As the 1950s dawned, the Packard Motor Company was down, but not yet out. In 1952, a hotshot salesman from the appliance industry named Jim Nance tried to turn it around with new tactics and new technology. He came close to succeeding, but it would be the venerable automaker’s last hurrah. This week, we look at the downfall and demise of Packard.
PACKARD AT THE CROSSROADS
In 1950, Packard was in state of flux. Over the previous decade, outgoing president George T. Christopher and his predecessor, Max Gilman, had turned away from Packard’s traditional position as a high-end luxury car in search of greater volume. The launch of the cheaper One Twenty saved Packard from collapse during the Depression, but eventually cost the company some of its past luster. That retrenchment, combined with dubious styling choices for Packard’s postwar cars, led to a sharp downturn in sales by the 1950 model year.
Saying that Packard had moved down-market demands some qualification. Even the “junior” Packards of this era were not cheap: A basic Packard 200 sedan cost started at almost $2,500 in 1951, about $350 more than an Oldsmobile Eighty-Eight and over $100 more than a Buick Super. The top-of-the-line Patrician 400 started at nearly $3,700, almost $500 more than a Lincoln Cosmopolitan and over $130 more than a four-door Cadillac Series 62. The problem was a more subtle one. The “senior” Packards, once the standard-bearers of the marque’s prestige, were perceived as bigger versions of the middle-class cars rather than the other way around. For a while, the Packard name retained a certain cachet, but that diminished as the identity of the senior cars became diluted. By 1950, Packard had premium prices, but a less-than-premium image. (Ironically, it was not unlike the position Buick, Cadillac, and Lincoln are in today.)
Despite that uneasy position, Packard was not in bad financial shape. It had no debt, it had a reasonable level of working capital, and whatever else one might say of George Christopher, he had kept a tight lid on spending. Packard finally had an automatic transmission and the Twenty-Fourth Series cars that debuted in the fall of 1950 had all-new, modern styling, courtesy of styling director Ed Macauley and chief stylist John Reinhart. What Packard needed, the board thought, was inspired leadership.
ENTER JIM NANCE
Packard veteran Hugh Ferry, who replaced George Christopher as president on January 1, 1950, accepted that post reluctantly and one of his main objectives was choosing a successor. That successor would have to come from outside. Packard’s internal talent pool was very modest; many of the board members were pushing 70 and many senior executives weren’t much younger. The closest Packard had come to a succession plan was in early 1948, when former chairman Alvan Macauley had tried unsuccessfully to recruit AMA executive George Romney as executive vice president.
In the spring of 1950, Ferry and the Packard board approached James Nance, the president of General Electric’s Hotpoint appliance division. Nance, then 50 years old, was already well known in the business world. In the past five years, he had made Hotpoint the nation’s third-largest appliance manufacturer and he was considered one of the most dynamic and talented sales executives in America — exactly what the Packard board wanted.
The board found Nance surprisingly receptive. A recent GE reorganization had effective demoted him from CEO to executive vice president, a bitter pill for someone as ambitious as Nance. However, Nance’s initial demands were quite high and the negotiations with Packard dragged on for nearly two years.
Part of Nance’s interest in Packard was the possibility of a merger between two or more of America’s remaining independent automakers. Even before accepting the presidency, Nance had preliminary discussions with Nash’s George Mason about a possible four-way merger between Nash, Hudson, Packard, and Studebaker. Nance saw the Packard presidency as a stepping stone to the executive seat of a new automotive conglomerate.
Nance became Packard’s president and general manager in May 1952, signing a five-year contract that gave him a starting salary of $168,000 a year plus options for 100,000 shares of stock and a 15-year pension. Nance had insisted on the pension throughout the negotiations. Not only would it benefit him personally, adding a pension plan would give him a useful tool for removing senior Packard staffers who had outlived their usefulness. (When he arrived, Nance promptly removed nearly 400 Packard executives, replacing some of them with colleagues from Hotpoint like Walter Grant, who became treasurer and vice president of finance.)
In an address to an informal group of Packard “key men” at the end of May, Nance confronted the issue that company management had generally been reluctant to face: that Packard’s once-vaunted reputation was now all but meaningless. He recognized the need for the volume the “junior” models provided, but declared that Packard had left itself in limbo: not quite a prestige brand, not quite a middle-class make. If the company was to survive, it could not afford half measures.
Nance thought George Christopher’s oft-repeated goal of 200,000 units a year was unrealistic, but concluded that 150,000 units would give Packard comfortable insulation against future economic downturns. However, Nance felt it was vital to restore the distinction between the junior and senior lines. His initial plan called for reviving the Clipper name, which Packard had dropped in 1947, and separating it in size and appearance from the senior Packards. He originally hoped to launch an all-new Packard for 1954, followed in 1955 by an all-new and distinct Clipper. Nance also wanted to reduce costs, improve Packard’s advertising, and adopt much more aggressive sales techniques.
The plans for an all-new car for the 1954 model year were quickly postponed. Although Packard had done quite well in the 1951 model year, the little-changed Twenty-Fifth Series launched that November was down more than 35%. The decline was largely a result of the Korean War, in which the U.S. had been embroiled since the summer of 1950. The war led to renewed shortages of steel and other strategic materials along with production caps and credit restrictions. The bright side was that the war brought an assortment of military contracts for jet and maritime engines, helping to keep Packard in the black.
Nonetheless, Nance made some progress. During his first year, Packard added about 400 new dealerships and culled some weaker franchises. Nance also renewed his conversations with George Mason, discussing the possibility of sharing parts, engines, and even production facilities. By the end of 1952, Packard had reason to be cautiously optimistic.