completed.

3. Cargo Loader

We haven’t heard anything yet from the new proposal on the Marine Corps loader that we mailed in Saturday morning.

4. M151

We will submit the first step, which will only require one-half dozen page changes. A decision will be made later as to whether we will submit a price proposal.

5. Turtle

We will try to have 2 Turtles in the RAVE demonstration in Detroit on Thursday of this week. (RAVE: Remote Area Vehicle Evaluation)

6. Suspension

We have a rough draft of the suspension proposal ready to take to the discussion on Friday of this week.

7. 1/8-Ton Vehicle

A technical man from Aberdeen will be here Friday to discuss this vehicle with us.

8. 2½-Ton Trucks

In August, 30,000 trucks will come up for a 3-year buy. (White may drop out of this one.) If we could get it, we could probably open Chippewa.

PUBLIC RELATIONS

1. Military Business

Mr. Dredge remarked that it is important that PR be informed as soon as possible on any military business in order to get as much as possible out of the stories, but Mr. Isley pointed out that these cannot be mentioned outside of the Company until the contract is awarded. Mr. Dredge noted that apparently the present contract possibilities have leaked around the country enough to affect the stock. He added that congressmen and senators get advance notice on these contracts, so we are handicapped somewhat.

2. Board Chairman

We fared well last week in connection with the resignation of Mr. Francis. The Press used the interpretation we advanced in our release.

3. Local Publicity

Mr. Dredge mentioned the recent auto accident and how it could have affected our local image. He cautioned the group to notify PR when any event occurs within the Corporation that has any news element that might produce adverse publicity. PR might be able to do something about it. (Local items are often picked up nationally, of course.)

4. Safety Belts

Mr. Dredge cautioned the group re the use of belts on any loaned car – if we had an important person get killed because he didn’t use the belt, we would get adverse publicity inasmuch as we have been promoting the use of safety belts. Dr. Lamberti commented that there should be a policy about letting friends and relatives drive a borrowed car. The employees who use the cars must assume more responsibility.

Mr. Minkel reported that Sales have had 3 bad accidents in the past 60 days involving field cars, and in two instances, the driver was not the person to whom the car was consigned. Sales have never issued restrictions on loaned cars because that is a part of sales. However, Mr. Minkel has requested full details on accidents, including a copy of the police report. He tells our people to use safety belts themselves and request that those with them use the belts. Mr. Minkel requested that we don’t make a policy that will restrict sales. Mr. Dredge added that PR is in the business of loaning cars for the image the cars create, but we advise everyone who uses the cars to use the belts.

Mr. Dredge said we continue to get letters from people saying that their cars are arriving without belts and asked that a control be instigated. Mr. Challinor reminded him that belts are a delete option and mentioned that our percent of orders for seat belts is low.