2. Labor Performance

Mr. Whitmer commented that week before last, the performance in the plant was the best we have ever had at a 35-per-hour rate – as far as off-standard is concerned. The off-standard in Plant 1 was better than it has ever been, regardless of line speed. This performance has been achieved in spite of the changes in model mix and parts shortages. There are 60 Hawks in the yard without seats and 33 cars are waiting for overdrive transmissions. We’re short of trim, arm rests, etc. These shortages are caused by frequent schedule changes – and not enough lead time to work out the schedules. We have always said we need 6 weeks to do this job right. Now, in order to get caught up, we have to add 20 more people in the stamping plant. Our bumper cost has been $1,000 per day.

This outstanding performance was accomplished in spite of the shortages in our daily lineset. Every day we have to set about 40 or 50 and guess at what they will be. We guess what we’re going to get in the way of orders; then if we guess wrong and we don’t get them ordered that way, we have to make a switch at the last minute. So we have to pull cars off and make a change – sometimes when they are as far along as paint.

This all adds excess cost to the manufacturing operation.

3. Avanti Driveaway

We will have to run these almost solid in order to make this date. We’re talking about 90 jobs, which is 6 days’ production.

4. Door Rubbers

We’re putting a slippery stuff on the rubber to make the doors slide into place; and Mr. Whitmer wondered if we could use softer rubber, which may require a door stop. Mr. Hardig will check into it. We probably can’t do anything for this model, but maybe we can work up something for next year.

5. State Orders

Via the grapevine, Mr. Whitmer learned that Newman and Altman had received orders from the State of Indiana for 74 passenger cars and 33 trucks, and understood they have to be built sometime between now and June. Manufacturing needs the specifications. Mr. Detzler believes they are all standard, but he will check into it and let Mr. Whitmer know.

SALES

1. Personnel

We are making some changes, personnel-wise, in Merchandising and Advertising because Bill Wood is leaving June 1. The man we had in mind took another job; so as an interim measure, Dick Detzler will fill-in in that department. Paul Galvin will take care of road shows, Elmer Danch has literature, and Warren Bates has programs. Mr. Minkel is checking on a couple of men for the job.

2. ’64 Model Dealer Shows

A show in Pittsburgh will be added to the ’64 show schedule, according to Mr. Minkel, and Sales will give the dates when the schedule is finalized. We will use red cars for the reveal if the red takes the spotlight right. If it isn’t a live color, we will use something else. Mr. Hardig commented that if it is red, this will have to be a production car because we don’t have a prototype in that color combination.

3. Dealer Count

We started the week with 2,028 dealers and ended with 2,031. We have 5 applications in process.

4. Orders and Lineset

Mr. Detzler reported May orders through the 17th as 2,311 regular cars, 105 Avantis, and 369 trucks. We have received 2,344 June orders and have used 1,200 in the system so far. Our requirements, counting yesterday’s orders, are 4,068 for our runout production.

We are lineset for production on the regular line through the 27th; we are framed through the 22nd (tomorrow), but we are short 25. We are lineset for Avanti production through June 13 and for truck production through May 24.

Our 5-day order average for last week was 177 and 189 for the previous week.

QUALITY CONTROL

1. Drip Moldings, Mirror – Avanti

On Thursday, we started the drip moldings 100%. The Service Department has been notified that they can get some of the new stock. We will use up the other stock, but we will have some scrap on it.

Mr. Minkel feels the drip molding is a service matter. You can’t open the door in the rain without getting soaked – also, the water runs into the car. He said the cost is $2.50 plus handling, or about $5 total. With 2,600 units out, our exposure would be $5 each, or $13,000. Installation could run from $11 to $16, depending on the local rate – it is a 2-hour job. Mr. Minkel thinks the general opinion of the public and the dealer organization is that this was a styling boo boo – probably on everybody’s part – and he strongly urged that we give the customer the drip moldings and let him pay for putting them on. If the dealers have to charge the customer, they won’t call him to ask him to come in; consequently all the cars wouldn’t be done. Mr. Minkel asked the opinion of the members of the group, if any of them felt strongly that we should not do this. These were the comments: have experienced more complaints on that issue than on anything else except the small mirror – feel it would be worth the money; agree with Lew, people in town have mentioned it; believe the customer would feel 2 hours’ labor was enough; the thing should have been on the car in the first place. It was mentioned that Mr. Egbert was of the opinion that we should get money for it. The fact that it was not included on the car to start with was the result of a decision – not an oversight. Mr. Minkel will discuss it with Mr. Egbert.

Mr. Minkel remarked that as far as the mirror is concerned, we built it this way, and it is adequate. However, we’re going to change it. Sales will look at several mirrors that Mr. Hardig has and then make a decision.

The outside mirror will be changed to one on the door which can be reached by lowering the window.

2. Grille – Avanti

Now this isn’t promised until after June 1 – and that’s not too reliable a promise. We estimated the cost of the grille to be $6.50; actually it’s a little higher.

3. Reworked Avantis

We have 3 or 4 of them completed. Sales would like to have them by the middle of June so that they can be sent into the field for sale. However, we haven’t hired any additional people to do these, and Sales is being notified as fast as they are finished. Mr. Whitmer will check to see what can be done.

4. Paint – Avantis

Mr. Capsey reported that we’re trying everything we can to get the best paint job possible on the Avanti so that when it goes out of here, we feel nobody will have a complaint; otherwise we have to pay $125-$225 for a paint job. Our policy requires the dealer to return any part involved in a claim. We inspect the part, and if we find it is not defective, we refuse the claim. With paint, we have no recourse. Mr. Minkel observed that if it is a major item, our Service field people check it. A dealer can get $5-$7 without an inspection, but anything over that has to be inspected by our people before the dealer can collect. Mr. Capsey told of a few cases they have had in the nearby area where the dealer has claimed an overspray on the paint, but when Quality Control investigated, they found it was just a little dirt that could be wiped off. However, he pointed out, when it is a distant point, Quality Control can’t check them. He will write a memo to Mr. Challinor, and Mr. Minkel will talk to Mr. Challinor about this.

5. Post Office Van

Mr. Capsey wondered what has been done about delivery preparation service on these vehicles. We prepare the regular GSA cars so that they will be all right until they go in for the 1,000-mile check, but we don’t know of any arrangements that have been made on the vans. Dr. Lamberti suggested that he check to see what the specifications call for. Since the vehicle is assembled at Lansdale, this could be a problem. Mr. Capsey will report on this at the meeting Wednesday.

PURCHASING

1. 1964 Model Tooling

We committed $144,560 in tooling last week; to date, $4,155,419; uncommitted $2,400,000. We will be better on our budget this year than we have been in the past.

2. Canadian 25% Duty Drawback

Mr. Soelch noted a number of problems he has been having in trying to deal with Canadian suppliers. He said if production control has similar trouble, we will be tying up the line; and we can lose the amount saved on the duty drawback in a couple of days if the line goes down. However, we’re battling the thing. Dr. Lamberti asked Mr. Soelch to get out a memo to concerned people on the Canadian suppliers. We don’t want critical items placed with them, just nonfunctional parts.

LEGAL

Mr. Feuer had nothing to report.

FINANCIAL

1. 5-Ton Truck

Mr. Beyer commented that it seems unlikely that we will be ready by Thursday with costs for a price meeting. Mr. Soelch added that we can’t find the tooling, and it’s practically impossible to get quotes. Dr. Lamberti will try to get a time extension on the due date (presently Monday, May 27, at 8:30 a.m.).

Mr. Isley remarked that in the meeting he attended Friday, the price escalation they suggested was on metal and metal parts rather than vehicles – which would be a much better deal. At the bidders’ conference, they said if anybody could come up with a better suggestion, they would be glad to consider it.

INTERNATIONAL

1. New Zealand

We box the first shipment to New Zealand next week.

2. Argentina

Mr. Thomas reported that we still have good hopes on Argentina. Payment has been satisfactorily made, and we hope we will be able to put more into the boxing schedule.

3. Australia

Mr. Chapman will be visiting here soon. He is seriously considering putting in the 6 in addition to the 8 – and possibly engine assemblies.

4. Chile

The agreement has been made, and matters are underway that must precede the actual transfer of funds.

APPLIED RESEARCH

1. M44

Things are going along on the engineering package – no particular problems.

2. M602 CKD

The first step proposal was submitted last Friday.

3. M151

The RFP for a 3-year supply of M151’s is in. No decision has been made whether we will bid on this.

4. ¼ Ton, 2½ Ton, 1/8 Ton

We found out last week that the technical people have passed on these proposals and that they have gone into procurement channels. They wouldn’t tell us how we rated.

5. 1/8 Ton Contract

We expect to receive this from the District this week.

6. Turtle

We hope to have this in the exercises that ATAC is running in Detroit on June 13. There will probably be 25-30 vehicles included in this test run. We will run our engineering prototype on Thursday of this week to demonstrate it to the people at ATAC and to find out how it will perform on the entire course. (This is the Turtle for Italy.)

7. Suspension

We have a couple of meetings set up on Friday at ATAC to test the suspension and the vehicle that would go along with it. We hope to get it settled as to what kind of proposal they will accept as an unsolicited proposal.

8. M114, T195, and T196

Mr. Isley reported on his trip to Cleveland: Last weekend, we attended a pre-solicitation conference of potential producers of the M114, T195, and T196. These will be produced in Cleveland ordnance plant which is now run by Cadillac of GM. The Army will have the IFB out June 1 for determining the new contractor to run this plant. (There were 9, including Cadillac, at the conference.) This will be a 3-year contract, and in these 3 years, 3,000 T114’s, 534 T195’s, and 549 T196’s will be produced, for a total estimated value of $120 million. Production would start on January, 1965, and run through June, 1967. The plant will be made available to the successful contractor – if other than Cadillac – on July 1, 1964. The contract award is expected to be made in October of this year. We don’t know if anyone has much of a chance to get this away from GM if GM wants to keep it. The package available has about 12,000 production parts drawings, and there are some 40,000 tooling drawings which will not be included in the package. These will be available at the Cleveland procurement district. In the plant, Cadillac is building the hulls and practically all the mounting brackets and various machined parts that it takes to put it together, the power plant, and the drive system. The Government will furnish all the armament put on it.

A proposal from us would take a considerable amount of work on our part. Engineering says it would take about 1,000 hours to break down a package of 3,000 to 4,000 parts, and we have about 3 packages here. The process sheets are not going to be made available to anyone; Cadillac will not make them available. So it will take a lot of work to determine how long it takes to move this equipment in their plant.

The welding equipment in the plant is new and was installed in the operation about a year ago. There are 2 transfer lines for machining the welded hulls: one for the T195 and T196 and the other for the M114. The rest of the machinery in the plant is old machinery that was used on the steel M41 tank, and it is not well suited for machining the aluminum parts used in these vehicles. However, they are using the old machinery rather than have it replaced with new.

They have about 4,000 employees, but we didn’t get a good breakdown on them. As near as we can tell, there are 2,800 production type, 500 VEA, and 700 or 800 administrative and supervisory people. These people would be laid off as far as GM is concerned, but GM has other plants in the area and they would be transferred to other GM plants. Many of the management people have been with GM a long time and worked in this plant back around 1950. In other words, most of the people would not be available to a new contractor.

A memo is being written by those who attended this meeting.

PUBLIC RELATIONS

1. Newsmen

Mr. Dredge mentioned the fact that the most recent Gregg article was favorable.

Mr. Flager is leaving AP to take a job with U.S. News and World Report. He is being replaced by a man we know better and who is friendly with Studebaker. Mr. Flager’s last article, which was not completely unfavorable, was on his ride in a Super Lark.

2. Publicity

A few of the long-lead-time magazine people are coming in to take pictures at the proving ground on Thursday.

3. Indianapolis 500

There is quite a lot of PR activity going on in Indianapolis (STP is getting good rub-off publicity also). Mr. Granatelli is big news at the race. He qualified the first of his Novis and has all week to qualify the other two. He now has an adequate driver for the second best car. He has been on TV and radio almost every day, and whenever he is interviewed or photographed, mention is made of his affiliation with Studebaker (but not his Novis, which will come later – depending on the outcome of the race). We have 15 Press cars headquartered at Indianapolis, and they are assigned to the best Press people we have been able to get to use them during this before-the-race period.

4. Canadian Rally

We have been painting stripes on the cars going to the race tracks. Chevy has a campaign going nationally where they are painting similar racing stripes on the Corvair, indicating that it has won its stripes by winning in the Canadian Rally.

5. Racing – Ford Motor Company

Ford Motor Company sent Benson Ford and Lee Iacocca down to Indianapolis with a team of six men to conduct a press conference in which they reaffirmed their competition and racing plans and pointed out that they are not simply interested in developing engine components, but they are anxious to win enough races to sell cars to racing fans. This is the strongest statement ever made by an automobile maker – it was a “flat-out” statement. Racing is the largest spectator sport in the nation, from the standpoint of paid admissions.

6. Consumers’ Report

Mr. Detzler mentioned that in their latest issue, this magazine reviewed specifications on ’63 wagons, and the tire capacity figures given for our car are not correct. In the first place, they use the wrong tire size. If they had used correct figures, we would be in the ball park with everyone else. In testing the 6’s, they considered the Chevy II the best station wagon buy. Mr. Dredge will check with them about their report on our product.