Kaisers Never Retrench: The History of Kaiser-Frazer, Part 1

THE POSTWAR BOOM

The first production Kaiser and Frazer models came off the Willow Run line on May 29, 1946. The first cars were shipped to dealers on June 22; all were registered as 1947 models. Despite Kaiser and Frazer’s earlier claims, neither car was anything close to a low-priced economy model. The Kaiser Special started at $1,868, nearly $700 more than the cheapest 1947 Chevrolet. The Frazer, meanwhile, started at $2,053, which was squarely in Chrysler and Buick territory. Both rode well, were reasonably economical, and had nicely trimmed interiors, but they were in no way exceptional automobiles.

At almost any other time, that would have been disastrous, but Kaiser-Frazer had the good fortune to roll out its new cars close to the beginning of the postwar automotive boom. When the war ended, the newest cars on the road were nearly four years old and many were far older than that. Unlike depressed, devastated Europe and Japan, American roads were intact and American buyers, flush with unspent wartime earnings, had money to spend. As soon as civilian production resumed in the fall of 1945, customers began snapping up every new car they could get their hands on. Dealers soon had lengthy waiting lists and automotive “scalpers” became common. Kaisers and Frazers might have been ordinary, but they were new and they had four wheels, which was enough for many buyers.

1947 Kaiser-Frazer
Another early magazine ad for the 1947 Kaiser and Frazer automobiles. The headline alludes to recently rescinded wartime restrictions, which sharply restricted “pleasure driving.” (image courtesy Alden Jewell)

In such a seller’s market, it was all Kaiser-Frazer could do to keep up with demand. When Continental couldn’t build engines fast enough, Frazer arranged to lease a plant in Detroit so K-F could build most of its engines itself. Kaiser-Frazer ultimately sold 70,474 Kaisers and 68,775 Frazers in the 1947 model year, giving it a highly respectable 4.1% market share — best of any of the American independent automakers. K-F posted a $19 million profit for 1947 calendar year, offsetting the previous year’s losses.

Graham-Paige, however, was still not pulling its weight. Graham was supposed to provide a third of all Kaiser-Frazer production, but between June 1946 and January 31, 1947, it managed to build less than 6,500 Frazers. Moreover, the company was nowhere close to meeting its contractual share of Kaiser-Frazer operating expenses. In February 1947, the Graham-Paige board decided to transfer all its automotive assets to Kaiser-Frazer in exchange for stock and various other considerations, bowing out of the car business for good.

Kaiser-Frazer sales remained robust in 1948, despite even higher prices. Demand was still strong enough that buyers didn’t flinch at the $2,460 price of a new Kaiser Custom model, or the even-costlier Frazer Manhattan, which was well into Lincoln territory. Total K-F sales amounted to 91,851 Kaisers and 48,071 Frazers, which was enough for a $10.4 million profit.

Kaiser-Frazer’s business was booming, but even with the profits of 1947 and 1948, capital remained a problem. The company tried to issue another stock offering in January 1948, backed by Allen & Company, First California, and Otis and Company, but it fell through when a current shareholder filed a lawsuit, charging mismanagement. Henry Kaiser accused Otis and Company’s Cyrus Eaton of conspiring with the shareholder in order to back out of the stock offering. Kaiser-Frazer subsequently sued Eaton, but the stock offering was never revived. Without it, the company had to obtain another $20 million loan from Bank of America.

1948 Kaiser Special front 3q
The Kaiser Special was the first Kaiser production car, essentially a stripped version of the first Frazer. Available only as a four-door sedan, it was $2,104 in 1947, $2,244 in 1948. A better-trimmed Kaiser Custom was added midway through the 1947 model year, but it accounted for less than 10% of 1947-48 sales. (Photo © 2008 Bryan Costin; used with permission)

SCHISM

On paper, Henry Kaiser and Joe Frazer were ideal partners, but there was a vast philosophical divide between them, resulting in a messy clash of cultures. The employees Frazer had recruited were, like Frazer himself, primarily Detroit veterans: engineers, production men, and designers who had cut their teeth at other major automakers. Kaiser’s people were mostly from California, recruited from the shipbuilding business and other Kaiser enterprises. They seemed proud of their ignorance of the established ways of the auto industry, believing their that ingenuity and fresh thinking would always carry the day. To the Frazer men, who derisively nicknamed them “orange-juicers,” they were naïve dilettantes, too eager to reinvent the wheel and too willing to waste the company’s money on boondoggles and extravagances. Hickman Price, who relinquished his role as treasurer to become head of Kaiser-Frazer Export in early 1948, spoke for many Frazer loyalists when he criticized the Kaisers for their lavish spending and seeming disregard for the company’s modest capital.

When the Kaisers did try to economize, their efforts were often misguided. When Kaiser-Frazer engineers were preparing the company’s first convertibles, Edgar Kaiser (who had assumed Joe Frazer’s role as general manager in 1946) ordered them not to reinforce the frame or body, hoping to save money. Engineers John Widman and Ralph Isbrandt reluctantly built a prototype that way, although they already knew it wouldn’t work. They finally convinced Edgar to change his mind, but the resultant cost overruns made the convertibles into money-losers; they cost the company nearly $5 million.

1950 Kaiser Traveler rear 3q
Introduced in 1949, the Kaiser Traveler was a novel hatchback sedan, reportedly suggested by Henry Kaiser himself. Intended primarily for commercial customers, it sold in very small numbers. Kaiser continued to catalog Traveler and Vagabond hatchbacks through 1953, although few were sold. This is a 1950 Traveler, the cheaper base model. This particular car appeared in the 1997 film Telling Lies in America. (Photo © 2008 Jim Lape; used with permission)

The differences between Frazer and Kaiser came to a head at a board meeting before the start of the 1949 model year. Frazer knew that 1949 was going to be a difficult year for the company. The selling boom was winding down and Ford and GM, which had previously been content to sell warmed-over prewar models, were about to unveil their first true postwar designs. K-F was working on new models, but they were not ready yet, nor was an interim facelift, planned for 1950. Kaiser was undaunted, insisting that the company should raise 1949 production to 200,000 cars. Frazer balked, telling Kaiser that at that rate, they would lose more than $30 million. Frazer recommended scaling back production to around 70,000 units, which would still make a modest profit and buy time to introduce new models.

Henry Kaiser was outraged. In a conversation with author Richard Langworth years later, Frazer recalled that Henry lost his temper, shouting, “The Kaisers never retrench!” He insisted that K-F should seek a new, $40 million loan from the Reconstruction Finance Corporation to bolster the development budget. Frazer — who had put up about half the collateral on the company’s already considerable debt load — staunchly refused. Neither man would back down and the meeting soon degenerated into name-calling.

1951 Kaiser Traveler engine
All full-size Kaisers and Frazers (not including the later Henry J/Allstate or Kaiser Darrin) were powered by the ubiquitous Continental engine, a 226 cu. in. (3,707 cc) flathead six. When the Kaisers first appeared, it had only 100 hp (75 kW), 112 hp (84 kW) with the optional dual-carb set-up, an extra $50. The best Kaiser ever got out of the normally aspirated engine was 118 hp (88 kW), although in 1954-1955, there was briefly a supercharged version with a claimed 140 hp (104 kW).

Frazer was painfully aware that his influence in the company had been on the wane since the Graham-Paige buyout two years earlier. His recruits were being gradually replaced by Kaiser men and he controlled only three votes on the board, to Henry Kaiser’s six. Now that Henry had turned against him, Frazer had no more leverage.

In early 1949, Frazer agreed to step down as president in favor of Edgar Kaiser. All parties agreed that making the public aware of their schism would hurt the company, so Frazer accepted the nominal and ultimately meaningless title of vice chairman of the board. The Kaisers subsequently gave him a three-year sales consulting contract, allowing him to maintain his salary through 1952. Even so, Frazer’s active role in the running of the company was over.

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4 Comments

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  1. “Scalpers” as you call them is an understatement. A big three dealer would rip you off for almost double asking price after the war. My father returning in 1947 bought a K-F Manhattan only because he could get it at ’sticker’ price. He kept it for a few years but do not remember him saying anything wonderful about that car.

    He always had bad judgment when it came to car buying and eventually even bought a Henry J. But will save that story for another time too.

    (The sticker price only came into being in 1958 with the Monroney Act.)

  2. A couple of minor points: first, George Washington had no children (only step-children, who did not carry the Washington name) so Mrs. Frazer must have been descended from a relative of the President’s. Second, the caption under the ad for the 1949 Virginian has both wheelbases identified as Kaiser, rather than one Kaiser and one Frazer.

    1. Thanks for catching that glitch, and for the clarification. Joe Frazer’s mother was part of the same family as George Washington, but obviously not a lineal descendant; I’m a little hazy on the precise genealogy, but I think she was descended from one of Washington’s brothers.

  3. The first car of my family’s that I have clear memories of was a ’49 Frazer. (I have dim memories of a Crosley station wagon.) My father had gotten it used in 1950. Knowing him, he would have bought a car on thoroughly hard-nosed, pragmatic criteria, but I don’t know how that led to this particular car. In 1956 he got tired of chasing wrecking yard parts and got a ’53 Pontiac. I would assume that when he bought the Frazer, he gave the marque too much credit for long-term viability.

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