2. Production

By getting rush shipments out for sales, we are down to 45 not-okayed units. This bank will probably build back up to about 200, which is normal for the system.

3. 2-Tone Hawks

Mr. Hardig asked about 2-toning the Hawks, but Mr. Whitmer answered that there wouldn’t be time available for this. He explained that every job is 2-tone now except the Hawk – the garnish molding color agrees with the interior instead of the outside body color, so it is a 2-tone operation in the system.

4. Carburetors

Of the 1,300 units at the Chippewa plant, manufacturing has campaigned 800 of them for carburetors. Before the remaining 500 are delivered or shipped, they will be campaigned.

5. Water Leaks

All of the units at Chippewa have been campaigned for door leaks. The solid roof station wagon water leak problems are stopped, but Mr. Whitmer is not sure the corrections will be effective when the cars are in service and asked Mr. Hardig to give them the shakedown test to see if the fix is good enough.

6. Avanti

We’re down this week on the Avanti and commercial truck line. By the end of the week, we plan to get the repairs down to a normal bank and then hope to hold it there after we start up again.

Mr. Whitmer hopes the Avanti and commercial truck line and the passenger car line can run at the same time – it would reduce some of the problems.

Dr. Lamberti observed that there is a decision that must be made on April 1 regarding what Ashtabula will do and what we will do by way of body framing. MFG has been asked to produce more Corvette bodies, and Mr. Morrison wants to know what our plans are.

SALES

1. Dealer Count

Last week –

In Process 4

2. Orders

Through March 15 –

The March daily order rate is 198; however, the last 5 days (through the 14th) have averaged 250. We are lineset for framing through the 20th and production through the 25th – and we have about 5 days beyond.

3. Inventory

As of Friday night –

4. Retail Deliveries

10 Days Ending March 10 –

5. R1 and R2 Engines

Some shipments have been made without the fender identification plates. Sales will write a letter to the dealers offering the ID plates to them, asking them to list the cars they bought with R1 and R2 engines. As we receive replies, we will mail the dealers 2 plates per car, with instructions as to how to install them. The price letter is ready to go out. This has been held up because Sales doesn’t have a firm date on when the radius rods and stabilizer bar will be available for production. Dr. Lamberti told Mr. Detzler it would be the latter part of March or the first week of April and asked that the dealers be notified so they would send in orders. Mr. Detzler replied that advertising posters went out Friday. Sales will give production control a forecast.

6. Hub Caps

Dr. Lamberti reported that Mr. Egbert feels that the red and blue on the hub caps clashes with the body color – however, he likes the coach marks. When Mr. Detzler asked why we are using a red, white and blue coach mark, Dr. Lamberti explained that the industrialist stylists have been doing this, and our competition is doing it (Plymouth, etc.) – it started with the Hawk. Mr. Hardig will make up some hub caps in black, white and silver, and we will get it resolved.

PARTS AND ACCESSORIES

1. Carburetor

This campaign is on schedule, although service is having trouble getting additional ones to replace the blue dots that are giving mileage trouble.

2. Dealer Council

Mr. Challinor told of being criticized by members of the Dealer Council on two counts:

a. Too long on service re carburetor and not enough service when they did do it. The New Orleans dealer is having trouble with blue dots, and Mr. Challinor sent him a special shipment of 25 carburetors late last week.

b. Oil Consumption. Service hasn’t given them an answer on this. They’re making a new batch of rocker arm shafts today to send out into the trouble areas; however, they are still running tests on these rocker arms.

Mr. Challinor expects our relationships with the dealers and their problems to improve through the work of the task force and the committee meetings every second week.

3. Concentration Program

Of all car sales made in 1962, 82% were made by 779 of our dealers. Sales intends to test the feasibility of reducing the attention given the 1,200 dealers who account for the other 18% of our business and concentrating money and field personnel time on the small core of effective dealers. In preparation for this, two zones have been converted into a region and will serve as a test case. Next week, field people from those two zones will be brought in for a one-week training program by an outside firm who has been hired to teach our field personnel new merchandising methods. Mr. Challinor feels that expense reductions in the training areas in the past are showing up now and that we expect our men to be specialists in too many areas. With this program of teams, we will get highly skilled men specializing in their own field. Mr. Challinor believes it will take about a year to see the results, but he is enthusiastic about the prospects of the new program. Sales will explain the concentration program to the members of the staff in a forthcoming meeting.

QUALITY CONTROL

1. Water Leaks

We have checked the GSA wagons 100% and are satisfied they are as good as we can get. We checked the new seals on some of the cars at Chippewa, and they seemed to work well. We are continuing our testing.

2. Competition

Mr. Capsey examined some competitive cars to compare quality and discovered that they have the same problems we have – although they can stand a little more than we can because of their strength. They have solder pits, etc.; and some Chevrolets even have door fit problems. (This doesn’t mean we plan to adjust to their poor quality.) Mr. Capsey told of a reliability problem his neighbor had with his T-Bird.

PURCHASING

1. Tooling

We have material rolling at Budd Company – and others – but since we haven’t written any orders, it hasn’t shown up as money spent against the appropriation. We have to get the prints for the breakdown of the dies, etc., and it will be about another month before the money spent begins to show – we are watching our budget very closely.

2. Flange Axle

With the schedule being finalized at a total of 66,155, Mr. Soelch asked where the flange axle fits in; that is, will we start with the ’64 or will it be a running change. Dr. Lamberti remarked that Mr. Minkel had said he didn’t mind it being a running change; however, Dr. Lamberti wondered about putting it into one model from the beginning in order to be in a position to capitalize on the advertising value of the engineering improvement. (Mr. Soelch will get a breakdown of the axles we have on hand.)

3. Steel Bank

We have arranged a 60-day bank beyond our regular ’63 model at the rate of 60 cars per hour – which will take care of us for August and September – and then maintaining a normal bank beyond that. If they don’t go out and we continue on, we will add month to month until it is settled. Some of our vendors want us to carry the load for them. We’re battling this; and so far, our vendors will carry the inventories needed to produce supplies for us.

Even with the excess steel, the total money outlay won’t be any more than we have right now – because of the cutback in the schedule.

INDUSTRIAL RELATIONS

1. Discharges

We have two more discharges for misappropriation of Company property: two night truck drivers in transportation. One was an ex-deputy sheriff with 27 years’ service, and the other was Gloyd Richards. It has always been our policy not to prosecute because of influence the Union has with local politics. The Union is processing grievances; however, Local 5 didn’t arbitrate the last few cases, so they are in a bind on this.

2. Citizens for Studebaker

This organization is resurging again. They have contacted industrial relations to develop some stimulation inside the company to go along with that on the outside. There will be a meeting tomorrow night to try to develop a program to get people in the Company to buy cars. Mr. Gallagher plans to meet with the president of the Management Club and the president of the Mary Ann Club in an effort to work through their organizations.

3. Company Product Sales to Employees

The open house at Chippewa on the Franklin products was a great success – about 2,000 people visited the display. We are now set to handle the full line and will issue a bulletin soon re the full line of products available to employees.

4. Political Education Program

The response through last Friday was not overwhelming. About 20 people asked about taking the course, and the biggest percentage of these was hourly employees. If interest does not increase by the middle of the week, Mr. Gallagher will contact department heads. He read a bulletin that is presently posted on bulletin boards concerning this program.

5. Indiana Compensation

The Indiana Legislature ended its regular session without enacting any budget or tax programs. There have been a series of meetings held by political leaders who hope they can restrict the items discussed in the special session. We could possibly avoid cumulative new taxes up to $750,000, which would cover about a 3-year period.

LEGAL

1. Citizens for Studebaker

Mr. Feuer mentioned an article that appeared in the newspaper regarding the Citizens for Studebaker Program, and he mentioned that if any special discount is involved in this program, it should be taken up with the legal department because of the Robinson-Patman Act.

FINANCIAL

1. Inventories

Inventories came down about $1.6 million in February. Most of it was accomplished by working off rear axle sets. That brought it down about $1 million. Then there was $300,000 in finished cars and $300,000 in material in process, making a total of $1.6 million. Dr. Lamberti commented that every time a change is made, it takes about 60 days to reconcile the inventory.

2. Tooling

There was $300,000 last week for a total-to-date of $1.5 million.

3. Spinning Company Cars

Comments as follows were made concerning this program:

a. Mr. Rickus said it smacks of desperation. It costs nothing to drive the cars from 300 miles to 1,000 miles, which means we sacrifice. We might accomplish the same thing at 1,000 miles. He wondered about leaving room for judgment. We’re talking about around 600 cars.

b. Mr. Challinor took exception to the 3 test cars being included on this program but said that all of the service cars had over 500 miles. He feels it depends on if we can sell the car.

c. Messrs. Gallagher, Soelch, and Lamberti mentioned the estimated 800 SY4’s at Chippewa that would be used to replace the cars – how about the problem of getting rid of these later. The cars that are presently consigned are luxury cars with many options.

d. Mr. Detzler said that with few exceptions, the cars at Chippewa will match the cars that are presently consigned. He commented that the prices on these cars will run $280-$300 less than employee price, new. It isn’t a big bargain. He continued, the decision was made that we turn them in. Our instructions have been to bring all cars in regardless of mileage. The cars turned in this week will be offered to dealers outside of South Bend.

e. Mr. Feuer referred to the Robinson-Patman Act and our present suit with Ranchero Motors. The dealer bought 400 cars and got a special price; then we continued to offer cars to other dealers at a special price. If you’re going to make special deals, you shouldn’t select certain dealers – the cars should be offered to the dealers as a broadside.

PUBLIC RELATIONS

Mr. Whitmer has nothing to report.

MISCELLANEOUS

1. Packard Parts

Mr. Challinor announced that the Corporation is looking for someone who is interested in taking over the distribution of the Packard parts. These parts are taking up warehouse space and money ($1.2 million) in parts inventory. They are still selling at the rate of about $300,000 per year, but there is beginning to be a drop-off in sales. Mr. Challinor asked the members of the group to let him know if they knew of anyone who might be interested in this proposition.

2. Staff Meetings

Dr. Lamberti asked the group how the staff meetings could be improved; that is, whether we should eliminate the statistical data being presented by the sales and production departments since most of this information is available on existing reports, or whether any of the data being presented was irrelevant, or how the meeting itself could be shortened. The attitude of the group was reflected as follows:

a. Everyone should come to the meetings prepared to list 3 or 4 points which concern their particular areas and which are of interest to the total group.

b. The overall basic figures should still be presented because some of the people around the table do not receive the reports that give the figures; and it is very important that, once a week, these figures be re-emphasized and called to everybody’s attention for their pertinent action.

c. The details in the meetings serve as a communications link and a very good record of all that has taken place in the automotive division. This serves as a basis for further planning.

d. It was agreed that problems involving more detailed investigation should be carried out by exploratory talks by members of sub-committees – away from the staff meeting.

It was the consensus that the meetings draw out from the various areas important information that can be utilized by all members to help them make decisions in the running of their own departments.

3-19-63

eh