DON’T CRY FOR ME, ARGENTINA: KAISER AND IKA
The last hope for Kaiser’s automotive business came not from the U.S., but from South America. In the summer of 1954, Argentine president Juan Peron approached Kaiser about the possibility of building a factory in Argentina. Negotiations began in September, managed by Henry Kaiser himself, who had not been actively involved in the company’s automotive operations for several years. The deal got off to a shaky start, allegedly because various Argentine government officials demanded “gifts” to grease the wheels, something Kaiser found intolerable. Peron assured Kaiser that the business would be strictly above board, and they signed a letter of understanding on October 5. On January 20, 1955, Kaiser formed Industrias Kaiser Argentina S.A. (IKA), a joint venture with the government-run Industrias Aeronauticas y Mecánicas del Estado. IKA’s first managing director was Jim McCloud, Edgar Kaiser’s brother-in-law. In March, IKA broke ground on the new factory, located in Santa Isabel, in the province of Córdoba. It was financed by Kaiser, the Argentine government, and a consortium of local businesses.
The involvement of local businessmen was fortunate, because their influence allowed IKA to survive the fall of the Peron regime that September. Construction of the Santa Isabel factory continued apace, and by June 1956, IKA was selling locally assembled Jeeps and 1954-1955 Kaiser sedans, manufactured in Toledo and shipped to Argentina in CKD (completely knocked down) form.
THE END OF THE ROAD — ALMOST
By 1955, Kaiser’s U.S. operations were drawing to a close. Although the company offered little-changed 1955 Kaisers, only 1,291 were built, most of which were CKD models for Argentina. Willys made a $4.7 million profit for the year, but most of that was on its Jeeps; Willys cars accounted for only 6,564 sales.
Up until the end, Kaiser Motors still had many ambitious plans, including front-wheel-drive subcompacts and a third-generation Kaiser that would have shared components with a new compact car, something Dutch Darrin had recommended several years earlier. The Kaisers, however, decided they’d had enough. At a board meeting in the spring of 1955, Edgar Kaiser announced the end of the Kaiser brand in the U.S. Jeep and commercial vehicle production continued, but the production of Kaiser and Willys automobiles ended for good in that fall. Kaiser subsequently sold the tooling for the 1954-55 Kaisers to IKA for $9.3 million; tooling for the Aero-Willys went to Willys do Brazil.
In March 1956, the Kaisers went public, rolling Kaiser Motors and the Henry J. Kaiser Company into a new publicly traded company called Kaiser Industries. Kaiser-Frazer shareholders who’d stuck it out to the end eventually received substantial dividends from Kaiser Industries, Henry Kaiser’s last gesture to those who had believed in his automotive dream.
In 1958, IKA began manufacturing a version of the 1954-1955 Kaiser Manhattan for the Argentine market, dubbed IKA Carabela. It survived until 1962, when it was replaced by the Alfa Romeo-based Bergantín and a local version of AMC’s Rambler Classic. Kaiser Industries sold its stake in IKA to Renault in November 1967, but the Industrias Kaiser Argentina name lingered until 1975, when the Santa Isabel factory was officially renamed Renault Argentina, S.A.
In 1963, Willys Motors became Kaiser Jeep, offering a number of groundbreaking vehicles like the original Jeep Wagoneer sport-utility vehicle. By the late sixties, however, it was struggling again. In January 1970, Edgar Kaiser sold Kaiser Jeep to American Motors for $70 million in cash and a 22% stake in AMC. Kaiser Industries sold that stock later in the decade, its last involvement in the auto industry.
Henry Kaiser officially retired in the mid-fifties, moving to Hawaii with his second wife, Alyce Chester Kaiser. He subsequently became involved in resort and hotel development, remaining very active until his death in 1967 at the age of 84. His son Edgar served as chairman of Kaiser Industries until it was broken up in 1977; Edgar died in December 1981, aged 73. The Kaisers’ former partner, Joe Frazer, died in 1971.
Although their automotive venture had been a failure, the Kaisers’ legacy in other industries remains formidable. Among other things, the Kaisers gave us the Kaiser Permanente health network, which began in the 1930s as a private health plan for Kaiser employees, and the Kaiser Family Foundation, one of the U.S.’s largest philanthropic organizations.
REQUIEM FOR THE KAISER-FRAZER DREAM
Barring quixotic efforts like Tucker, the Kaiser-Frazer Corporation was the last serious effort to launch a new mass-market automaker in the United States. (American Motors, incorporated in 1954, was really the consolidation of two preexisting companies, Nash and Hudson.) The direct reasons for Kaiser-Frazer’s failure are not complex: a lack of capital and excessive costs relative to the Big Three. The more interesting question is why Henry Kaiser failed. Kaiser had a formidable record of success in other industries both before and after the collapse of his automotive enterprise. Why did the man who had built the Hoover Dam falter in taking on Detroit?
First, Kaiser’s tremendous achievements in construction and manufacturing were in contract-based businesses, not retail sales operations. With contract jobs, the competition is mostly in securing the contract; after that, the customer and the price are more or less assured. The auto industry is a different and more brutal game, where building a good product and convincing someone to buy it are two entirely different problems. The immediate success of 1947 and 1948 lulled Kaiser into a false sense of security, suggesting that the strategies that had worked so well in the shipbuilding trade would also work in the car business, but that was only true in the brief rush of the postwar seller’s market.
Second, the Kaisers’ approach to Kaiser-Frazer was not unlike the many online start-up companies of the late 1990s: They were prepared to throw many ideas at the wall in search of one that would stick, assuming that once the company found its niche, they could easily repay the deficit they had run up along the way. What Henry Kaiser did not appear to grasp was the degree to which the auto industry is a war of attrition. The cost of a new product is only the beginning; you also have to budget for its replacement and the next generation after that.
Many observers still think Kaiser’s greatest downfall was not listening to Joe Frazer, who understood these things all too well. We’re not so sure. True, if Henry Kaiser had heeded Frazer’s advice, Kaiser-Frazer could have mitigated the disaster of the 1949 model year, and more input from Frazer might have brought about a useful degree of fiscal restraint. Even so, we doubt that the eventual fate of Kaiser-Frazer would have been much different.
To our mind, Kaiser-Frazer’s greatest failure was in not defining a clear identity for the company’s brands. Had Henry pursued his original agenda of building an inexpensive, plastic-bodied economy car, Kaiser would have had a coherent brand identity — if not necessarily a lucrative one — but Frazer talked him out of it. Despite Frazer’s early talk about building an economy car, it appears that what he really wanted was to make K-F an orthodox, bread-and-butter automaker, offering pretty good cars for a pretty good price. That was a fine idea, but the era in which it was a realistic goal for a company as small as Kaiser-Frazer ended with the Great Depression. To survive in the brutally competitive postwar marketplace, K-F needed to find a unique niche, which neither of the company’s original brands ever really did.
The Kaisers didn’t find their niche until after the merger with Willys, when they acquired the Jeep brand. Of course, Jeep wasn’t Kaiser-Frazer’s creation (except insofar as Joe Frazer was responsible for establishing the brand during his earlier tenure at Willys), but it had the unique product and unique identity that K-F had needed from the beginning.
This is not to say that the Kaisers or Frazers were bad products; other than their lack of power, they were fine cars in many respects. Edgar Kaiser always used to say that his company’s cars would have sold like mad if they’d been badged as Buicks. We tend to agree, although an Oldsmobile V8 under the hood certainly wouldn’t have hurt.
Much of the information in this article comes from Richard M. Langworth’s remarkable (and long out of print) book Kaiser-Frazer, the Last Onslaught on Detroit: An Intimate Behind the Scenes Study of the Postwar American Car Industry (Automobile Quarterly Library Series) (Boston, MA: E.P. Dutton, 1975). Additional information came from Roberto Dario Frassinetti, “Rare car Bergantin made by Kaiser Frazer of Argentina,” Route 40 for the Adventure Traveller by Bob Frassinetti, 14 February 2006, route40argentina.tripod. com/ 40/index.blog?topic_id=1083862, accessed 16 December 2009; Ken Gross, “Pride of Willow Run: 1951 Frazer Manhattan Convertible” and “Then Man Who Never Failed,” Special Interest Autos #27 (March-April 1975); Arch Brown, “1953 Allstate: Henry J in Drag?” Special Interest Autos #153 (September-October 1996); and Richard Langworth, “1953 Kaiser Manhattan: SIA Drives a NOS Kaiser,” Special Interest Autos #94 (July-August 1986), all of which are reprinted in Richard A. Lentinello, ed., The Hemmings Book of Postwar American Independents: driveReports from Special Interest Autos Magazine (Bennington, VT: Hemmings Motor News, 2002). Some additional information came from the Auto Editors of Consumer Guide, Encyclopedia of American Cars: Over 65 Years of Automotive History (Lincolnwood, IL: Publications International, 1996); John Gunnell, ed., Standard Catalog of American Cars 1946-1975, Rev. 4th ed. (Iola, WI: Krause Publications, 2002); and Dave Holls and Michael Lamm, A Century of Automotive Style: 100 Years of American Car Design (Stockton, CA: Lamm-Morada Publishing Co. Inc., 1997).
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