INDUSTRIAS KAISER ARGENTINA
The last hope for Kaiser’s automotive business came not from the U.S., but from South America. Argentine president Juan Perón had actually approached Kaiser-Frazer back in 1947 about the possibility of manufacturing cars in Argentina, but nothing had come of it. However, in mid-1954, Henry Kaiser’s friend De Lesseps Morrison, the mayor of New Orleans, convinced Kaiser that South America offered rich opportunities for local automotive production.
Kaiser subsequently visited nine South American countries, including Argentina, where Henry and his wife met with Perón. Kaiser initially viewed the right-wing Perón regime with suspicion — which some accounts allege was exacerbated by heavy-handed demands from Argentine officials — but Perón assured him that the business would be completely above board. He and Kaiser 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 Aeronáuticas y Mecánicas del Estado. IKA’s first managing director was Jim McCloud, Edgar Kaiser’s brother-in-law. Surprisingly, Kaiser took only a small minority interest in IKA, the majority of whose shares were offered on the Argentine stock market. IKA broke ground in April for its new factory, located in Santa Isabel in the province of Córdoba.
The fact that both Kaiser and the Argentine government held only minority interests in IKA proved fortuitous, allowing IKA to survive the fall of the Perón regime that September. By June 1956, the Córdoba plant was online, initially assembling Jeeps and 1954-1955 Kaiser sedans shipped in complete knocked down (CKD) form from Toledo. Kaiser Motors transferred some of the tooling for the big Kaisers to IKA as U.S. production wound down.
THE END OF THE ROAD — ALMOST
In the United States, Kaiser automobile production was nearly finished. The company built only 1,291 1955 Kaisers and most of those were CKD kits for Argentina. The Aero-Willys compacts were also nearing the end of the road, accounting for only 6,564 sales in 1955.
Until almost the end, Kaiser still hoped to introduce new models, including the much-discussed FWD subcompact and a third-generation Kaiser that would have shared components with a new compact car, an idea Dutch Darrin had recommended several years earlier. The Kaisers, however, finally decided that enough was enough. At a board meeting in the spring of 1955, Edgar Kaiser announced that U.S. production of all Kaiser and Willys automobiles would cease that fall. Jeep production continued, however, allowing Willys to post a $4.7 million profit for its 1955 fiscal year.
Months later, in March 1956, the Kaisers consolidated all of their various companies — including Kaiser Motors and Kaiser’s cement, aluminum, and steel interests — into a new publicly traded holding company called Kaiser Industries Corporation, with a combined share value of $417 million. Kaiser-Frazer’s accumulated loans were repaid and the automaker’s remaining shareholders were allowed to convert their stock to Kaiser Industries shares at a rate of four to one. If it was not everything investors might have hoped, it was nonetheless a worthwhile (and lucrative) consolation prize for those who had believed in Henry Kaiser’s automotive dream.
That dream was not wholly dead; Willys continued to build and sell Jeeps for the U.S. market and both Willys and Kaiser retained their subsidiaries in South America. In 1958, IKA introduced the Carabela, a locally manufactured version of the 1954-1955 Kaiser Manhattan. Although the Carabela was too expensive to sell in large numbers, IKA supplemented it with Jeeps and other models, including license-built Renaults and, starting in 1960, the Alfa Romeo-based Bergantín. The Carabela ceased production in 1962, replaced by local versions of AMC’s Rambler Classic and later an unusual and rather pretty Rambler American offshoot called the IKA Torino.
Both IKA and Willys-Overland do Brasil, Willys’ Brazilian subsidiary, became profitable by the early sixties, but Kaiser Industries sold its stake in both companies in late 1967. Industrias Kaiser Argentina was purchased by Renault and the following year was renamed IKA-Renault. The IKA name was finally dropped in 1975 and the company became simply Renault Argentina S.A.
In 1963, Willys Motor Corporation became Kaiser Jeep, offering groundbreaking vehicles like the original Jeep Wagoneer sport-utility vehicle. In the sixties, however, these were still niche products and by the end of the decade, Kaiser Jeep was again struggling financially. Edgar Kaiser arranged to sell Kaiser Jeep to AMC in early 1970 for a reported $70 million, including a 22% stake in American Motors. Kaiser Industries sold those shares later in the decade, the Kaisers’ last involvement in the auto industry.
Henry Kaiser officially retired in the mid-fifties, relocating 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. Edgar Kaiser remained the chairman of Kaiser Industries until it was broken up in 1977, four years before Edgar’s own death. The Kaisers’ former partner, Joe Frazer, had died in 1971.
Although their automotive venture didn’t quite pan out, the Kaisers’ legacy in other industries remains impressive. Perhaps the Kaisers’ most enduring accomplishments were the establishment of 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 before, during, and after his unsuccessful 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. Henry Kaiser was always an ebullient salesman, but his retail experience had ended before World War I. With government contract jobs, the competition is mostly in securing the contract; after that, the customer and the price are more or less assured (although even that isn’t 100% guaranteed, as Kaiser found with its defense contracts). The auto industry is a different and more brutal game, where building a good product and convincing people 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 threw 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 had to learn the hard way was that the auto industry is in many ways 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 automotive historians think Kaiser’s greatest downfall was in 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 might have mitigated the disaster of the 1949 model year and brought about a useful degree of financial restraint. Even so, we doubt that Kaiser-Frazer’s eventual fate would have been much different.
To our mind, Kaiser-Frazer’s greatest failure was in not defining a distinct identity for the company’s brands in a crowded and ferociously competitive postwar market. Kaiser could have had a coherent image — albeit not necessarily a lucrative one — if Henry had pursued his original agenda of building an inexpensive, plastic-bodied economy car, but Joe 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 like Chrysler, offering pretty good cars for a pretty good price. That was a fine ambition, but the era in which it was a realistic goal for a company as small as Kaiser-Frazer ended with the Great Depression.
The Kaisers didn’t find their niche until after the merger with Willys-Overland, 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 products and unique identity that K-F had needed from the beginning. Admittedly, it was not until years later that Jeep, which is now owned by Chrysler [Author’s note: now FCA US LLC], became the lucrative brand it is today. Nonetheless, the mere fact that it still exists — long after Kaiser and Frazer became historical footnotes — speaks volumes.
This is not to say that the Kaiser or Frazer automobiles were bad products; other than their lack of power, they were fine cars in many respects. The second-generation Kaiser was even better and would have been genuinely impressive with either an Oldsmobile V8 or the planned 287 cu. in. (4,706 cc) Kaiser V8 under the hood. It’s a pity that, like too many bright children born to families of limited means (and Kaiser-Frazer was that, despite the founders’ individual wealth), it never really had a chance to thrive.
Our sources for this article included Stephen B. Adams, Mr. Kaiser Goes to Washington: The Rise of a Government Entrepreneur (Chapel Hill, NC: University of North Carolina Press, 1997); the Auto Editors of Consumer Guide, Cars That Never Were: The Prototypes (Skokie, IL: Publications International, 1981), and Encyclopedia of American Cars: Over 65 Years of Automotive History (Lincolnwood, IL: Publications International, 1996); Douglas Brinkley, Wheels for the World: Henry Ford, His Company, and a Century of Progress (New York: Viking Penguin, 2003); Arch Brown, “1953 Allstate: Henry J in Drag?” Special Interest Autos #155 (September-October 1996), reprinted in The Hemmings Book of Postwar American Independents: driveReports from Special Interest Autos magazine, ed. Richard A. Lentinello (Bennington, VT: Hemmings Motor News, 2002), pp. 4-11; “Controls: Strength through Pain,” TIME 18 December 1950 (www.time. com, accessed 3 June 2010); Howard “Dutch” Darrin, “My American Safari: Further Adventures in the Automotive Jungle,” Automobile Quarterly Vol. 10, No. 1 (First Quarter 1972), pp. 36-45; Mark S. Foster, Henry J. Kaiser: Builder in the Modern American West (Austin, TX: University of Texas Press, 1989); Patrick R. Foster, The Story of Jeep (Iola, WI: Krause Publications, 1998); Roberto Dario Frassinetti, “Rare car Bergantin made by Kaiser Frazer of Argentina (14 February 2006, Route 40 for the Adventure Traveller by Bob Frassinetti, route40argentina.tripod. com, accessed 16 December 2009); Nick Georgano and Nicky Wright, Art of the American Automobile: The Greatest Stylists and Their Work (New York: SMITHMARK Publishers, 1995); Ken Gross, “Pride of Willow Run: 1951 Frazer Manhattan Convertible” and “Then Man Who Never Failed,” Special Interest Autos #27 (March-April 1975), reprinted in The Hemmings Book of Postwar American Independents: driveReports from Special Interest Autos magazine, pp. 28-35; John Gunnell, ed., Standard Catalog of American Cars 1946-1975, Rev. 4th ed. (Iola, WI: Krause Publications, 2002); David Halberstam, The Fifties (New York: Ballantine Books, 1993), and The Reckoning (New York: William Morrow and Company, 1986); Ronald Hansen, Emilio R. del Valle, and Enrique T. Meincke, “IKA Torino 380 W,” Parabrisas No. 80 (August 1967), Test del Ayer, www.testdelayer. com.ar/ torino380.htm, n.d., last accessed 9 April 2015; “Henry J vs. Maverick: How much progress in 23 years?” Special Interest Autos #23 (July-August 1974), reprinted in The Hemmings Book of Postwar American Independents, pp. 36-41; “High Finance: From Riches to Riches,” TIME 30 April 1945, (www.time. com, accessed 17 December 2009); Dave Holls and Michael Lamm, A Century of Automotive Style: 100 Years of American Car Design (Stockton, CA: Lamm-Morada Publishing Co. Inc., 1997); Michael Lamm, “The Imagineer William B. Stout: Automobile and Airplane, His Goal Was to See Them Wedded,” Car Life Vol. 14, No. 7 (August 1967): 54–58; L’Editrice Dell’Automobile LEA, World Cars 1973 (Bronxville, NY: Herald Books, 1973) and World Cars 1979 (Pelham, New York: Herald Books, 1979); David L. Lewis, “Ford’s Postwar Light Car,” Special Interest Autos #13 (October-November 1972), pp. 22–27, 57; Tom McCahill, “MI Test the 1951 Kaiser Special,” Mechanix Illustrated May 1950, pp. 84–85, 160, 174; Jack Mueller, ed., KFOCI Handbook, v. 4.0 (Kaiser-Frazer Owners Club International: n.d.), circlekf. com, last accessed 27 June 2011; 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), pp. 46-61; and 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); Michael Parris, Fords of the Fifties (Tucson, AZ: California Bill’s Automotive Handbooks, 2000); “State of Business: Step This Way, Please!” TIME 19 May 1952 (www.time.com, accessed 3 June 2010); Daniel Strohl, “Companies that used Continental engines – the complete list,” (10 December 2008, Hemmings Blog, blog.hemmings. com, accessed 17 December 2009), and “Rambling Men,” Hemmings Classic Car #57 (June 2009); Mark Theobald, “Howard A. ‘Dutch’ Darrin 1897-1982” (2004, Coachbuilt, www.coachbuilt. com, accessed 25 June 2011); and Henry Kaiser’s obituary, “The Man Who Always Hurried,” TIME 1 September 1967 (www.time. com, retrieved 17 December 2009).
Additional background information on Henry and Alyce Kaiser came from Joan Didion’s 1966 essay “Letter from Paradise, 21° 19′ N., 157° 52′ W,” originally published in Didion’s anthology Slouching Toward Bethlehem (New York: Farrar, Straus and Giroux, 1968) and reprinted in We Tell Ourselves Stories in Order to Live: The Collected Nonfiction (New York, Alfred A. Knopf, 2006), pp. 142-153; “Henry Kaiser Tells Plan to Wed Nurse,” The Deseret News 7 April 1951, p. 2; “Kaiser Takes Bride Today,” Miami Sun News 10 April 1951, p. 15; School of Travel Industry Management, 2007 Legacy Honorees, “Henry J. Kaiser,” (28 November 2007, www.tim.hawaii. edu, accessed 25 June 2011; “TYCOONS: Henry J.’s Pink Hawaii,” TIME 24 October 1960, www.time. com, accessed 25 June 2011; and the Wikipedia® entry for Kaiser Permanente (en.wikipedia.org/wiki/Kaiser_Permanente, accessed 26 June 2011).
Some additional information on the Willow Run plant also came from “Production Miracle at Willow Run,” Strategos International, www.strategosinc. com/ willow_run.htm, accessed 18 December 2009, and Joe Baugher, “The Liberator Production Pool,” American Military Aircraft, 8 August 1999, home.att. net/ ~jbaugher2/b24_8.html, accessed 18 December 2009.
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