Help for Studebaker-Packard

A worried group of stockholders met in Detroit early this week at the Studebaker-Packard annual meeting. There they heard a statement from President James J. Nance that the company was in trouble.

Trouble was a mild word for Studebaker-Packard's plight. Instead of the strengthening expected from the October 1954 merger, the combined company has been losing money heavily. Production is running 30% below 1955, the backlog of Packards in dealers' hands is big, and the company has used up nearly $25 million of its $45 million line of bank credit.

But what President Nance did not spell out to his stockholders this week was the board's desperate search for a way to keep the company going. Back in January S-P had gone to the big investment bankers hoping to get a large, long-term loan. One after another, the bankers had said no.

They were sympathetic, but they had doubts about SP's survival in the face of General Motors' big upsurge and the overall drop in car sales.

Dismayed, the S-P executives considered liquidating the company and selling its plant piecemeal, but rejected the idea almost immediately. They tried sounding out the Big Three on buying out Studebaker-Packard. The only interest was shown by Ford, which plans to bring out a new line some time next year, priced between the Mercury and Lincoln, and could use SP's ready-made setup. After some dickering, Ford declined.

Billion-Dollar Angel. This left only one other possibility: find a big, money-making angel outside the auto industry who wants to get into carmaking. The rescuer could take over S-P in a stock swap, use its losses to offset its own profits while pumping in enough money to keep S-P going. By 1960, auto economists figure on a 10 million car market--big enough to support even a small producer.

This week SP's last chance became a hot possibility. It is already dickering to sell out to a billion-dollar corporation, hopes to wind up the deal in a few weeks.

Whether President Nance will stay with the corporation is still up in the air, since he has been offered several other jobs. In any case, he has earned the respect of Detroit's tough tycoons. Under Nance, in the 18 months since the merger,

S-P has built its own brand-new competitive V-8 engine plant, begun making its own bodies in a plant leased from Chrysler, talked the militant U.A.W. into reducing labor costs at Studebaker's South Bend factory to make them competitive with the rest of the industry, pioneered such engineering items on the Packard line as torsion-bar suspension and electrified push-button automatic shifts.

Dream into Reality? All of this was the groundwork for a radical restyling of the Packard line in 1957 to look like Packard's dream car, the Predictor, with sliding roof panels, disappearing headlights and radar brakes. With its advanced new car, Packard hoped to be able to compete with the Big Three and get solidly into the black. But when the time came to order retooling for the new model, said one Packard official sadly, "our money ran out." Now Packard plans only a face lifting of its models for next year. But if the merger goes through, it hopes to rush through retooling of its highest-priced line and bring out at least one model like the Predictor.

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