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 a 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.
THE YEAR OF DECISION
Packard’s 1953 Twenty-Sixth Series got off to a slow start, but once dealers actually received the new cars, early sales were strong. The Twenty-Sixth Series was a facelift, the work of new chief stylist Dick Teague. (John Reinhart had quit early in the design process and gone to Ford, where he led the design of the 1956 Continental Mark II.) Although it still lacked a V8 engine, Packard coaxed 180 hp (134 kW) out of the senior cars’ 327 cu. in. (5,361 cc) straight eight, which was competitive with most rivals. Power steering, power brakes, and air conditioning were now optional and there were two new image leaders: a Derham formal sedan and the Caribbean convertible. The coachbuilder Henney also introduced a new series of limousines on a 149-inch (3,785mm) wheelbase, signaling Packard’s intention to reenter the prestige market.
Packard recorded a profit of $3.5 million in the first quarter of 1953, a healthy increase on the previous two years. Bolstered by that success, the board approved the development of a much-needed V8 engine, which eventually cost the company more than $20 million. Nance also talked with Packard’s former engineering chief, Colonel Jesse Vincent, about developing a V-12 engine based on the new V8, which would have given Packard a marketing edge against Cadillac.
Unfortunately, those promising notes soon turned sour. In January, new U.S. President Dwight Eisenhower appointed former GM president Charlie Wilson as Secretary of Defense. Wilson began shifting defense contracts from other automakers to his former company. Nance estimated that Wilson eventually cost Packard more than $425 million in defense-related revenues. An end to hostilities in Korea also meant deep cuts in existing contracts.
As the Korean War wound down, the federal government rescinded its previous restrictions on both production and consumer credit. Ford Motor Company, seeing an opportunity to reclaim the number-one sales slot from Chevrolet, responded with an aggressive increase in production. Chevrolet responded in kind, sparking a brutal sales war. Dealers, faced with impossible surpluses, cut prices to the bone and offered easy credit terms to buyers who would not otherwise have qualified.
The price war was most acutely felt in the low-priced field, but it also took a nasty bite out of the mid-price segment. Despite the greater prestige of middle-class brands, the potential savings on a new Ford or Chevy were hard to resist. The independents, which tended to have higher list prices and thinner margins than the Big Three, suffered the most; their dealers simply could not afford to match the price cuts of their Ford and Chevrolet rivals. Even Packard was hurt. Its cars were already overpriced and the price war led dealers to concentrate on the cheaper Clipper models, further hurting the senior cars. To make matters worse, by summer, the repossession rate on new car loans was the highest it had been since the Great Depression, prompting banks to tighten restrictions on credit.
Packard managed to build around 90,000 cars for the model year, but its cash reserves sank from $40 million to $18 million, forcing Nance to obtain a $25 million revolving credit line for automotive operations. (The company had already obtained a $20 million credit line for defense work, the only debt Packard had to that point.)
Both Nance and the Packard board felt their best option was to seek a merger with another independent with whom they could share costs and components. Nance talked briefly with Hudson‘s A.E. Barit in October, but the board rejected that possibility, preferring Studebaker. Hudson was moribund — it had been common knowledge that it was up for sale since 1951 and the price war had been the last straw — and Studebaker seemed like a better prospect. There was also the ongoing possibility of a merger with Nash, although discussions with Mason had been inconclusive.
Before the year ended, there was one more unpleasant surprise: the loss of Packard’s body supplier, Briggs Body Company.
Since the 1941 Clipper, Briggs had produced most of Packard’s bodies except the Derham and Henney customs. Packard manufactured its own engines and transmissions at its plant in Utica, Michigan, and performed final assembly at its factory on East Grand Boulevard in Detroit, but the actual body stampings were made at Briggs’ plant on Conner Avenue. (Other Briggs plants built bodies for Chrysler and some smaller manufacturers; before the war, Briggs had also done a lot of work for Ford and Lincoln.)
Outsourcing the stampings to Briggs had been a dubious idea to begin with and it rubbed Jim Nance the wrong way. By the fifties, Briggs was often behind schedule, its quality control was sub-par, and cost overruns were frequent. Shortly after his arrival, Nance had asked finance VP Walter Grant to explore the possibility of bringing production back to East Grand. Grant told him it would be prohibitively expensive unless they could increase production to 200,000 units or more. Manufacturing VP Ray Powers also persuaded Nance that the six-story East Grand plant was outmoded and inefficient compared to newer single-level plants. For the time being, Packard had little choice but to stay with Briggs.
In December 1953, that choice was abruptly taken away. Walter O. Briggs, the company’s founder, had died in January 1952 and high inheritance taxes had left the Briggs family eager to divest. In May 1953, they arranged to sell the company’s 12 U.S. factories to Chrysler for $35 million. Chrysler president Tex Colbert informed Packard that Briggs would continue to supply bodies through the 1954 model year to fulfill existing obligations, but made no promises beyond that. It was devastating news: No other outside supplier still had the capacity to build complete bodies in sufficient quantities and Packard didn’t have the capital to bring production in-house.
Nance had previously negotiated a reciprocal agreement with George Mason to produce some Packard stampings at Nash’s plant in Kenosha, Wisconsin, in exchange for Nash’s purchase of Packard’s new V8. After the Briggs sale, however, Nance concluded that the cost of shipping complete bodies from Kenosha to Detroit would be prohibitive and decided that Packard’s only realistic solution was to purchase the Conner Avenue plant from Chrysler.
Nance’s negotiations with Tex Colbert were necessarily delicate — Chrysler wasn’t eager to sell and Packard did not actually have the money to buy. Nance managed to string Colbert along until the Mutual Benefit Life Insurance Company agreed to underwrite a $7.5 million loan to finance the purchase. Unfortunately, Colbert raised his price to $8.8 million and Mutual refused to go any higher. Nance finally had to settle for a five-year lease with a total cost of $4.2 million.
Around that time, Walter Grant suggested a radical possibility. Rather than continuing to assemble cars at East Grand, Packard could transfer the assembly line to Conner Avenue, consolidating it with the production facilities. Many of Packard’s manufacturing people were leery of that idea because the Conner Avenue plant was rather small (early plans called for expanding it by 20%, although the idea was quietly dropped for cost reasons). However, Grant estimated that the move would save up to $12 million a year, which was compelling.
The consolidation of assembly and production at Conner Avenue remains the single most criticized decision of Jim Nance’s tenure. Many Packard historians characterize it as unjustifiably foolish: Continuing production at Conner without consolidating would have saved enough money to lower Packard’s break-even point from 64,000 units to 30,000 while the $12.6 million cost of transferring the assembly line raised it to 80,000 units. However, Grant pointed out that if Packard could sell 80,000 cars in 1954, they could pay off the investment in less than 15 months, putting the company in a much better financial position for the all-new Packard and Clipper lines Nance still hoped to build. It was a calculated risk, but it would prove to be a terrible mistake.
THE STUDEBAKER MERGER
Packard’s 1954 models were a holding action, another mild facelift of the 1951 body shell. The new V8 was still not ready, so the old flathead straight eight got one last airing. For the senior cars, it was bored out to 359 cu. in. (5,880 cc) and fitted with an aluminum head and 8.7:1 compression ratio, giving it 212 hp (158 kW). That was competitive with the OHV V8s of most rivals, but the lack of a V8 was becoming a serious sales obstacle.
Further hampering the 1954 cars was the weakness of Packard’s dealer network. By May of 1954, Packard was down to about 1,200 dealers, from about 1,700 in early 1953. Each dealer was also ordering fewer cars, particularly since there were still large stocks of unsold 1953 Packards. Rather than lay off large numbers of workers, Ray Powers put production on an on-again, off-again schedule early in 1954, anticipating the customary spring sales boom. The boom did not materialize and the erratic schedule drove up costs.
Packard’s competition had shifted as well. In 1952, Cadillac dropped its entry-level Series 61, meaning that its cheapest model was now in the same price bracket as Packard’s most expensive. The move initially cost Cadillac about 20,000 sales, but it recovered quickly and by 1955 was selling more than 140,000 units a year. Packard, meanwhile, had rolled out a stripped-down base Clipper in an attempt to bridge the price gap between Clipper and Buick. Nance had reluctantly accepted that Buick, Lincoln, and Chrysler were more realistic short-term targets than Cadillac was, at least until Packard was able to introduce an all-new senior car. Packard and Cadillac were moving in opposite directions.
The mid-priced market was tougher, too. Aside from the ongoing impact of the price war, both Buick and Oldsmobile were all new for 1954, while Packard’s Clipper was an obvious facelift of a three-year-old design. The entry-level Buick Special now had a V8 and even the basic Special series included trendy pillarless hardtops, which Packard offered only in the pricier Clipper Super series. Packard’s sales for the 1954 model year dropped to around 31,000, lower than Nance’s worst fears.
By January 1954, the Packard board believed that merger was the only way to avoid eventual bankruptcy. (Hudson had come to same conclusion; on January 14, they merged with Nash to form AMC.) In March, Packard began formal negotiations with Studebaker, brokered by Lehman Brothers of New York.
The decision to court Studebaker rather than Nash is another often-criticized decision. It appears that it was primarily the board’s decision, not Nance’s — in February, the board refused to hear George Mason’s proposal for a merger with AMC. The Packard board felt that Studebaker’s product line better complemented Packard’s and were attracted to Studebaker’s larger dealer network and traditionally higher sales volume. However, Studebaker’s financial problems were deeper than even Studebaker realized. While Jim Nance had recognized early on that the market was in trouble, Studebaker’s Paul Hoffman and Harold Vance were slow to realize their peril, steadfastly maintaining that sales would return to normal in 1954. In the spring of 1954, while negotiations were still ongoing, Walter Grant estimated that Studebaker’s losses for the year would be nearly $39 million before taxes, $24 million after.
Nonetheless, both companies were desperate enough to overlook many things. The Packard board was so impressed with Lehman Brothers’ rosy projections of the merger’s potential financial benefits — including operations and tooling cost savings of $15.6 million a year and much-improved profit potential — that Packard did not even request an independent audit of Studebaker’s books.
Nance remained interested in AMC, with tenuous plans to combine Studebaker and Packard with Nash and Hudson. Although the Packard board had rebuffed him, Mason had left the door open to that possibility. The obstacle, at least as far as Nance was concerned, was George Romney. Romney was seven years younger than Nance, but just as bright and every bit as ambitious. The AMC merger had made Romney an executive vice president, which meant that he and Nance would be direct rivals in any future alliance. Nance reportedly had little respect for Romney, whose initial role at Nash had been to shadow Mason as a sort of catchall executive assistant; his interactions with Romney were frequently tense. (We’re not sure if Nance was aware that Romney had previously been a strong candidate for the presidency of Packard, which would probably have contributed to his hostility.)
Romney, for his part, felt that by leasing the Conner Avenue plant, Nance had reneged on the reciprocal agreement even though Nash still had a contract to buy Packard engines. Our sources are ambiguous on how formal the reciprocal agreement was, but in any event, Romney took it as a sign of bad faith. The death of George Mason in October ended what little chance there was for detente between Nance and Romney and any real prospect of a Studebaker-Packard/AMC merger.
Negotiations for the Studebaker merger dragged on throughout the summer, but both boards approved the deal by September. On October 1, 1954, the two companies became the Studebaker-Packard Corporation. Paul Hoffman became chairman of the new board of directors while Harold Vance became head of the executive committee. Jim Nance was named president. For better or worse, the merged company was now his responsibility.
PACKARD GOES FROM BAD TO WORSE
The fall of 1954 was extremely difficult for Packard. The cost savings that Lehman Brothers had estimated for the merger assumed a complete integration of the two companies, including shared parts and tooling — something that would take years even in a best-case scenario.
Worse, those projected savings were based on hopelessly unrealistic assumptions about the two companies’ production volume and costs. At the time of the merger, Studebaker’s proxy statement had claimed a break-even point of a little under 166,000 units. Nance quickly became suspicious of that figure and in mid-October dispatched Walter Grant to investigate. Grant studied the South Bend plant for two weeks and returned to Detroit with the alarming conclusion that Studebaker’s actual break-even point was more than 286,000 units. Combined with Packard’s own 80,000-unit break-even level, Studebaker-Packard would have to sell nearly 370,000 units to show a profit in 1955. Nance was understandably horrified.
At the same time, the transfer of Packard assembly to the Conner Avenue plant, which had begun in September, was turning out to be far more expensive and protracted than expected. Production of the 1955 models did not begin until November 17, weeks after the normal start of the model year, and cars did not reach dealers in significant numbers until well into February. Early production quality was appalling: Cars came off the line with doors that wouldn’t open or other serious problems. Some dealers accepted incomplete cars, hoping to finish assembly themselves, but that led to severe parts shortages. The quality problems weren’t addressed to anyone’s satisfaction until June 1955 and it cost the company more than $80 per car just to get the early cars into salable condition. Packard’s 1955 warranty costs were more than double those of 1954.
Those delays were particularly unfortunate because Packard’s hard-pressed dealers finally had a really competitive product with a new engine, a new transmission, and a remarkable new suspension.
TORSION-LEVEL RIDE AND THE 1955 PACKARDS
Packard’s new suspension was the work of Hudson engineer William D. Allison, who had begun work on an interconnected suspension — with the springs of the front wheels connected to those of the rear — back in 1941. He continued working on it after the war, believing that it would provide an unusually good combination of ride and handling. Ordinarily, Allison’s invention would have belonged to Hudson, but while his employers thought the design promising, they decided that developing it would cost more than Hudson could afford. Rather than shelve the design, Hudson took the unusual step of releasing the rights to Allison and allowing him to shop his design elsewhere.
Allison pitched his concept to various automakers, including Studebaker, but found no takers until he presented it to Jim Graves and Forest McFarland at Packard in 1951. They were intrigued and signed a preliminary deal for Allison to develop his concept for production, giving him a Packard sedan to use as a test mule. Hudson magnanimously granted Allison a leave of absence to pursue the project, which had very promising results. A series of pre-production test cars followed and in early 1954, Jim Nance approved the design for the 1955 model year. The marketing department dubbed the suspension “Torsion-Level.”
Torsion-Level used a more or less conventional double wishbone independent front suspension with a front anti-roll bar and a live rear axle that transmitted acceleration and braking forces via trailing arms; a pair of short lateral stabilizing links provided lateral axle location. Where the suspension departed from convention was in its use of interconnected torsion bar springs. Unlike Chrysler’s later “Torsionaire” suspension, Packard’s torsion bars did not act against the body or the frame. Instead, the main springs were connected at one end to the lower front wishbones and at the other to the rear trailing arms. A second, shorter set of torsion bars ran parallel to the main springs, connected at one end to the rear trailing arms (and sharing the same pivot axis as the main springs) and at the other to a frame-mounted electric compensator motor.
Interconnecting the front and rear suspension in this way meant that a bump affecting the front wheels was transmitted to the rear axle and vice versa. This provided the sort of wafty ride quality normally associated with very softly sprung conventional suspensions without the accompanying sacrifice of body control. Even by the standards of the mid-fifties, no Packard could really be called nimble, but Torsion-Level cars handled with surprising composure that belied their curiously disconnected ride motions.
Torsion-Level’s other signature feature was automatic level control, the “Load Levelizer.” If you loaded an anvil into the trunk, for example, the electric motor would kick in and crank the compensator springs to bring the car’s tail back up to normal ride height. This was not simply a convenience feature; the level control system was the only thing that gave Torsion-Level a consistent equilibrium. (Like any conventional suspension, the torsion bars were preloaded to provide a preset static ride height, but unlike conventional springs, that spring loading could be balanced at a variety of peculiar angles or attitudes, not just straight and level.) The motor cut out automatically if the brakes were engaged and incorporated a 7-second delay to keep the system from overreacting to bumpy pavement and a cut-off switch was provided under the dash so that the compensator would not drain the battery with the engine off.
Torsion-Level was initially offered only on senior models and Clipper Supers, but public enthusiasm eventually led Packard to offer it across the line. It was fairly expensive, at $150, but it had definite showroom appeal. The automotive press loved it, too, with some critics declaring the Torsion-Level Packards the best-handling domestic cars of the year. That was an exaggeration, but Torsion-Level gave Packard much better handling than Buick or Cadillac without the ride harshness of the Chrysler 300.
Torsion-Level was reasonably reliable for a complex new product, although the electric motor and its network of switches could act up and the control box could be damaged by road debris or corroded by salt. Nevertheless, Torsion-Level was less troublesome than Citroën’s early hydropneumatic system or GM’s late-fifties air suspensions.
The same could not be said for the new Twin Ultramatic transmission, which quickly developed an unfortunate reputation. A complete revamp of the 1949-vintage Ultramatic, the new transmission now provided dual drive ranges, one of which started in low and shifted automatically to high rather than depending solely on torque converter multiplication. (The first-generation unit’s novel lockup torque converter was retained.) Unfortunately, the Twin Ultramatic’s torque capacity was sorely tested by the new V8, so aggressive driving was a prescription for trouble. Technicians’ unfamiliarity with the redesigned transmission didn’t help.
The new V8 was not nearly as groundbreaking as Torsion-Level, but it finally gave Packard parity with its rivals, welcome news for beleaguered dealers. Packard also sold some of the new engines to AMC, which agreed to underwrite part of the development costs.
Topping off these technical innovations was a new look, courtesy of the ever-inventive Dick Teague, who was now director of styling. The revised styling looked different enough from the ’54s to at least partly disguise the carryover body shell. If the 1955 Packards were not a timeless design, they at least looked and felt relatively fresh.
We use the plural advisedly because Nance was still trying desperately to establish the Clipper as a separate entity despite the fact that Packard still lacked the money to really differentiate it from the senior cars. The main distinction was that the senior Packards had a 5-inch (127 mm) longer wheelbase and bigger engines than the junior models. Seriously challenging Cadillac would have to wait.
The 1955 line was Packard’s best (and possibly last) hope of reasserting itself in the marketplace. Unfortunately, it would not be enough.
PACKARD’S SUMMER OF DISCONTENT
Demand for Packard’s 1955 cars was initially very strong, which made the early production delays that much more frustrating. Packard actually made a profit in March, but it didn’t last. By summer, dealers were reducing their orders, anticipating factory rebates for the end of the model year. To make matters worse, the Federal Reserve Board had raised the discount rate, alarmed at the recent explosion in long-term auto loans. Packard sold more than 55,000 cars for the 1955 model year — quite good considering the production problems — but Nance had to delay the launch of the 1956 models by over a month to clear unsold stocks of 1955 Packards.
Despite brutal headcount reductions in both Detroit and South Bend, Studebaker-Packard was still bleeding money. Breaking Raymond Loewy’s consulting agreement for Studebaker styling cost $3 million and S-P had to repay the Defense Department $8 million on its military contracts. A facelift of the Studebaker line for the 1956 model year consumed $15 million. In September, George Romney informed Packard that AMC would stop buying Packard engines and transmissions in September 1956, costing Studebaker-Packard an additional $3.3 million in lost revenue.
The economies of scale that Studebaker and Packard had hoped to achieve through the merger were nowhere in sight. The two divisions still had parallel staffs, often without a clear chain of command, and plans for sharing tooling between Studebaker, Clipper, and Packard were still out of reach. Even Nance’s plan to combine Studebaker and Packard franchises was off to a rocky start. The process was so cumbersome that only a handful of dealers completed it.
By the end of the year, Nance had to tap $9.9 million of the company’s $25 million revolving credit line just to pay for continued operations. Studebaker-Packard still had $50 million in operating capital, but they couldn’t touch most of it without violating the terms of the credit agreement. S-P posted a harrowing $29.7 million loss for the year.
Despite those setbacks, Nance still held out hopes for all-new 1957 models. In January 1956, he met with the Prudential and Metropolitan insurance companies, Studebaker-Packard’s primary creditors, to request a $50 million loan for new models and ongoing operations. That was about half what S-P actually needed, but Nance thought it was the best they could do. He was wrong: The company’s creditors flatly refused to loan Studebaker-Packard another dollar. If Nance couldn’t find another source of funding, the company was doomed.
THE FALL OF EAST GRAND BOULEVARD
Packard’s 1956 models were not greatly changed from 1955 — having just spent $15 million on Studebaker, S-P could not afford a full facelift. Engines were bigger, up to 374 cu. in. (6,132 cc) and 290 hp (216 kW) in senior cars, 310 hp (231 kW) in Caribbeans. The Twin Ultramatic transmission got a significantly lighter aluminum case, improved torque capacity, and optional pushbutton controls. Midway through the year, Torsion-Level became standard across the line. Packard also attempted to register Clipper as a separate marque, although getting the multitude of state motor vehicle department bureaucracies to recognize the change was considerably less straightforward than removing Packard badges from the Clipper line.
There was one more noteworthy technical innovation for 1956: Twin Traction, a limited-slip differential made by Dana’s Spicer division. Twin Traction was at the forefront of an industry trend, but Spicer’s early differentials were not up to spec, leading to a rash of axle failures. Packard had to impound most of its 1956 cars while waiting for Dana to deliver new axles, and even those were fragile. Dealers replaced many with standard units.
By early 1956, it was becoming increasingly difficult for Packard dealers to obtain floor plan financing for new cars, a reflection of the finance industry’s lack of confidence in S-P’s future. Many franchises gave up or went under and those that survived cut back their orders. Packard’s distribution network was clogged with unsold stock and no dealers willing or able to take them.
Both Jim Nance and Paul Hoffman were personal acquaintances of Dwight Eisenhower and in late February, they approached Washington for help, pointing out that the collapse of Studebaker-Packard during an election year would be a political nightmare. Eisenhower discussed this with the cabinet in April and asked Secretary of Defense Charlie Wilson to look for new military contracts to help shore up Studebaker-Packard’s cash flow. At the president’s urging, Wilson also tried to get the Big Three to back a $50 million loan for S-P, arguing that the collapse of a major independent automaker would ultimately be bad for business. Henry Ford II was receptive, but General Motors management was not (somewhat surprising in view of GM’s mortal fear of federal anti-trust action), so the loan never materialized.
In the meantime, Nance tried to sell Studebaker-Packard to both Chrysler and Ford without success. A plan to buy the tooling from the 1956 Lincolns to create an all-new 1957 Packard also failed. The board, increasingly desperate for merger partners with money to spend, had some preliminary flirtations with Royal Little of Textron and then approached Roy Hurley, the president of the aviation company Curtiss-Wright and a former Ford manufacturing executive. Hurley was not particularly sanguine about Studebaker-Packard’s prospects, but he was aware of the maneuvering in Washington and saw Studebaker-Packard as a way to leverage additional defense contracts for Curtiss-Wright.
Hurley steadfastly refused an outright merger, but in May, the S-P board accepted his counter-offer of a management agreement that would give Hurley operational control of Studebaker-Packard in exchange for an infusion of cash. Curtiss-Wright also received warrants to purchase a 45% share of Studebaker-Packard at a fraction of the company’s actual stock price, although Hurley had little interest in exercising those warrants.
Hurley’s first step was to obtain concessions from Studebaker-Packard’s major creditors and help the company secure a $15.3 million loan, the last of its revolving credit line, to cover short-term operating expenses. None of that money came from Curtiss-Wright, but the price Hurley demanded was nonetheless high: all of Studebaker-Packard’s defense business, the Aerophysics Development Corporation (a smaller defense contractor S-P had bought about six months earlier), and whatever new contracts the Defense Department could be persuaded to provide. The combined value of all this eventually amounted to more than $136 million, but Curtiss-Wright offered Studebaker-Packard a mere $12 million, plus an agreement to lease Studebaker’s plant on Chippewa Avenue in South Bend and the Packard’s Utica engine/transmission plant — whose refitting the DoD agreed to underwrite — for an additional $25 million, paid in advance.
Most Studebaker-Packard board members were understandably unhappy about the deal, which was decidedly one-sided, but under the circumstances, they had little choice but to agree to Hurley’s terms. By July, Studebaker-Packard had spun off its defense business into a new wholly owned subsidiary called the Utica Bend Corporation, ownership of which was transferred to Curtiss-Wright on July 25.
The loss of the Utica plant meant the end of Packard’s V8 and Twin Ultramatic transmission; the Conner Avenue and East Grand Boulevard facilities were next. The assembly line, which had been shut down briefly earlier in the year to clear inventories, was operating well below its break-even point, which Studebaker-Packard could no longer afford. Production of 1956 Packards had ended on June 25 and most of the plant’s 5,000 remaining workers were laid off. The prototype Dick Teague’s staff had built of the abortive 1957 model, known to the designers as “Black Bess,” was cut up for scrap.
Disposing of the factories was not a simple matter. Studebaker-Packard ended up having to buy out their lease on the Conner Avenue plant, which Chrysler didn’t want; the plant was razed about a decade later. There were no buyers for East Grand either, so Hurley tried unsuccessful to persuade the city of Detroit to tear it down. Its assets were sold for pennies on the dollar and the building itself passed through diverse hands, eventually falling into disrepair and decay.
SOUTH BEND, DOWN, AND OUT
Nance and Hoffman resigned as soon as the agreement with Curtiss-Wright was signed and former Studebaker chief engineer Harold Churchill became president of Studebaker-Packard. Nance remained in Detroit for about a month as an unofficial consultant, focused mostly on helping other ousted executives find new jobs. In October, he accepted a new position as vice president of marketing for Ford. In 1958, he would briefly serve as general manager of the Mercury-Edsel-Lincoln Division, but he was forced to resign that September following a political struggle with Robert McNamara. Nance later left the auto industry and became very successful in banking.
After the closure of the Conner Avenue assembly line, Studebaker-Packard consolidated its remaining production in South Bend. The 1956 Clipper and Packard were dead; the only Studebaker plant that could have accommodated their tooling was Chippewa Avenue, which was now leased by Utica Bend Corp. for military work. At first, there were no plans to continue the Packard marque, but Harold Churchill decided to keep the nameplate alive for a while longer, if only to allow S-P to placate its remaining Packard franchise holders while Hurley and Churchill cleaned house.
In January 1957, Studebaker-Packard unveiled a new Packard Clipper. Created on a shoestring tooling budget of only $1.1 million, the revived Clipper looked like what it was: a Studebaker President festooned with hastily added Packard cues. With awkward looks, high prices, and a near-total lack of credibility, sales amounted to only about 4,800 units.
The “Packardbaker” returned for 1958, now sporting a new roofline and trendy quad headlamps. The line was expanded to include a two-door hardtop and the new Packard Hawk coupe (described in our article on the Studebaker Hawk) as well as the four-door sedan and station wagon. Despite the expanded lineup, a sudden downturn in the economy further eroded what little market there may have been and sales for 1958 fell to fewer than 2,600 cars. The wagon sold only 159 copies.
The Studebaker-Packard board initially planned to stay the course for at least a little while longer; even for cash-strapped Studebaker, the tooling costs were minimal and the board still held out hope that sales would improve. In February 1958, however, Churchill asked the board to cancel the 1959 Packards and reallocate the tooling budget to the new compact Lark, the car he still hoped would save Studebaker. The final Packards rolled off the line in South Bend on July 13, 1958.
There were periodic rumors of a Packard revival well into the sixties, but none came to fruition. After a brief resurgence with the Lark, Studebaker-Packard’s fortunes resumed their decline. The company dropped the “Packard” portion of its name on April 26, 1962, and left the auto business for good in 1966.
In the more than 50 years since Packard’s demise, there have been many analyses of the reasons for its fall, including not a little rancor toward both George Christopher and Jim Nance. Nance, in particular, has received considerable criticism for decisions like the transfer of assembly to Conner Avenue. Our feeling is that he did about as well as anyone could have in his position and if some of his choices didn’t work out as intended, few of them were ill-considered. There were times when he gambled and lost, but it appears he generally understood the odds.
Even without the burden of the Studebaker merger and the chaos of the Conner Avenue consolidation, it would have been difficult for Packard to reclaim its past prestige. Lincoln and Imperial struggled gamely for more than a decade without making much impression on Cadillac buyers and we suspect Packard would have ended up in the same boat. Still, an all-new 1957 Packard Patrician with Torsion-Level and Col. Vincent’s mooted V-12 engine would have been an interesting proposition, especially if it were priced in the realm of Cadillac’s Sixty Special.
Unlike many historians, we don’t think separating Clipper from Packard was a particularly good idea. The reason Cadillac abandoned its LaSalle “companion make” in 1940 was that the same basic car sold better as a Cadillac, commanded higher prices, and earned greater profits. The big Series 75 cars (and even the postwar Sixty Special) were not major factors in Cadillac’s postwar sales success. Similarly, Buick sold a lot more low-end Specials than it did Roadmasters, doing no great harm to either its sales or image; it was No. 3 in U.S. sales through much of the fifties. If Packard had managed to reestablish the senior cars’ image (or hadn’t squandered it in the first place), the similarities between the senior cars and the Clippers would have been an asset, not a weakness.
The tragedy of Packard is that in the last decade of its existence, it did a lot of things right. Whatever his missteps, Jim Nance had a decent sense of where the company needed to be and he worked hard to get there. The 1955 and 1956 models were thoroughly creditable efforts, particularly given what Packard had to work with, and the public reaction to them was heartening. Unfortunately, by then, Packard’s reserves were depleted and circumstances seemed to conspire against it.
Today, the ruins of the old Packard complex still stand on East Grand Boulevard in Detroit. When it was built in the early 1900s, East Grand was the finest factory of its kind in the world; now, it’s a stark reminder of how far even the mightiest can fall.
NOTES ON SOURCES
Our sources included Robert Ackerson, “1950 Packard DeLuxe Eight: The Last of Packard’s Postwar Pachyderms,” Special Interest Autos #64 (July-August 1981), reprinted in The Hemmings Motor News Book of Packards: driveReports from Hemmings Special Interest Autos magazine, ed. Terry Ehrich (Bennington, VT: Hemmings Motor New, 2001), pp. 58-65; David Traver Adolphus, “1958: Altered to Fit: The 1958 Hawk, a Packard that Packard fans love to hate,” Hemmings Classic Car #16 (January 2006), pp. 28–35; “Autos: New Team,” TIME 28 August 1950, www.time. com, accesse 13 March 2010; “Autos: Gas for Packard,” TIME 4 May 1953, www.time. com, accessed 13 March 2010; “Autos: New Team,” TIME 28 August 1950, www.time. com, accessed 13 March 2010; “Autos: Packard Shifts Gears,” TIME 19 May 1952, www.time. com, accessed 13 March 2010; “Body by Briggs: Part II,” Special Interest Autos #19 (November-December 1973), reprinted in Hemmings Classic Car #45 (June 2008), pp. 56-62; Arch Brown, “Another Visit with George Romney,” Special Interest Autos #77 (September-October 1983), reprinted in The Hemmings Motor News Book of Hudsons: driveReports from Hemmings Special Interest Autos magazine, ed. Terry Ehrich (Bennington, VT: Hemmings Motor News, 2001), p. 96; and “Why Studebaker-Packard Never Merged With AMC and other revelations by Governor George Romney,” Special Interest Autos #66 (December 1981), pp. 50-55; Arch Brown, Richard Langworth, and the Auto Editors of Consumer Guide, “1955-56 Packard Caribbean,” Great Cars of the 20th Century (Lincolnwood, IL: Publications International, Ltd., 1998), pp. 254-257; “Business: Rescue Accomplished,” TIME 30 July 1956, www.time. com, accessed 2 May 2010; John Gunnell, ed., Standard Catalog of American Cars 1946-1975, Rev. 4th ed. (Iola, WI: Krause Publications, 2002); Tim Howley, “1951 Packard: John Reinhart’s Master Stroke,” Special Interest Autos #102 (November-December 1987), and “1958 Packard: Fin-Ale for a Proud Name,” Special Interest Autos #142 (July-August 1994), reprinted in The Hemmings Motor News Book of Packards, pp. 76-83 and 96-105; Bob Johnstone, “Packard History – 1945-1984” (n.d., Bob’s Studebaker Resource and Information Portal, www.studebaker-info. org/ text3/pack-hist-1945.html, accessed 13 March 2010); George L. Hamlin, “The Day Pan Am Sued Packard,” Special Interest Autos #51 (May-June 1979), 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), p. 79; George Hamlin and Dwight Heinmuller, “All-New Contour Styling: The Twenty-Fourth and the Twenty-Fifth Series, 1951-1952,” “America’s New Choice in Fine Cars: The Twenty-Sixth and the Fifty-Fourth Series, 1953-1954,” “Let the Ride Decide: The Fifth-Fifth Series, 1955,” “The House Falls: The Fifty-Sixth Series, 1956,” and “The Last of the Marque: The Fifty-Seventh and the Fifty-Eighth Series, 1957-1958,” in Packard: A History of the Motor Car and the Company (Automobile Quarterly Magnificent Marque Books), Beverly Rae Kimes (Princeton, NJ: Automobile Quarterly Publications (CBS Inc.), 1978; Third Edition); Dave Holls and Michael Lamm, A Century of Automotive Style: 100 Years of American Car Design (Stockton, CA: Lamm-Morada Publishing Co. Inc., 1997), pp. 217-228; and Richard M. Langworth, “1954 Packard Pacific: Last of the Great Straight Eights,” Special Interest Autos #51 (May-June 1979), reprinted in The Hemmings Book of Postwar American Independents, pp. 74-81; Michael Lamm, “1956 Packard Patrician,” Special Interest Autos #36 (September-October 1976), reprinted in The Hemmings Motor News Book of Packards, pp. 88-94; James Arthur Ward, The Fall of the Packard Motor Car Company (Stanford, CA: Stanford University Press, 1995); and Josiah Work, “Packard’s Handsome Hybrid: 1951 Packard Series 250,” Special Interest Autos #84 (November-December 1984), reprinted in The Hemmings Motor News Book of Packards, pp. 66-73.
We also consulted the following period road tests: Bill Callahan, “Packard Packs Pep,” Motorsport June 1951; Walt Woron, “Packard 300: An MT Research Report,” Motor Trend October 1952; Tom McCahill, “MI Tests the ’53 Packard,” Mechanix Illustrated May 1953; Walt Woron, “’54 Packard Clipper,” Motor Trend June 1954; “Testing the 212 HP Packard Patrician,” Science and Mechanics June 1954; Frank Rowsome, Jr., “’55 Packard Glides on Torsion-Bar Suspension,” Popular Science February 1955; “Packard Has V-8 Engine and New Suspension,” Wheels May 1955; John Bolster, “John Bolster Tests the Packrd Clipper with ‘Torsion-Level Ride,'” Autosport 24 June 1955; Tom McCahill, “McCahill Tests the Packard Clipper,” Mechanix Illustrated July 1955; G.M. Lightowler, “Distinguished Company: The Packard Patrician for 1955 is a combination of luxury and high performance,” Car Life August 1955; “The 1956 Packard and 1956 Clipper,” Motor Life December 1955; “Packard Clipper Custom Saloon (The Autocar Road Tests No. 1598),” The Autocar 8 June 1956; Jim Lodge, “Drivescription: ’56 Clipper,” Motor Trend July 1956; Joe H. Wherry, “Packard Clipper Drivescription,” Motor Trend March 1957; and “Packard Road Test…” Motor Life June 1957, all of which are reprinted in Packard Gold Portfolio 1946-1958, ed. R.M. Clarke (Cobham, England: Brooklands Books Ltd., ca. 1988).
This article’s title was suggested by the 1854 poem by Sir Alfred Lord Tennyson, based on an event during the Crimean War.
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