2. Military Truck

The first contract has been completed, and we have nothing yet on the new contract because we’re still waiting for an inspection team to come in from Ordnance – now they are supposed to come in today. We are supposed to ship 190 units against this contract this month, but the first inspection on the first vehicle is holding us up. Mr. Capsey explained that we have to get the unit inspected when the job is 50% complete and then again when it is finished. He said that Mr. Fields is putting the heat on Ordnance for us. Mr. Capsey will keep Dr. Lamberti informed.

3. Two-toning

Mr. Whitmer reported that if we didn’t 2-tone at all, we would save $258 per day; if we would just 2-tone the P8 and Y8, we would save $77 per day. We don’t get the full benefit of the reduction because we have to man the line. On the other hand, if we substituted simple 2-toning for the present complex 2-toning, we would save $80 per day. (Mr. Whitmer showed examples of simple and complex 2-toning.) Dr. Lamberti observed that we can’t do it on our luxury line because it is visible inside, and we just don’t have enough going for us this year to take the chance. However, by eliminating some models, we can’t save a lot. Maybe we should try it on one model – maybe the Y2 or Y4. Mr. Bender preferred the test be made on the Y4. Dr. Lamberti suggested that we take another look at it before it is released.

4. Returned Avantis

There were two sessions of discussion on this subject: one prior to Mr. Egbert’s entrance and the other while he was in the meeting. Comments made during the first discussion:

Mr. Whitmer wanted to know what the plans were for these cars; that is, are we going to fix them up as new cars or as used cars. Mr. Capsey and others have reported to him that the bodies are in very good shape, but a few of them need to be buttered up to improve the back glass opening. The interior of the car doesn’t look good – under the hood, etc. It means putting quite a bit of money into them, and it depends on what we want done – what are we going to do with them.

Dr. Lamberti suggested that they be sold as demonstrators, but eventually they will be sold to customers; and we want them to represent the proper quality of an Avanti. Of the 100 early units, 32 of them have come back; the rest of them were repaired in Ashtabula. The corrections, mainly, are the back glass openings. Repair them completely like you were putting out practically a new car. See that they pass the same specification requirements as a new car.

Mr. Bender understood that 32 of the bodies were in bad shape as far as water leaks, etc. were concerned. He understood that either we were to throw them away or put new bodies on them and sell them as used executive cars or demonstrators. The only thing Sales is interested in is that if we repair these cars and sell them, they will stay repaired and sold. We just want to know if they are going to cause us 32 particularly dissatisfied customers.

Mr. Gallagher commented that if they are bad enough, give them to the schools so the kids can learn about Fiberglas on them, but Dr. Lamberti indicated that they aren’t that bad.

Mr. Capsey told that Quality Control plans to take one of the better jobs and keep track of the costs as they recondition it. When it is determined that the unit is a saleable job, they will use those figures to tell how much it would cost to fix the bad ones.

Mr. Dredge related an experience they had with one of the PR cars. A VIP had had his order in since April, so PR offered him one of their press cars (about 6,000 miles). We knew it was rough, and we paid $800 to get it repaired. We sold it to the customer with the policy that we would fix anything he found. He has come back with a complaint only once. Mr. Dredge also commented on the PR car used on the Economy Run which has 15,000 miles on it. It is rough; e.g., the windshield is pitted, but the engine runs like a top.

Comments made during the second discussion:

Mr. Capsey noticed the trim was falling off the roll bars on a lot of the cars that came back, but there was no popping on the paint on any of them. However, all of them leak water.

Mr. Egbert said when the cars come back, pull the bodies off and junk them; then put on new bodies and give the cars to the men in service. We are wasting money buttering them up. Mr. Egbert doesn’t want to compromise, he wants them to be as good as anything we’re sending out today, and we would be money ahead to quit horsing around. A body is $600 – it would be a lot cheaper to put on the new body and forget about it.

5. Hood Latch

Mr. Whitmer noted that in order to turn the hood latch around, we must use shims or a spacer, which doesn’t make the best appearance; but it is not possible to emboss it to make it fit in there like it was designed to be in that position. Mr. Whitmer wanted to know if we should shim with the spacer or if we should go with just part of the fix – that of turning down the flat part (this has been done). Dr. Lamberti mentioned that on his recent trip to Oldsmobile, he learned that the F85 has two flat spots on the hood latch, and they have been having trouble with hoods flying open – so he told them what we were doing to correct the problem.

SALES

1. Dealer Count

Mr. Bender remarked that practically all of the dealer reduction is due to weeding out the dealers and that the count will probably continue to go down for another 50 or 60 days – as the 90-day termination notices fall due.

2. Retail Sales

First 10 days of April (based on the preliminary report)

The dealers’ rate of travel for this 9-selling-day period was 216. The dealers’ average rate for the first 3 months of this year was 180; and for the month of March, the average rate was 169. We expect the final report to be 2,200 or 2,225, which would give us approximately 1% of industry if our readings are right. We expect industry to be 200,000 or 225,000.

3. Inventories

We believe the snowbank will be reduced to 1,000 by the end of April as we move some of the cars into Company service in the field.

4. Orders

Previous Week Two Weeks Ago

We received 20 Avanti orders so far this morning.

5. Production Scheduling

Mr. Bender reported that the Larks and Hawks are very tight. As of this morning, we are nip and tuck with very little backlog – a backlog of about one day’s orders for fieldset, which doesn’t give us a good situation as far as model mix is concerned. It is a situation that we will have to be talking about.

Mr. Feuer asked for an explanation of the down trend in the selling rate. In view of it being the beginning of a good selling season, along with the sales promotion programs – what about the trend? Mr. Bender answered that the rate of order intake is just slightly less than what is required. Actually, we had a slight increase of straight dealer orders last week because the week before included some fleet orders. Our field people (Messrs. Kough and Pistor) say that, based on retail movement, we can expect a reaction for additional orders. In any event, on model mix, we can’t stand anymore deterioration; either we will have to build for stock, or we’ll have to shut the plant down. Mr. Whitmer asked if competitors build stock cars, and Dr. Lamberti replied that about 30% of cars sent to their dealers are to quota. Mr. Bender added that 52% of our orders are dealer stock, and 48.3% are customer orders for the month of March. He sent on that you can’t base your judgments on one 10-day period, although this is the first 10-day period in recent months that seems to have reacted to the season of the year. If the rate is indicative, it is higher than we have estimated. On the runout, we estimated 283 for dealers in April, 235 in May, and 216 in June, but an overall average of 218 per selling day for that 3-month period. We had a little over 216 per day for this first period. Usually, the first 10 days is about 30% of the month; so on that basis, we could have 6,000 units for the month. Dr. Lamberti commented that the dealers know we have a big change coming, and he hopes they will order the ‘63’s. Mr. Bender responded that this is true, but it has also been the means of keeping some of the bigger dealers.

Avanti

We received 41 orders last week against a production schedule of 50. We’re framed through May 3 for production of May 17. Mr. Bender reported that, actually there are 111 orders that are in the system, and there are 137 orders downstairs that are not lineset. If all those were lineset, we would have production through May 18. Also, we have 29 orders that apparently are not good orders. The system on the Avanti is too long. If a customer places an order today, it can’t be built until May 18. An Avanti ordered today will come through May 18, and by the time it is shipped, it will be about another 5 days. If you live in California, you won’t receive it until June 5. We don’t object to building 100 Avantis for stock, and Mr. Egbert is agreeable that we carry 100 Avantis as factory inventory in the zones.

Mr. Whitmer asked if Sales is saying that we should have used up a bigger backlog before we cut back to 10 per day. The “not okay” bank can be reduced down to about 50, which would mean 45 units. It takes just so long to build a car. The only way we can get faster delivery is to build stock jobs – make a shelf item out of it – and we have an awful time selling stock cars.

Dr. Lamberti noted that the system on the Avanti is long because of our present rate of production. If we were running at 30 per day, we would get the car in 10 days or 2 weeks, although you can’t get a car built from order anywhere in the country in less than 3 weeks. We can get cars faster than the figures show. Ashtabula has no float down there anymore because they are painting by percentage. We can give them 3-week delivery. If that is not good enough, we can crank up the rate. However, if we go up to 15 per day, we would have the backlog cut down in a week, unless we stock 100 cars. There are 1,150 Avantis in dealer hands, and at the present rate of travel, dealers have 3 months’ stock of Avantis right now. (Only about 700-800 dealers handle it.)

Mr. Dredge remarked that people are under the impression that Avantis are not available. If we let the image continue that you can’t get the car, you never will be able to sell it. (Mr. Dredge was interested to learn that we are just building cars to order.)

Mr. Egbert wants to go ahead and stock 100 Avantis in anticipation of spring. He feels we will lose orders on the basis of a long delivery, and he wants 100 cars in stock by May 15.

There will be a scheduling meeting tomorrow at 1:30.

6. Retail Movement Bonus

Messrs. Kough and Pistor believe that this has been a plus item on the first 10 days’ business.

PARTS AND ACCESSORIES

1. New Parts Depot

We’re announcing the opening of our Jacksonville depot this week. This will give us much better coverage in the Florida area and should increase sales. We’re opening on April 27.

2. Shorting of the Avantis

This will be campaigned because we have had a number of complaints, and one car completely burned up. The strap holding down the battery shorts it out because the connecter is too high between the cells and it shorts against the strap. Mr. Hardig explained that the pillar is supposed to be below the top, but it protrudes about 1/8” above, and we had to put a bow in the strap. It is a standard battery and one that we have used for 35 years. Dr. Lamberti suggested that Mr. Challinor get Mr. Soelch in on this to see if we can get any recovery from Willard inasmuch as it is a complete Willard assembly. He also suggested that they check the print.

3. R3 Engine

Mr. Egbert referred to the minutes of the previous meeting and said he had never heard of warranting a racing engine. From personal experience a while back, he knows that Ford offers no service or warranty at all on their racing engines. Mr. Dredge commented that if it goes out as a special engine, it is one thing; if it goes out as a complete automobile, there has to be some warranty on the car itself. Mr. Egbert agreed – on the car, but not on the engine. This should be said legally – nothing. He indicated that a bulletin be sent out so that everybody understands it. He pointed out that first of all, we don’t want to sell them – we’re only selling enough of them to qualify them for racing.

Mr. Egbert asked about the prices mentioned in the previous meeting, e.g., the Corvair. He asked if they had a suggestion for the price of the R3; he asked Dr. Lamberti if he had sent in his recommendation. Dr. Lamberti replied that his price recommendation – his personal opinion – is that we cover our manufacturing costs. When Mr. Egbert asked if there was a group recommendation on the price, Mr. Dredge told him that an agreement hasn’t been reached yet.

QUALITY CONTROL

1. Ross Gears

Mr. Capsey reported that the Ross people were here on Friday about the trouble we have had on the Avanti steering gear. Before we took them over to the plant, we let them drive some cars. We asked for specifications, and they were reluctant to give us any; but after they drove the cars, they agreed the gear was not satisfactory for the automobile. So they have set up a program to see if they can make some minor change in the gear or get their manufacturing back under control. They think part of the poor recovery is due to an imperfection in the cam itself. Tomorrow we will have something new in from them to try out, and John Nemeth will take 2 gears down that are good. They want to compare a good-handling job with a bad one. It will probably take a few weeks to get it where we want it because it won’t be an easy thing to correct. The problem is more noticeable in the power because it is more sensitive. Their production manager was in the group that was here, and he was the one who was opposed to doing anything before – but he will now. Mr. Hardig commented that it is just poor quality; we should change to Saginaw gears. Dr. Lamberti observed that Chevy just replaced 180,000 Saginaw gears.

2. Brakes

The task force is doing a good job, and we will be out of this brake shudder problem before long.

3. Avanti Body Cracks

The MFG people will be in here Wednesday to go over the bodies to see what we can do about the cracks. We have panels that have cracks, and the panels have not even been put on cars yet. Dr. Lamberti explained that when you have a sharp angle, you build up the bonding; and as it matures, you get a small hairline crack. We’re making a complete study on this problem in Quality Control.

PURCHASING

1. Corporate Purchasing Meeting

The Director of Purchasing from each of the divisions will be here on Wednesday of this week.

2. C2 Cab

We don’t build many of these, and we have an increase in price from 95 cents to $3.60 for the door lock. Also, there is a $1,905 setting-up price every time they run them. The vendor wanted to run them all on one setup and send them all in at once, but Mr. Soelch told him we don’t want that. Dr. Lamberti asked about running them all and sending them in 3 shipments. Mr. Soelch answered that the trouble really is that the vendor doesn’t want the job anymore. They want us to either take the tooling or let them all be run on one run. We have the same problem on the Hawk. We’re adding too many models and keeping some of the old models where the volume is down so low the vendor doesn’t want to go along any longer.

Mr. Hardig remarked that to change the lock would run to $36,000 tooling and asked what volume was projected next year on the C2 cab. Mr. Soelch didn’t know – the only way they use any of them is for special fleet jobs. Dr. Lamberti will look at this.

3. Andy Granatelli

Mr. Soelch is holding several H orders that Mr. Granatelli put out for special runs: one is for $12,000 against which he has asked for material of over $18,000, and now he wants $1,000 more. Mr. Soelch can’t do anything unless the amounts are changed on the orders, and Mr. Granatelli keeps sending in his invoices – he wants his money. Mr. Soelch has asked Mr. Granatelli to send him a letter covering his conversations with Mr. Egbert so that he (Mr. Soelch) will be informed.

INDUSTRIAL RELATIONS

1. Union

Mr. Gallagher announced that the Los Angeles warehouse and office had been signed for the second consecutive year without an increase.

2. Office Hours

Some employees have asked personnel about summer office hours. It seems that in 1953 and 1954, as a result of a poll, the office was opened between 7:30 and 4:00 during the summer. Mr. Gallagher wanted the reaction of the group as to whether such a schedule could be considered again. Several reasons were given against the idea, including need for business contacts outside the city and difficulty in contacting vendors, and the consensus of the group was not to consider such a schedule.

3. Personnel Forms

We are developing a reporting form for our outlying locations warehouses, retail stores, etc., and the purpose of the form will be for managers to use to give information re any troubles they may be having in Union relations. We hope that with this monthly reporting form, we will be better equipped to handle the problems.

Another form is to be used in known, organized locations to find out as quickly as possible where Unions are trying to get in. We are stressing communications and trying the best we can to keep the Unions out. The forms will be ready within the next month.

4. Discharges for Theft

Mr. Gallagher cautioned the group to secrecy on the Richards case. The point is we don’t have an open and shut case. He said we prefer that we keep everything we know to ourselves and hope that it doesn’t go to arbitration. Richards secured a job at Drewrys and then was laid off. He was led to believe that some executive from Studebaker had put the pressure on a Drewrys’ executive. Actually, we were better off when he was employed by them. Now he is out of a job and blames us. Drewrys say the separation was due to their own internal policy. The whole thing is stirred up, and if anything is said by anybody, it would just make it worse.

LEGAL

1. Inventories

Mr. Rickus reported that finished inventory came down about 800 units during the month of March; however, they have gone back up about 400 units through Thursday. Each day last week it was up a little bit. Hawk inventories were 5,800 as opposed to 4,700 at the end of March.

The Avanti inventory is up to about 400 in all locations: in zones, etc. (almost 100 at retail stores). We have built 1,900 more Avantis than we have sold through Thursday.

2. Tooling

The tooling commitments last week were $310,000, bringing the total to date through Friday to $3,455,000 – with just under $3.2 million undercommitted.

APPLIED RESEARCH

1. M44

The contract was signed last week, and the work on the engineering package is still going forward.

2. M602 CKD

The RFP for the technical proposal was received last Saturday. We have until the middle of May to get the technical proposal in. There will be no hitches on it – we had already submitted an unsolicited proposal.

3. 25K Loader

We were notified last week that Cummins Diesel was awarded the contract for 170 units at $5.6 million, and the price was about the price of our alternate design that we turned in.

4. 5 Ton

The technical proposal is completed and due in Detroit tomorrow.

5. 8 Ton

The study proposal is in final type now. We have until April 26 to get that one in.

6. Proposals on Small Vehicles

We haven’t heard anything on these yet. We couldn’t get any information out of Detroit except that we are competitive on the 2½ ton.

7. M151

The latest we have heard on this is that the proposal is supposed to be out around the first of May.

8. New Concepts

While Mr. Isley was in Detroit, he visited the new concepts branch who is preparing the requirement for a new family of vehicles which would be put in production around 1970. It is a big jump as far as mobility of vehicles is concerned. They are talking about 30-40 mph cross-country speed with a top of 70 mph on good roads. This means they are now interested in three families of vehicles: one, presently in production ones – represented by the 2½ ton study and the 1/8 ton study; the second – represented by the contract they left with Ford on the 5 ton, in which they are trying to take present-day components and increase the mobility of the vehicle; and the new study – what can you do if you go to other than commercial components.

He had a further discussion on suspensions. They indicated that they do not know of any suspension that will allow for this kind of cross-country mobility. Ours is the only one they have seen that would have a chance of meeting this type of mobility.

The ’64 fiscal money will be available after the first of July. We are working on a small vehicle that we will try to get in June.

PUBLIC RELATIONS

1. Shows

The New York show went extremely well. The press preview for Mr. Egbert and Mr. Gale went very well. The public swarmed all over the Super Lark and the Super Hawk – we had as good an audience as anything on the floor. They had good press in advance, and they got lots of activity. All of the notices Mr. Dredge has seen have been good.

Dr. Lamberti asked if Sales has a committee that goes over the cars that are planned for the show; that is, is popularity considered in the selection of the models. For instance, our whole front section at the show was of bland colors. The blue, which is our No. 2 color, was not in the front; and gold, which is our No. 3 color, wasn’t in the show at all.

For the next large show, which is in Los Angeles, Mr. Dredge suggests that we try to get one of our old race cars out there and our old Big Studebaker 6 – they are good traffic stoppers. Dr. Lamberti mentioned that it is well to have some exotic jobs out there, and with a little more time, we can give you exotic colors and interiors in some cars. Mr. Dredge remarked that GM spends fantastic amounts of money on these.

2. Newspaper Drag Race

Last Wednesday in Los Angeles we had the first of our newspaper drag strip races with the Super Lark and Hawk. The press competed with each other. They were doing the quarter mile in about 16 seconds, which is good time. None of the people driving the cars was professional – they were all writers.

3. Trailer Haulers

Public Relations has been getting a deluge of mail about trailer-drawing packages. The trailer-drawing thing seems to be getting lots of publicity in the camper magazines and also seems to be very fast growing. Ford has issued heavy duty axles for the units to be used for hauling trailers. We already have a beautiful set of options that could be put into a package that could be ordered by number and by name. There is a considerable market for this, and it is a package that is likely to appeal to a Studebaker buyer. If some consideration is possible on this issue, it would make a good thing for the ’64 line.

4. Race-Winner Models

It’s been the consensus of a lot of us that there is no reason why, by trying a little harder, that we can’t wind up with a class winner in the V8 and possibly one that will do pretty well on the 6 in the Mobil Economy Run. A lot of good press could be gained with an economy V8 in the Pure Oil race and the Mobil run. We would have to build a good number of cars – it has to be an established model that is readily available in order to qualify. They have to be available in every dealership, in every zone office, or wherever they might ask for them. (Although we had to try five dealerships before we found a Regal this year.) The best example of this is Rambler’s use of the American. It is recognized that this car was designed to win the Mobil Economy Run. Mr. Dredge suggests we have a package that could win.

We are working with Mobil and USAC to establish a sports car class. Here we would have a wonderful chance because we have a smaller engine than anyone else in this class.

5. Citizens for Studebaker

Mr. Egbert thinks we should pull the cars back in from the Citizens for Studebaker displays. He noticed that nobody was around the cars – they were not manned. Mr. Bender indicated that the cars are inspected each day by the Service Department. They are unlocked during the time that someone is presumed to be there. Mr. Gallagher commented that it is an 8-hour day to see that the cars are locked or unlocked. Mr. Egbert suggested that Mr. Dredge talk to the Citizens for Studebaker and tell them that unless they can find some way to take better care of these cars, we will pull them in. Mr. Dredge said they are checking into the possibility of retirees. He notified them last week that the present situation was unsatisfactory – then he had to go to New York.

Points discussed during Mr. Egbert’s attendance at the meeting (and not covered elsewhere in the minutes):

1. Service Problems on Parts

Mr. Egbert asked about the responsibility of the vendors in relation to our problems with their parts, and Mr. Challinor told him it is a feature of the purchasing price. Dr. Lamberti explained that it is a standard arrangement, and Mr. Bender added that unless we run into a broad, general problem – then we negotiate.

2. Stationery

Mr. Soelch explained that Messrs. Bumbery and Cox have been working with two outfits; then when they run out of stationery they come to me. Otherwise I know nothing about the deal. Dr. Lamberti will talk to Mr. Cox – Mr. Soelch should have been brought into it.

3. Carburetor from Granatelli

Mr. Hardig said Engineering is still running tests on the carburetor that Mr. Granatelli sent. We will probably finish up about Wednesday or Thursday of this week. We lost 40 hp on the dynamometer stand. Mr. Hardig talked to Mr. Granatelli who said it won’t run on the dynamometer; it wasn’t built to run on a dynamometer. Mr. Egbert agreed. He said the only way to test them out is to put them on the cars. The proof is on the road, not in the Engineering lab.

4. Plant Cleanup

Mr. Egbert asked Mr. Whitmer about the cleanliness of the plant. Mr. Whitmer answered that we’re doing the regular cleanup work, and we’re doing a pretty good job – but it would probably not satisfy Mr. Egbert.

INTERNATIONAL

Mr. Thomas did not attend the meeting, but he phoned the following report to Dr. Lamberti’s office:

1. South Africa

Our assembler in South Africa, SAMAD, advised us last Thursday that, due to the good business situation in South Africa, they had been given a special license, and they expect to be able to import an additional 240 units in May and June of this year. We will give them our schedule on which we can ship these, and if they can accept this schedule, we will get this order. We expect a confirmation from them that this is accepted by Wednesday of this week. Domestic gave us the material for the 240 units.

(Mr. Thomas notified Dr. Lamberti’s office on Tuesday that the shipping schedule was accepted.)

4-18-63

eh