2. Budd Tooling

Mr. Whitmer reported that Mr. Gierke visited the Budd plant and found that although Budd is not ahead of schedule, they are on target. However, the F-quarter panel may be a bottleneck. Mr. Whitmer had hoped to start a pilot model a little early but this will not be the case.

3. Material Shortages

Mr. Whitmer is extremely concerned about material shortages resulting from the inventory reduction program. He said cars are stored in the yard waiting for materials or parts to come in. This is resulting in considerable down-time.

4. May 31st Production

An Accounting Department study of manufacturing variances indicated that a complete plant shutdown on Friday, May 31 would result in a loss of from $20,000 to $25,000. It was decided to operate the entire plant that day.

SALES

1. Dealer Count

2. Retail Sales

Mr. Bender reported that retail sales for the 2nd period of May were 1,743, of which 75 were Avantis and 11 were home-office sales. Retail rate of travel for the 2nd ten-day period (8 selling days) was 208 per day on the part of dealers and retail stores.

For the first ten-day period, home office sales amounted to 369 of which 131 were Avantis. The dealer-retail store selling rate for that period was 195 Larks and Hawks per day.

Retail sales on the part of dealers and retail stores for the month of May may be a little short of reaching Sales’ estimate. Home-office sales, so far, have exceeded the estimate of 162. It is still possible that overall retail sales will reach the forecast of 6,200 for June.

3. Dealer Inventories

Mr. Bender estimates that at new model announcement time, dealer inventories will be approximately 7,200 Larks and Hawks and 1,100 Avantis, excluding retail store inventories.

4. Orders

Larks and Hawks have been framed through May 29th and production of June 4th.

Open dealer orders 859

As of this morning (5/27) orders required to cover line production for June – 3,330.

5. Factory Stock

To run out production starting May 8th, 271 orders per day were required for the first nine days. Order intake averaged 228 per day. The second eight days required 240 orders per day. During the first four days of that 8-day period, order intake averaged 158. For the 13 days involved, order intake will be approximately 1,400 short of covering production. This would bring factory inventory and float up to approximately 3,600 units at the end of June.

Zone inventory – 1,100 new cars (not including assigned cars.)

Mr. Bender estimates that if dealers maintain their retail rate, dealer inventories at the end of June will be approximately 12,000 plus 1,200 in retail stores. This would be about 4,000 units less than last year.

6. Wholesale Deliveries – Thru May 23:

The target for the month of May is 5,300. With 5 days to go, this will require 325 to 350 per day, including sales out of zone inventory.

PARTS AND SERVICE

1. Service Campaigns

All service campaigns have been completed except on the Avanti hold-down clamp.

2. Drip Molding Kits

Drip molding kits will be made available to dealers at a dealer net of $5.00. Our manufacturing cost is $2.53. The $5 charge will cover all expenses including packaging and shipping. Installation for drip molding kit will require 2 hours, which will result in cost to the owner of approximately $11.00 to $16.00, depending on location.

3. Owner Complaints

Mr. Challinor stated that owner complaints are increasing each month; that Service is getting into some difficult situations in certain areas. He is placing his top service men in these areas who will talk to dealers about how they are handling service complaints in an effort to pinpoint the areas in which the most trouble exists. This will be a part of our dealer development program.

Mr. Challinor further stated that there are some very difficult situations in the Avanti line which are taking a tremendous amount of time, not only on the part of the dealer, but also the service personnel in South Bend. He said he had received 7 complaints since Friday morning, May 24.

Mr. Dredge said Tom Fry of D’Arcy had taken delivery of an Avanti and shortly thereafter the windshield wiper driver broke loose in the cowl. Mr. Challinor wants to examine the car because he was under the impression that windshield wiper problems had been corrected.

Oil consumption leaks….Mr. Challinor reported that it appears that Quality Control is getting oil leaks under control but the correction problem in the field is costly because Service must pay for replacing gaskets and seals.

Mr. Challinor said that with the two-year warranty now in effect, service costs will increase considerably as a result of these items.

4. Air Scoop Kit

Kits have been ordered for Service. Estimated availability is June 15th. These will be made available at our regular dealer net price.

QUALITY CONTROL

1. Molded Fiberglass Body Co.

Mr. Capsey reported that a man will be sent from MFG to go over the Avanti body defects. He feels that the MFG representative’s visit will be helpful.

2. Avanti Rear Window

The No. 1 problem with the Avanti is still the rear window. Mr. Capsey said the last fix (a revised clip) did not absolutely correct the situation.

Dr. Lamberti suggested that reports be obtained from owners describing the driving conditions at the time the window blew out. Mr. Challinor said it will be impossible to tell whether the “fixed” cars have been corrected because the driver may not yet have encountered the same condition which existed when the back glass blew.

PURCHASING

1. 5-Ton Military Truck

Mr. Soelch reported that costs on the 5-ton Military Truck would be completed by noon today.

INDUSTRIAL RELATIONS

1. Richards-Davidson Discharge Case

This case has been set for July 1st. Outside of the fact that the chief witness has had two heart attacks and the second witness is in jail, Mr. Gallagher said “we’re in good shape.”

2. New York City

A 10-day labor negotiation session broke off early last week and will be resumed today. No progress has been made. Although the Union has not yet backed off, Mr. Gallagher feels sure they will do so. There has been no extension of the contract which expires May 31st. Local has taken a strike vote authorizing the Bargaining Committee to strike if it sees fit.

3. Treasury Bond Drive

The drive will begin and will be completed this week. All employees will be personally contacted.

4. Clarke Floor Machine Division

Clarke employees have been approached by the U.A.W. Mr. Gallagher has reviewed the employee benefits and recommends an increase in the pension benefit from $2.00 per month for each year of service to $2.80 per month, recognizing all years of service. Clarke’s present plan limits the years of service to 15, resulting in a maximum of $30.00 per month pension, which he feels is inequitable.

Mr. Gallagher said the Union will use the pension program as a tool and suggests that the revised program be approved as early as possible.

LEGAL

Mr. Feuer had nothing to report.

FINANCIAL

1. Tooling Commitments

Mr. Rickus reported that $104,000 had been committed during the past week for a total of $4,250,000. $2,400,000 uncommitted.

2. Factory Inventories

Since the first of May, Lark and Hawk inventories increased approximately 1,100 units, trucks 65 and Avanti 50.

GOVERNMENT

1. 5-Ton Truck Proposal

The proposal is due on Wednesday, May 28.

2. ¼ Ton Cargo Carrier, 2½ Ton Truck, and 8-Ton Truck

No further information on these proposals.

3. Turtle

Mr. Isley reported that the Turtle was demonstrated at Tomahawk Hills and photographed by ATAC personnel. The Turtle covered all the courses without any difficulty. ATAC personnel’s reaction was favorable and they admitted it was better than anything they had seen so far.

On June 13th, the Turtle will participate with 25 to 30 vehicles in the ¼-ton class in a demonstration for all of the Army agencies.

ATAC will consider an unsolicited proposal on the Turtle.

4. 1/8-Ton Cargo Contract

This contract was delayed again. The man at the Procurement district in Chicago who was writing the contract had a heart attack and his work is being redistributed.

5. New Suspension System

While at ATAC, Mr. Isley discussed our new suspension system for a small weasel-type vehicle. Although there is no established requirement for such a suspension at this time, ATAC has agreed to accept an unsolicited proposal which Mr. Isley’s group is preparing.

PUBLIC RELATIONS

1. Indianapolis “500”

Mr. Dredge stated that he had just returned from Indianapolis where Mr. Granatelli has managed to catch the fancy of the nation by qualifying his three Novis, which are the three most famous race cars in the world today. Only Mr. Granatelli and Ford will send three cars into the “500”.

Mr. Dredge feels that from a public relations standpoint, Mr. Granatelli’s rating has undergone a 180 degree turn.

2. R-3 Engine Horsepower Rating

Mr. Dredge has been contacted by the National Hot Rod Assn. urging that Studebaker place a horsepower rating on the R-3 engine which would qualify it for drag strip races. A discussion followed and Dr. Lamberti suggested that Mr. Dredge write a memorandum setting forth his feelings and reasons as to how this would affect sales.