THE WILLYS DEAL AND THE SALE OF WILLOW RUN
After merger discussions with the Atlas Corporation and the aircraft company Consolidated Vultee (a.k.a. Convair) came to nothing, Edgar Kaiser announced in March 1953 that Kaiser-Frazer would purchase another independent automaker: Toledo, Ohio-based Willys-Overland, the company of which Joe Frazer had once been president.
Buying Willys was a curious move considering Kaiser-Frazer’s precarious financial position and the fact that Kaiser-Frazer didn’t have anything close to the $62.4 million Willys-Overland chairman Ward Canaday was asking for his company. Executing the purchase involved some convoluted financial maneuvering: Through the Henry J. Kaiser Company, the Kaisers, the Transamerica Corporation, and Bank of America financed a new Kaiser subsidiary with the funds necessary to purchase Willys. After the purchase was completed, the subsidiary was renamed the Willys Motor Corporation while Kaiser-Frazer officially became Kaiser Motors, sweeping away the last vestiges of the original partnership with Joe Frazer.
Kaiser’s Golden Dragon package included 14-carat gold trim, special interior trim and carpet, and a lot of extra sound insulation, making it the quietest and most luxurious Kaiser. The package included Hydra-Matic, a heater, a radio, and other accessories and added a hefty $1,270 to the already-lofty price of a Kaiser Manhattan. The package was quite rare, accounting for only 1,227 sales. The Dragons were offered in three series, each available in different color combinations; this one, painted “Maroon Velvet” with a beige top, is part of the third and final series, announced in March 1953. (Photo: “Kaiser Golden Dragon 1953” © 2009 TedXopl2009; used with permission)
Willys-Overland was not an obvious merger choice. Willys’ own recent automotive venture, the compact Aero-Willys, had fared no better than Kaiser’s. However, Willys had remained profitable thanks mainly to Jeep. Although Jeep was not yet the commercial bonanza it would later become, it had solid military sales and enjoyed a modest but stable consumer niche.
More importantly, the Willys factory in Toledo was far more appropriate for Kaiser’s production needs than Kaiser-Frazer’s massive Willow Run plant outside Detroit, a former bomber factory that K-F had leased in September 1945 and later purchased. Impressive as it was, Willow Run had far more capacity than Kaiser-Frazer had ever really needed and it was rapidly becoming unaffordable, particularly in the face of new United Auto Workers (UAW) demands for wage parity with Ford’s equally colossal (but much more fully utilized) River Rouge plant.
The Willow Run problem was becoming more acute as Kaiser-Frazer’s defense business crumbled. Trying to balance aircraft and automobile production in the same plant with substantially the same workforce had been cumbersome and expensive, exacerbated by a flood of USAF-requested design changes to the C-119 Flying Boxcar Kaiser was building. The resulting cost overruns became the target of several voluble Congressional Republicans and led to a 1952 Air Force inspection. In June 1953, Congressional hearings on the matter painted the company in a negative light. With the Korean War nearly over anyway, the Air Force finally canceled Kaiser-Frazer’s C-119 contract.
Soon afterward, Kaiser Motors laid off all of the 2,600 workers at Willow Run and began the move to Toledo, which was completed by September. Edgar Kaiser initially described the move as temporary, but with the loss of the Air Force contracts, there was really no way Kaiser could afford to restart production at Willow Run. Later that year, Kaiser Motors sold the plant to General Motors, which quickly retooled it to replace the Hydra-Matic plant in Livonia, Michigan, that had burned down in August. Kaiser used the $26 million purchase price to pay off part of the company’s outstanding Reconstruction Finance Corporation loans.
KAISER’S LAST STAND
Considering all this chaos, it’s little surprise that Kaiser’s 1953 sales were even worse than 1952’s. The lack of a V8 engine had also become an insuperable problem. If the Kaiser had been a low-priced car, the situation might not have been as bad — Chevrolet, Plymouth, and Pontiac didn’t get V8s until 1955 — but the Kaiser Manhattan was priced within a few dollars of Buick’s popular long-wheelbase Super Riviera sedan and and cost almost $200 more than an Oldsmobile Super 88, both of which enjoyed greater prestige and V8 power.
To make matters worse, most mid-price rivals now offered fashionable hardtops while Kaiser had only two- and four-door pillared sedans. (Kaiser-Frazer stylists had designed both hardtops and convertibles, but they didn’t make it to production.) Kaiser again ended the year with many unsold cars and recorded a net loss of $27.1 million.
Howard Darrin developed the Kaiser Darrin on spec in early 1952, using a fiberglass body and the chassis and running gear of the Henry J. Henry Kaiser was initially aghast that Darrin would create a sports car proposal without authorization, but Kaiser’s wife, Alyce Chester Kaiser, loved the look and persuaded him to approve it for production. (Photo: “DKF-161 Kaiser Darrin” © 2009 John Lloyd; used under a Creative Commons Attribution 2.0 Generic license)
As before, Kaiser was obliged to repackage and re-serial some leftover 1953 cars and offer them alongside Kaiser’s actual 1954 models. The true 1954 Kaisers had updated styling and were considerably glitzier than before, featuring acres of chrome, a Buick-like concave grille, a fake hood scoop, and rather extravagant “Safety-Glo” taillights. There was still no V8 engine, but a McCulloch centrifugal supercharger was now optional, boosting power to 140 hp (104 kW). The supercharger gave the Kaiser more reasonable performance — 0-60 mph (0-97 km/h) in around 15 seconds — but it was still not a V8 and the supercharger could be troublesome. (Incidentally, this was an earlier version of the same McCulloch/Paxton supercharger later used on the Studebaker Super Lark.)
Kaiser’s 1954 facelift, penned by in-house designers Buzz Grisinger and Herb Weissinger, was reportedly inspired by a Buick show car called the XP-300, a favorite of Edgar Kaiser’s and also the inspiration for the styling of the 1954 Buick Skylark. This example is one of a handful of Kaisers in Sweden, where they have a certain following. (Photo: “1954 Kaiser Manhattan” © 2008 Stefan Jansson; used with permission)
Hoping to spur customer traffic, Kaiser launched its first sports car, a fiberglass-bodied convertible called the Kaiser Darrin. Developed by Dutch Darrin in 1952 as a spec project, the Kaiser-Darrin used a Henry J chassis and engine, but had a unique interior and Darrin’s patented sliding doors. It was an interesting piece, but it was neither particularly fast nor especially practical. With a list price of $3,668, the Kaiser Darrin was also very expensive and Kaiser dealers were reluctant to order them. Production ceased after only 435 had been built and Dutch Darrin later found about 100 unsold cars languishing outside the Willys plant.
New sales chief Roy Abernethy (later to become chairman of AMC) tried hard to revive Kaiser sales, but without success. High prices, ferocious depreciation, and the company’s uncertain future made a new Kaiser a dubious value. Total 1954 sales were only 7,039 and the company ended the year with a $14.5 million loss.
What is most fascinating to me about Kaiser is how — from beginning to end — the fledgling automaker vastly overreached.
For starters, it was pure folly for the company to attempt to launch two new brands.
More significantly, replacing the first-generation body after only four years with a completely new design was a risky move for a newbie with little capital and a serious cost disadvantage. It didn’t help that the “Constellation” was half-baked. The low cowl and lack of a step-down chassis resulted in little trunk space and a weirdly tall greenhouse that arguably aged more quickly than a more traditional look.
Perhaps the biggest mistake Kaiser made was to launch a compact with little parts interchangeability with its family cars. The company could only afford one platform.
The original Kaiser body was modern enough for a six-year run. However, it desperately needed a shorter, lighter, entry-level variant better matched to the Continental six.
Ironically, Kaiser’s best hope for survival may well have been a penny-pinching effort to perfect the “small” stuff that made for a better ownership experience. During the early-50s innovative ideas tended to backfire on all of independents, e.g., Studebaker’s rust-bucket Loewy coupes, Nash’s ugly airflyte styling and Packard’s trouble-plagued 1955s.
[quote]However, it desperately needed a shorter, lighter, entry-level variant better matched to the Continental six. [/quote]
I think they really just needed a better engine. K-F’s earlier attempt at a stripped-down model was still more expensive than some direct rivals, probably a reflection of the company’s production overhead. A cheaper, short-wheelbase car would likely have cost almost as much to build, but would have been perceived as downmarket, so people would have expected a lower price that K-F could have provided only by cutting their margins even thinner. A conundrum.
The Henry J was a miscalculation in a number of ways, its lack of commonality with the big cars being only one of them. That design was based on a proposal from American Metal Products, which had been pitched to Henry Kaiser in 1948, around the time he was negotiating with the RFC for additional loans. Kaiser accepted it (although the original proposal had to be extensively and expensively redesigned), because it seemed an expedient way to fulfill the promise he’d made to the feds that he’d build a cheap people’s car. Some of the Frazer people thought it was a really bad idea, but Henry dug in his heels; at least one board member resigned over it.
Dutch Darrin told Dick Langworth that he had proposed a compact based on the ’51 full-size car, on a 105-inch wheelbase and sharing a lot of the same tooling. Darrin thought that on balance, it would have been cheaper to build, but the Kaiser engineers rejected it. Darrin thought it was because they didn’t want to have to pay him a royalty on it, although since the Kaisers and most of their people declined to talk to Langworth about it, I don’t know if that was the actual rationale or not.
The most plausible justification for the Constellation was that it could be a better basis for a compact than the first-generation Kaiser. So too bad Darrin’s proposal didn’t prevail.
Kaiser could have had a more viable compact entry than Willys and Hudson if it had managed to keep the price down. Was that much more possible with a Constellation body than the original Kaiser?
Despite the short, 105-inch wheelbase, a Constellation-based compact would have been heavier and wider than the Aero, Jet or first-generation Rambler. Perhaps the best comparison would have been with the 1956 Rambler, which pulled enough parts from the senior Nash’s to be more of a mid-sized car despite its compact dimensions.
However, unlike the tall-and-boxy 1956 Rambler, roominess would not have been the greatest strength of a compact Constellation. Much like the 1953 Studebakers, the Kaiser’s low cowl was best used on a two-door hardtop. Put on a 105-inch wheelbase, a Kaiser hardtop could have been an interesting cross between a Studebaker Starliner and a Rambler Country Club hardtop (which was Rambler’s best-selling model in both 1952 and 1953).
[quote]Was that much more possible with a Constellation body than the original Kaiser? [/quote]
Well, according to Darrin, the argument went that the AMP prototype would be cheaper to build in terms of parts and materials cost per unit, but the Constellation-based car would have involved far less investment in tooling (and engineering, since the AMP car ended up having to be substantially redesigned for production). So, Darrin’s proposal probably would have made it easier for K-F to break even. I don’t think the Kaisers were thinking in those terms, though; they assumed the compact was going to be a big seller, which would have allowed them to pay off the tooling costs fairly quickly.
Fundamentally, I think K-F (and Willys and Hudson) just overestimated the actual demand for smaller cars. A lot of buyers [i]said[/i] they wanted a compact, but (as I said in the Jet article), prior to the Eisenhower recession, I think a lot of that was reaction to postwar sticker shock, and the presumption that smaller car=cheaper car. I don’t think K-F could have sold a Constellation-based car for much cheaper than they did the Henry J, and I don’t think they grasped the point George Mason and Romney recognized about market positioning.
So, I don’t think a Constellation-based car would have sold vastly better, but it might have been easier for them to make money on the volume they did sell, or at least lose less.
[quote=Administrator]On his own initiative, he decided to set up tooling in the Rotterdam plant for a new rear panel with an opening trunk lid. He didn’t ask for permission from the home office, since he assumed they would say no. Of course, the Kaisers found out about it soon enough anyway, and decided it was a good idea — hence the Accessory Group. [/quote]
It’s easier to get forgiveness than permission!
I think the early Henry J’s lacked an opening trunk lid because as a condition of receiving RFC aid, the price of the car could be no more than $1300.
There’s an interesting (at least to me!) historical parallel here. When the Saab 92 (Saab’s first car) was in development, Saab heard that the then-upcoming Volvo 444 was going to sell for 4400 Swedish kronor, which I think was equivalent to US$880. At that point, Saab’s cost to build the 92 was projected to be more than SKr4400, so away went the trunk lid. The Volvo 444’s price didn’t turn out that low after all, and at some point in the next few years, the 92 got an opening trunk lid.
In his autobiography, [i]The Real Frank Zappa Book[/i], rock musician Frank Zappa mentioned his family’s move (in a Henry J) from Baltimore to the Los Angeles area in the early 1950s. His take on the back seat was, "I spent two weeks on this ironing board from Hell."
The lack of a decklid and glove compartment were definitely part of an effort to meet the RFC price target — Henry Kaiser had promised the feds that the K-F compact would have an MSRP under $1,200. Even with those economy measures, the Henry J still missed that mark by around $25, although I assume the RFC decided it was close enough. (Incidentally, Hickman Price told Dick Langworth that a fair number of the cost-cutting tricks were suggested by Kaiser himself.)
According to Price, the way the Henry J eventually got its decklid was rather convoluted. At the time the Henry J debuted, Price was the head of Kaiser-Frazer Export. A couple of years earlier, he had set up a factory in Rotterdam to supply cars to other export markets (apparently, the exchange rate of the guilder to other currencies was less onerous than with the dollar). When the Henry J came out, Price thought it had obvious export potential — it was the right size — but the lack of a decklid was a big obstacle. On his own initiative, he decided to set up tooling in the Rotterdam plant for a new rear panel with an opening trunk lid. He didn’t ask for permission from the home office, since he assumed they would say no. Of course, the Kaisers found out about it soon enough anyway, and decided it was a good idea — hence the Accessory Group.
Price thought the Henry J could have sold much better overseas than it did, but he said that Kaiser-Frazer was very reluctant to spend the money on export-specific modifications, like heavy-duty suspension. Some of those the Export company ended up doing itself, but there was never a factory right-hand-drive version, for instance, which limited business in markets like the UK and Japan.
(I should note that I’m not sure how unbiased Price’s perspective may have been — he was Joe Frazer’s nephew, and by 1950, Frazer was effectively out, although he remained on the payroll for a while longer.)
As for the Henry J’s rear seat, the standard upholstery was basically plastic-coated paper, so I imagine that a cross-country drive in mid-summer would have become rather miserable in a hurry.
Hello Aaron. Nice post! But I have to clarify that Juan Peron neither was a dictator, nor leaded a regime in Argentina. He was a president elected by popular vote (over 50%) three times, in 1946, 1952 and 1973.
Luciano
A fair point. Duly amended.
Thank you very much, Aaron. Your history articles are much appreciated.
Where can one find images of Dutch Darrin’s original design proposal of Kaiser’s small car that resembled a downscaled version of the 1951 full-size Kaiser?
A pity Kaiser-Frazer never gave the green light to the 288ci Kaiser V8, wonder how it would have fared had the experimental V8 reached production.
I don’t remember if there were images of Darrin’s proposal in Richard Langworth’s book on Kaiser-Frazer — it’s been years since I looked at that book — but if any images survived to that point, I imagine he would have included them.
Aaron, thanks for a typically excellent set of observations woven into a pair of good stories re: the Kaiser-Frazer. Coupling the Kaiser-Frazer story with those of Hudson, Nash, Packard, and Studebaker, it seems to me that the “independents” were probably doomed to failure under the onslaught of the Big Three, even when one accounts for the bad management and business decisions. The only one of these decisions that appears to have been valid was Romney’s small car niche market play. How that would have worked out, had it been continued after his departure, is a good question, however, as a small company would have lacked the resources to develop the technology for more efficient and cleaner engines by the 70s.
It’s in this matter that I would like to add a personal comment: I can’t judge Kaiser-Frazer and cite personal experience regarding the automobile, but I do feel qualified to offer up some valid observations on the 226 Continental engine that Kaiser used. My view is that you have been far too generous in your assessment of this engine.
As a youngster, I worked in a shop rebuilding engines for lift trucks, which Continentals largely powered in brands such as Towmotor and Clark. and the large 6000# capacity trucks used the same 226 6. They are undoubtedly the cheapest things I’ve ever worked on, and their durability compared poorly with the more expensive Chrysler Industrial sixes. My understanding was that, even though they were used in other automotive uses, they were primarily an industrial engine for use on welders, generators, and water pumps — applications where a steady speed was all that was necessary and where the braking forces of an automobile were not constantly introduced — one of the things that limited this engine’s durability in Kaisers.
Using such tired iron could not be the way to succeed. I wonder how, after reading your article, a Kaiser would have faired with a Rocket Olds V8. Undoubtedly there would be more power, but the Rocket V8 would place several hundred pounds of iron squarely over the front wheels. I can’t imagine this doing much good for the car’s road manners.
I have wondered why Kaiser went to GM, rather than Hudson or Nash? Hudson had a good flathead six that, while larger than the lump of Continental iron, put out just as much power as the vaunted Olds V8 and thrashed it at the track, to boot. Granted, it would have been a heavier power plant than the Continental, as well.
Perhaps a better choice would have been the Nash 6, which was a very capable OHV design and proved its abilities in the British Healeys. One of these would have been much more durable than the Continental and lighter than a Rocket V8, and given Nash’s situation, perhaps available at a more reasonable price. Running a McCulloch supercharger on one of these engines would have been a more reasonable proposition, as well.
But as I said, I doubt that Kaiser-Frazer was going to work out in the long run, no matter what course of action was taken.
Even if Hudson or Nash had been willing to sell engines to Kaiser-Frazer, I don’t think trading a six for a six would have done Kaiser any good from a marketing perspective, at least in the price league in which they were trying to compete. That was certainly Hudson’s experience, racing legacy notwithstanding. As for the big Nash six, it should be remembered that the Healeys had to do quite a big of work on it to make a competition engine, and its performance in the Nash-Healey was also a reflection of that car’s being a bunch lighter than a Nash sedan or even the lighter Kaiser sedans.
The other consideration, and I assume one of the reasons Edgar Kaiser went to Oldsmobile, is which other manufacturers would have had the production capacity (and the willingness) to supply engines to an outside company. That might have been a touchier issue with another independent, even if there had been other advantages to such a deal.
my dad had a1952 Kaiser Frazer 4door with push button doors
Very interesting reading about Kaiser in our post-Tesla world – they certainly did a much better job differentiating their products from the mainstream car companies than Kaiser/Fraser did.