KAISER’S LAST SPRING
Although the outbreak of hostilities in Korea curtailed buyer enthusiasm, Kaiser-Frazer sales for 1951 reached 231,608, beating 1948’s peak by 65%. Most of those sales were the new Kaiser, plus 81,942 Henry Js and 10,214 Frazers. (The latter were actually facelifted leftover 1950 models, the last gasp of the Frazer marque.)
In addition to reinvigorated auto sales, Kaiser-Frazer also had new defense contracts, beginning with an $82 million agreement to build the Fairchild C-119 Flying Boxcar for the United States Air Force. The company subsequently signed a separate agreement to build the Lockheed P2V Neptune for the Navy. The contracts were far from lucrative considering the tooling expenses and retraining expenses involved, but Kaiser-Frazer needed the revenue and the contract enabled the company to utilize more of its considerable factory capacity. In fact, Edgar Kaiser had to reassure stakeholders that the aircraft contracts would not lead Kaiser-Frazer to abandon the automobile business.
Alarmingly, despite all the good news, Kaiser-Frazer still lost money for 1951: $12.3 million, almost as much as in 1950. Some of the loss reflected the money Kaiser-Frazer had spent to buy the Continental Motor Company’s Detroit Manufacturing Division, which made Kaiser’s engines. Nevertheless, the numbers were discouraging.
A central problem was that Kaiser-Frazer was still building more cars than it could sell. When sales slumped later in the year, the company ended up with 8,000 leftover ’51 cars. Kaiser-Frazer’s remaining Detroit veterans were also very critical of the company’s spending, chiding extravagances like allowing executives to order costly custom-trimmed cars for personal use. The fact that the Kaisers and many of their senior staff were still based in California also resulted in enormous travel costs.
Perhaps the biggest and more difficult problem was the one that had led to the final split between Henry Kaiser and Joseph Frazer back in 1949: the company’s heavy reliance on credit to make up for its lack of capital. By 1951, Kaiser-Frazer’s already high overhead was further inflated by interest and finance charges on a debt load that now exceeded the aggregate market value of the company’s stock.
THE VALLEY OF THE SHADOW
The Korean War was a bitter time for the independent automakers. Although industry pressure discouraged the government from halting civilian production as it had done during World War II, Washington did impose caps on automobile production based on each automaker’s 1950 levels. Raw materials, which had been an issue for all automakers since 1945, again became scarce and anti-inflationary consumer credit restrictions were tightened. The uncertainty surrounding the grim police action also dampened the public’s interest in new car purchases.
Kaiser’s first inauspicious 1952 offerings were 6,561 leftover 1951s re-serialized as 1952 Kaiser Virginians. Concurrently, 7,017 unsold 1951 Henry Js were fitted with optional Continental spare tires and sold as Vagabonds. The real 1952 Kaisers, mildly facelifted and sporting many minor improvements, did not appear until February 1952.
The true 1952 Kaisers had new names: Henry Js were now called “Henry J Corsair”; the previous Kaiser Special was renamed Deluxe; and the ’51 Deluxe was replaced by the 1952 Manhattan, a name Kaiser-Frazer had previously used for the top-of-the-line Frazers. Prices were also new and substantially higher than before, in some cases by more than $500.
The higher prices and rapidly shrinking demand for the Henry J slashed total 1952 sales to a dismal 57,265, including Virginians and Vagabonds. The military work held losses to “only” $4.7 million, but Kaiser-Frazer employees were already wondering if the company’s days were numbered.
One of the few bright spots during this period was the Kaiser-Frazer Export Corporation, started in early 1948 by Joseph Frazer’s nephew, Hickman Price, Jr., K-F’s former treasurer. The strength of the dollar had allowed the export subsidiary to establish assembly plants in Bombay, Haifa, Mexico City, and Rotterdam and made the export business consistently profitable despite Kaiser-Frazer’s reluctance to provide export-specific modifications and equipment. However, Price had grown frustrated and jumped ship in September 1952 to become president of Willys do Brazil, Willys-Overland’s Brazilian subsidiary.