2. Military Truck

We’ll be finishing this military truck contract April 2, and we’ll shut the line down and have the inventory on April 4-5-6. We will still be okaying trucks April 3-4-5, and we should have all the trucks completed and shipped on this contract by April 7 – which means we can start production on the new contract on April 8.

3. Avanti

Mr. Whitmer reported that we’re down to 20 per day this week, and if we don’t get orders, we won’t be working next week. Mr. Detzler indicated that Sales is aware of this. Mr. Whitmer said we should know by tomorrow what we’re going to do because it takes about a week to get all the calculations ready, and when we do it in that short a period of time, we only do it by percentage.

Dr. Lamberti commented that we run 20 per day, or 5 days for 100 units. Right now there is about a 300-order gap which will be reduced to about 200. However, we have to have 100 in the float here and about 100 in the float at Ashtabula (they want about 300 in the float). We have to keep MFG and the Union in mind. There is no point in continuing the rate of production the way we were running it. There were only 16 orders all last week (61 the week before), and we’re running at 20 per day. Maybe we’re facing a 4-day week on the Avanti and truck. (The truck isn’t healthy either.) We have to make a decision of some kind.

Mr. Detzler remarked that we’re all right now on framing and scheduling for about one week, and we’ll have to look at what comes in the first two days of this week. How our rate goes the first few days will determine what we can do next week.

4. High Performance Package

When Mr. Whitmer asked if this carries over into the ’64 model, Mr. Detzler told him it does. Dr. Lamberti asked when we could expect some linesets on them, and Mr. Detzler answered that there will be 30 for the zones real quick – 2 for each zone office, a Hawk and a 2-door Regal Lark. Comments concerning the choice of body style follows:

a. The people who spend that much money for the package will step up to a higher-priced model, and they might prefer a Daytona: they should have a Daytona to show the people. The F4 and F6 are cheap standard cars, and the people may not want them. (The kids want a Monza-type.)

b. We want to keep the price tag down for advertising purposes.

c. The F6 rides real nice, and we’re well over the Monza price – even with the Regal.

SALES

1. Dealer Count (as of Friday)

2. Orders

The 21-day average is 187, with a 5-day average of 200. We dropped off a little last week, and we think one of the reasons was that the personnel from two zones were in here all week. On trucks, we have a 21-day average of 23 per day and a 5-day average of 20 per day.

3. Wholesale

4. Inventory

5. Retail Deliveries

The second 10 days should be about 1,800. (Preliminary was 1,707, but it should come up.) Industry could be 220,000, which would give us .82%.

6. Demonstration Program

This program has started. We’re sending a mailer to 800,000 owners of competitive cars inviting them to take a demonstration ride – and take their challenge card with them to see if they won a prize. The dealers will buy records to give to the people who take a demonstration ride. There is a Wagonaire ad in three magazines inviting people to take a ride in the Wagonaire, and 300,000 small business houses have been invited to take a ride in the Wagonaire. This started March 15 and will run into April and May. The Wagonaire program to small business houses will run into June. Some of the prizes: Avanti, Lark Cruiser, Wagonaire, Gravely Tractor, color TV, vacation trip for two, etc.

7. Runout

Mr. Detzler reported that Sales does not have any big concern – they feel the runout figure is entirely reasonable. We think we will increase our sales pattern as a result of the programs we have now and those we have planned: the programs are beamed at retail. The dealer inventories are about what we can expect with our sales pattern. It is high in days supply, which is natural with Studebaker in relation to the rest of the industry. The established pattern is that what we get in retail is what we can hope to get in wholesale.

8. R3 Engine

Accounting has some tentative costs on the R3 engine – it is a little high. (Mr. Egbert wants to be in on the pricing.) Mr. Rickus will run it through the normal system and we will have to determine what the Company will absorb. It costs between $1,100 and $1,400; and with normal markup, we would be in the $2,000 range. Competition prices run about $500-$750, and Messrs. Granatelli and Dredge feel we should price the R3 at $750 to stay with competition. Out of pocket is $1,400. To cut it in half, we would be absorbing $75,000. Mr. Egbert wants to know if advertising or promotional material has been prepared and who it will go to (who are the customers).

Deliveries will probably be late in April. Mr. Granatelli has machined one, which should be in here in the next couple of weeks; but the first 25 production units will probably be in here late in April. Mr. Soelch will talk to Paxton about the tooling for the exhaust manifold because it hasn’t been placed yet.

Mr. Challinor is concerned about service for the new engine. He noted that training people for that many cars would be costly, but the engine has to be right or it will be ruined. He said he doesn’t have personnel – we will have to hire them or get a racing organization to handle it. We have to have someone with racing knowledge to work with us the way competition has.

Mr. Dredge commented that everyone talks about a racing program, but there is no racing program. It will take changes – a lot more than changing the front end – for these cars to be racing cars, even for drag racing. They are high-performance, boulevard automobiles.

Mr. Dredge observed that on advertising and sales promotion, we are in a peculiar position. Supposedly, this engine has been in existence for the past year, so if we ballyhoo that it has now arrived……..

Mr. Hardig is working on a suspension with a different roll center, and we’re working on heavier components which, when it is finished, we plan to release it as a racing suspension. Mr. Hardig and Mr. Dredge agreed that anyone who goes into a race knows what it takes for a racing car. When anyone enters a race, they have to meet particular specifications or the judges won’t let them enter the car. (Mr. Hardig hopes to have the suspension complete for one car by the middle of May.)

PARTS AND ACCESSORIES

1. Campaigns

All campaigns are now on schedule. We have located all the Avantis except 4 – they went to Europe.

2. Committee Meetings

The committee meetings in Engineering are beginning to pay off: the complaints are running higher, but we can cope with them better.

3. Hoods Flying Open

Mr. Challinor wondered if it would be well to campaign this hood latching problem before we get involved in some serious accidents – although we’re not getting a lot of volume on this (have had 11). He is making a study on it and will have more information next week. Mr. Capsey said that a correction he has been working on would require a new die, and it wouldn’t improve the situation much. Mr. Hardig reported that Engineering still can’t get them to fly open. He noted that the latching device and safety feature are the same as last year; whereupon Mr. Challinor commented that we got around it last year by saying the service man didn’t close the hood properly. Mr. Dredge remarked that he has noticed that the whole hood flutters at high speeds.

QUALITY CONTROL

1. GSA

Mr. Capsey received a report from GSA covering ’62 and ’63 models listing unsatisfactory items. The items range from paint scratches that occurred in transportation to a cracked cylinder block. Mr. Capsey will see that corrections are made. He mentioned that GSA was satisfied with the service they received.

2. Brake Drums

The special drums for fleet will be ready to go this afternoon or tomorrow morning. They will be checked before they are shipped.

PURCHASING

1. 1964 Model

Mr. Soelch needs the model breakdown (body type and volume) because of the tooling on some of the items that are used in small quantities.

2. Packaging Program

Everything is in except STP, which we expect to receive today. We received Onan and Franklin last Friday.

3. Volume – Prices

Mr. Soelch told of the difficulties he is having trying to keep prices in line with the dropping volume. He said we don’t sell enough of some of the models in the line to pay for the tooling. We have some parts where it takes about two hours to set up the tooling, and it only takes ½ hour to run the month’s production requirements. This is not new this year or last year – this has been the case for the past 9 years or so; that is, we promise a certain volume, and then we don’t get there. We can’t get prices down with the volume, the options, and the number of models we have.

INDUSTRIAL RELATIONS

1. Car Leasing

Franklin has asked for a 10-day extension on the March 31 deadline because they don’t know yet who will be in the program and how many cars are involved. It was pointed out that the program was set up through Messrs. MacMillan and Cox – but it probably can be done.

2. Citizens for Studebaker – Internal

At the request of this group, we are developing a program to stimulate the backing of the employees. We are trying to motivate employees to work on family and friends who are not driving Studebaker cars. For the next couple of weeks, there will be banners and posters, etc., in the plant; and we are running a contest, through May, with awards to employees for the highest number of prospects sent to dealers to take a demonstration ride. We’re running bulletins to recognize the Studebaker families who have a large number of Studebaker cars in the family, and we’re trying to find the oldest operating Studebaker. In addition to Plant 8, the divisions have donated excellent prizes. The program will begin with a letter to all employees over the signature of the Company and the Union, pointing out it is being done at the request of Citizens for Studebaker. There will be 50,000 business-sized cards distributed to all employees requesting that they attach them to the bills they pay, etc. The cards will carry the message that the money to pay the bill was earned at Studebaker and suggesting the business house use Studebaker products.

3. Employee Sales

We now have a full program of product coordinators in all divisions.

4. Discharges

The discharge case on the theft will be heard this afternoon at 2 o’clock; it will probably go to arbitration.

LEGAL

1. Speed Advertising

Mr. Feuer reported that he disapproved a recent ad showing 132 mph for the Lark and 140 mph for the Hawk because they are advertising raw speed, and he feels the public would attempt to develop these speeds. He pointed out that this type of advertising is undesirable from a legal standpoint because if there were an accident, the lawyer could say the advertised speeds were relied upon. The industry is going to durability and performance, and Mr. Feuer thinks we should use a little more finesse in our advertising. He noted it would also be desirable to have stickers in the cars saying they should not be raced without certain other equipment – as we do with the Avanti. (Mr. Detzler told him these stickers are on all cars that have these engines.)

When Mr. Feuer remarked that merchandising, advertising, and public relations agree we should not make these claims, Mr. Dredge said that PR recommends that the ads on these runs be phrased as performance evaluation tests. He went on: we are in a peculiar position as far as advertising goes because, by nature of our product, we are unable to race it – we can’t announce as Ford did on Daytona – all we can do is run it at Bonneville. Later, maybe on drag strips, but it is not suitable for drag strip racing now. We should talk about it from the standpoint of safer design; however, when we announce that the cars have run that fast, we do say, inferentially, that others can go that fast also. Mr. Dredge agrees with Mr. Feuer – the manner in which it is handled has a great deal to do with it. Mr. Dredge read the following wire:

The Super Lark will be featured in the June issue of Car Life magazine along with the Wagonaire. The Super Hawk will be featured in the June issue of Motor Trend magazine with the Hawk on the cover. The Avanti with the R3 engine will be featured in the June issue of Hot Rod magazine.

Three New York based magazines also have stories running on the new, high-performance cars. This is publicity that we couldn’t get at this time of the year with anything but high-performance cars. All of these stories will emphasize speed because that is what the cars do – and they handle well.

FINANCIAL

1. Tooling

The tooling this week was just under $340,000, which brings the to-date to $1.8 million and $4.8 million yet to come in.

2. Runout

The final runout figure will be determined April 15, but there will be a meeting to look at the situation on Friday, April 5, at 1:30 p.m. Mr. Rickus explained that he doesn’t intend to judge whether the volume is correct; he just wants to supply costs involved at different volumes.

INTERNATIONAL

1. Columbia

To meet government requirements, we are organizing a small company in order to submit a proposal. The name: Studebaker Roa Columbiana.

2. Argentina

We are hopeful that we may have a key to turn that volume on again – should know in a week or 10 days.

3. Turkey

Through Verdi, we made a bid in Turkey last week for 400-1,000 dump trucks (with and without diesels). The latest on Friday is that Chevrolet will be about $300 below us on both gas and diesel.

APPLIED RESEARCH

1. M44

Work is being done on the engineering package. So far, we have presented 400 changes; 50 have been resolved; 40 more will be presented tomorrow; and about 200 more are yet to be identified. This is without the major subcontractors.

2. M602

We have nothing more on the status of this unsolicited proposal.

3. E48

Mr. Isley has nothing new on that, but Mr. Hardig reported that Mr. Egbert had asked what it would mean in time to convert the one that is at the proving ground so it could be tested. It would take 60-75 days to complete it, and the cost would be in the neighborhood of $3,000 or $4,000. Mr. Thomas said we don’t have any need for this; we don’t have anything live in order to warrant this expense.

4. 25K Unloader

We sent in a revised price last week on the one design we had because after doing some more study and changing components, we found we could reduce the price. Indications are that the Air Force will consider this revised price.

5. Turtle

At the present time, the Turtle is being followed up in Washington to see where we stand.

6. 1/8 Ton, ¼ Ton, and 2½ Ton

We submitted these unsolicited proposals two weeks ago, but there apparently has been some delay because the people who have to evaluate them didn’t receive them until last Friday.

7. 5 Ton

The technical proposal is due April 15. It will be a revision of the M151 proposal. There are two problem areas: one is an engineering problem similar to the 2½ ton, and the other problem has to do with the tool list. Our tool list will have to be identified by the time our final price proposal goes in.

PUBLIC RELATIONS

1. Citizens for Studebaker – External

This is a local committee that has been involved with the promotion of Studebaker products’ sales as far back as 1958. Two weeks ago they came to us and offered help in arousing the townspeople to buy Studebaker products. This is not planned to be as big a program as previous ones have been. There will be about 15 locations where cars will be displayed, and banners will be put up in town. Salesmen will be stationed at the display areas to tell about the cars – this will be on a volunteer basis. A special committee was set up to solicit the business people and manufacturing people to buy trucks for fleets. Studebaker is maintaining hands-off because it is more desirable for it to be a citizens’ affair rather than a Company affair. It is a no-budget or low-budget project as far as the Corporation is concerned. It will start Saturday and run for a month or less – depending upon the acceptance of the program. We plan to stay away from any idea that we need help or have asked for help and will approach it from the angle that the people of South Bend are sufficiently loyal to be interested in promoting our products. PR cannot control the publicity, but they will do their best to channel the thinking in the right direction.

2. ’64 Avanti

Mr. Dredge wanted to know if it is possible to let the running changes leak through – just one change at a time. Mr. Hardig said this is the plan, but with the cutbacks, the changes may not come along as planned. Dr. Lamberti suggested that the gutters not be mentioned – they should have been on the car in the first place. The headlights and the interior are two things that could be hit pretty well.

Mr. Detzler noted that it had been called an Avanti II and observed that we can’t do that without also having a model change. We have told the dealers that we are not going to have a model change.

3. Pricing R3, Super Lark, and Super Hawk

Mr. Dredge commented that the purpose of these cars, basically, is to get image. If we price ourselves out of the market, we lose all the image we tried to gain. If we can’t afford to build them, we shouldn’t build them.

MISCELLANEOUS

1. Noon Lunches

Dr. Lamberti mentioned that Mr. Egbert does not feel that enough people are using the dining room facilities and suggested that members of the staff talk to their people about it. He suggested it is also a place to bring guests. Mr. Soelch commented that only two of his people are permitted to eat in the dining room; the recent ruling cut across certain groups who eat together, so they do not use the facilities.

3-28-63 eh