We will make the schedule on the military trucks this month.

2. Hood Latch

We had some trouble and couldn’t get this started into production last week as planned, but it will start this morning.

3. Avanti

Production is up to 15 per day. We have changed the check point. We were down to 80 not okay which is normal, but we’re up to 82 now. We will continue receiving 12 cars one day and 6 the next from MFG (cars are shipped 6 in a lot) for awhile longer – until we get more of them used up ahead of the line.

SALES

1. Dealer Count

We started the week with 2,031, approved 3, terminated 7, and ended the week with 2,027. We have 5 in process, 2 of which are pretty good: one in Downers Grove, Illinois, and the other at Ogden, Utah. They both have over 100 potential.

2. Inventory

Stock built and credit holds 965

3. Wholesale (through 4/25)

4. Orders

5. Lineset

On Larks and Hawks, we are lineset for framing through May 1 and production of May 6. On the Avanti, we are lineset for framing through May 8 and production of May 21. On trucks, we are lineset for framing through May 2 and production of May 7. Over and above framing for Larks and Hawks, we have 2,078 on hand – which includes 1,273 for June. Mr. Feuer asked if sales is dipping into May orders, and Mr. Detzler explained that right now we’re working on May orders per schedule. He said we need about 8,500 orders for production runout and 10,000 to move the zone inventory (as well as cover production).

6. R3 Pricing

Mr. Detzler asked what the next step on the R3 pricing should be. The discussion that followed covered these points:

a. Originally, Sales and PR were each supposed to write a memo to Mr. Egbert giving him their opinion as to their recommendation of a price for this engine. These memos were not written.

b. Mr. Egbert has been given a pricing list.

c. Since this is a pricing problem, Mr. Rickus will write Mr. Egbert a memo giving the opinions of the people concerned. He asked Mr. Detzler, who answered that Sales would say in the $800-$900 range. Mr. Dredge said he would concur with that. Mr. Granatelli has said that he feels we could live with $1,000. Our manufacturing costs are $1,400. The Corvette price is $1,200. In his memo, Mr. Rickus plans to mention the June 20 delivery date that Mr. Granatelli has promised.

d. Mr. Granatelli says he will try to get about 3 sooner, but continuing production should start June 20.

e. In connection with the pricing, Mr. Granatelli has suggested that we talk to USAC, but Mr. Dredge did not recommend this because their attitude would be that the price was not realistic.

7. Axle Ratios

In answer to Mr. Detzler’s question, Mr. Hardig said that these were more or less finalized last Friday. We are contacting Dana about the possibility of another ratio, and this will be finalized by the end of the day. Our releases will be finished tomorrow.

Mr. Detzler mentioned a note from Mr. Granatelli in which he recommends that we bust the ratios open again. Mr. Hardig acknowledged these will be included in the AMA specs because they have to be; however, on all the cars except the Avanti, the ratios will be: 3:54 standard, 3:31 optional, 3:73 optional. Anything other than that will be at extra cost, and we won’t carry them in stock, so it will take the customer awhile to get them. (This was agreed to in the meeting on Friday.)

8. Interior Trim for the ‘64

Mr. Detzler wanted to know if a meeting could be held to bring Sales up to date on what has been released and to bring Engineering up to date on what Sales wants to offer as options per model. Mr. Hardig will try to have a chart ready by the end of this week showing the trim combinations for each of the exterior colors.

9. Fold-Down Rear Seat

Mr. Detzler asked if any progress had been made on the change in the arrangement of our fold-down rear seat on the wagon. Mr. Hardig replied that when this was discussed, it was dropped because it would require major changes.

10. Changes on the ‘64

Mr. Detzler mentioned a few of the items Sales would like to have: the trunk mat standard in the Challenger series, twin horns, etc. At Mr. Hardig’s suggestion, Mr. Detzler will write a memo to interested people listing these things.

11. Seat Belts

The State of Georgia will require the seat belts to be installed at the factory, and Mr. Challinor remarked that several states are going that route. Mr. Whitmer pointed out that to install the belts would cause dirty carpets, and Mr. Hardig asked if the dealers would object to taking the belts off to put down the carpet and then put the belts back in.

PARTS AND ACCESSORIES

1. Air-Conditioning for ‘64

Mr. Challinor reported that our dealer in Savannah, Georgia, is concerned about our air-conditioner being built in. He says our price is not competitive with GM, and 90% of the cars sold in that city are sold with air-conditioning.

2. Drip Moldings on the Avanti

Mr. Challinor remarked that as soon as we get some pieces, we’re going to make up some installations; whereupon, Mr. Hardig commented that the material is supposed to be in May 15. As soon as they begin coming in, they will come in at a very fast rate. Messrs. Capsey and Soelch will see to it that Service gets the first 200. Dr. Lamberti asked Mr. Capsey to check on them quality-wise and get them in here.

3. Taxicabs in New York City

Mr. Challinor is going to New York tonight for a meeting with the taxicab operators. They will be dealing primarily with warranties. The taxicab operators have been told that no junkers will be allowed on the streets during the period that the New York Fair is on. This means that there will be 800 to 1,000 cab replacements coming up in October. The operators we will talk to represent this business. We are going in priced about $80 high. We will get a Management decision this afternoon as to whether we can go the $80 or whether we hold the line. We’re trying to get 280 ’63 cabs, with some concessions. (It will not cause a problem on the Robinson-Patman Act because it will be offered on all ’63 cabs.) We’d like to get 1,000 cabs on the streets in New York for the New York Fair.

We lost a bid about 10 days ago to Dodge who came in after most bids were in and bid $80 under us per cab, but the thing that really threw the deal was the warranty they offered. They offered 75,000 miles on engines, 75,000 miles on axles, and 50,000 miles on transmissions. (Ford offered 100,000 on engines, 100,000 on axles, and 50,000 on transmissions.) We analyzed our costs per taxicab in New York and found that with the exception of our axle shaft problem on this cab prior to our going with the present arrangement, our axle gave us very little trouble. We believe that if we were to go with our flange axle – based upon our analysis of 800 taxicabs in operation – we could warrant for 100,000. We want to warrant the engines for 100,000, with the exception of the valves; and we want to warrant the transmissions for 50,000 miles, with the exception of the torque converter. The valves and the converter would be covered for 24,000. To give them this warranty will cost $5.99 over our present reserve on taxicabs. This is estimated on the basis of analyzing 12,000 claims paid last year on a fleet of some 100 vehicles.

Our cost per mile is lowest of any other cab in the city; we’re running about 7½ cents per mile while competition is running 8 to 11 cents. The Ford operator who covers the International Airport run has a cost of 11 cents per mile. This is due to the long waiting times between pickups.

Dr. Lamberti remarked that conversations he has had with cab drivers indicate that they like the Checker because it is dependable, but it drives like a truck. They like the comfort of our car because they’re not as tired at the end of the day, and our car can get in and out of tighter places in traffic. Ford has style, and the car moves out fast, but the operator loses time getting people in and out of the cab, what with the wheel well, etc.

QUALITY CONTROL

1. Citizens for Studebaker

All of these cars had carpets and seat belts in them. If we remove the belts and carpets in line with our usual shipping method, we will have a lot of carpets that have been cut; also, the carpets are dirty. He wondered if Sales wanted them shipped with the belts and carpets installed. There are about 80 cars involved. Mr. Rickus suggested and Mr. Detzler agreed that they be turned over to the zones. (Mr. Dredge commented that the three dealers in the area reported that their sales had gone down while this promotion was underway.)

2. Door Fits and Loose Window Glass

We’re still working on the door fit program, and the width of the channel is being changed to correct the loose window glass – as reported in last week’s meeting.

PURCHASING

1. 1964 Model

We’re on target.

2. Post Office Vehicle

The prototypes have to be built by July. There will be a meeting on this vehicle this week.

3. Publicity

Mr. Soelch had a clipping of Ray Gregg’s article in the Tribune wherein he reported that our model lineup would be named President, Admiral, and Commander. Mr. Dredge will check this out with Mr. Gregg.

The group discussed Mr. Gregg and the effect his articles have on the Company. Mr. Dredge said that Gregg is not syndicated, but Dr. Lamberti pointed out that a lot of his stuff gets national coverage. Mr. Dredge explained that when he is reporting news, he can be picked up; however, AP would pick up facts that Gregg reports, not his personal opinions. Dr. Lamberti wondered if something can’t be done – not to coerce him, but just to get him to keep still. This paper has a very large coverage in this area, as well as people passing through, vendors, former residents, etc. Mr. Soelch stressed that news or not news, Gregg is not selling South Bend. After all, the paper indirectly gets its bread and butter from Studebaker, so, in effect, he is undermining his own paper – and his own job. Can’t the man’s boss do something about it? Mr. Soelch wondered how Gregg would like it if we boycotted the Tribune and bought another paper. Mr. Dredge commented that he, personally, does not condone Mr. Gregg’s actions, but pressure has been used on this newspaper and Gregg for several years, and the reaction has not been favorable.

INDUSTRIAL RELATIONS

1. Rumors

Mr. Gallagher reported that the whole system is full of rumors of cutbacks and layoffs.

LEGAL

Mr. Feuer had nothing to report.

FINANCIAL

1. GSA

We will have somebody in Washington the day the bids are opened so that we can get pretty definite specifications. If we don’t get a transcript, it will take them 2 or 3 weeks to get the abstract to us. Mr. Rickus is concerned about the obsolescence we might be exposed to. Last year, we had about $600,000 obsolescence, and it can be much more if we don’t watch it.

2. Inventory

It looks like the Lark and Hawk finished car inventory will go up between 400 and 500 units during the month. Of that, several hundred will be lease jobs which will not be considered as sales, but they will be broken out so that they can be identified. Mr. Rickus doesn’t think that wholesale can pick up production this month.

Material in process is in very good shape – the trend is definitely down in the last six weeks since we started running steadily. (This shows what a steady schedule can do.) We estimate that material brought in is about $4 million less than used in production and that we will have a substantial reduction during the month of April.

3. Tooling

Last week we committed about $130,000, for $3.75 million to date and $2.9 million not committed.

4. 1964 Colors

The car Mr. Rickus is driving is painted an experimental green – a 1964 color. Yesterday the sixth person complimented the color and asked what it was.

INTERNATIONAL

1. Argentina

Mr. Thomas asked that 24 Argentina jobs be put into the schedule for late May. We’re on a trial basis until we see if they can put up what they say they can put up. This will begin to use up the material, and we hope for a higher rate after we get started. (This is material that is peculiar to the 7E.)

2. Chilean Company

At the meeting on Thursday, the Board approved buying into this company. Mr. Thomas doesn’t know what the publicity arrangements will be, but we should have the appraisal, etc. before final arrangements are made.

3. E48

We’re in touch with the people in Washington on the E48. Mr. Kidder has said it will be about six weeks.

APPLIED RESEARCH

1. M44

Work is continuing on the engineering package.

2. M602

The technical proposal on this is going forward; it is due May 17.

3. M151

We’re expecting the RFP on this. It is supposed to be out this week.

4. 5 Ton

We submitted a technical proposal a few weeks ago, but we were notified last week that our proposal was not responsive in that we had a discrepancy clause in the package. There will be a meeting this afternoon to resolve this clause. If we don’t remove it, we will not be asked to quote a price on the proposal. There are two problems: (1) If it is a 2-year contract, we have a question on pricing in relation to the escalator clause. (2) They want us to build according to the bill of material. According to our recent experience with our present contract, this will build a vehicle, but it will not build it to print. This has to be reconciled.

PUBLIC RELATIONS

1. Canadian Rally

Over the weekend, our women’s team won the Canadian Rally, which is the second most difficult rally in the world. Studebaker has won this twice in a row, but this is the first year we are publicizing it in this country. Mr. Feuer asked how many teams were in the competition, and Mr. Dredge answered that one other team was, but it had to drop out. This is rough competition. If one member of the team falls off, the whole team is dropped. Ford and Chrysler went into this with fantastic budgets. Ford’s team won the men’s team, but Mr. Dredge doesn’t know who won second and third. The overall winner of the single car race was Chevy, Ford was second, and Volvo was third.

2. Trailer Hauler

We’re still getting about 20 letters per day asking about trailer hauler packages – not involving new engineering changes, just incorporating features we already have. Mr. Challinor reported that this is in the works: Engineering is working with sales promotion on it. Mr. Dredge mentioned that a high percentage of the people are asking if it would be available in a passenger car. Messrs. Hardig and Challinor have no study on that, and Mr. Hardig indicated that he didn’t know if you could even get it in under the tunnel. Mr. Dredge has never seen such a large public response on anything like this since he has been in the automobile business.

3. Shareholders’ Meeting

We had a shareholders’ meeting with an announcement of a $6 million loss, and the press – by and large – was favorable (including the South Bend press which, on that day, had a headline featuring the post office contract). With a $6 million loss in the first quarter, you have quite a story to handle, and Mr. Dredge was pleased to see that the response of the press was much better than was anticipated, especially in view of the argument on the floor. Dr. Lamberti didn’t feel that the press hit the divisions’ story and performance. Although the loss itself was hit pretty lightly, all the other divisions are making a profit, and they represent 50% of the Corporation. Also, they didn’t show that the votes Fox had were a result of cumulative voting. Mr. Dredge commented that some of the stories showed the votes received by all the nominees. In addition, he understands that the profit in some of the other divisions wasn’t as great as it could have been.

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