Autos: Now There Are Four

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In South Bend, on a cold grey day with gently descending snow, workers poured from the plant in shock and anger. In Hamilton, Ont., the news was greeted with elation, and men quickly lined up to apply for jobs. Across the U.S., 1,900 dealers sat in their showrooms and forlornly surveyed an uncertain future. In a move long expected but nonetheless shocking when it came, Studebaker Corp. announced that it was dropping auto production in the U.S.—111 years after its founding as a carriage maker and 61 since it turned out its first auto. The company insisted that it will continue to produce autos in its Canadian plant for the U.S. market, but hardly anyone took Studebaker's small future in autos too seriously.

Since the first auto was produced in 1893, some 1,850 U.S. auto firms have gone out of business, two of them (Packard and Kaiser) since World War II. Studebaker's departure from fifth place leaves the U.S. with only four major auto producers. "We were being bled to death," said Studebaker Chairman Randolph Guthrie, a partner in the Wall Street law firm that Richard Nixon recently joined. Guthrie has his own explanation for why Studebaker flopped in one of history's best auto years. "The reason," he says, "is that everyone thought that Studebaker was going out of business."

Unhappy Event. Though anticipated, Studebaker's decision was an unhappy event for many. More than 7,000 men and women will lose their jobs in Studebaker's 6,000,000-sq.-ft. South Bend plant. Part of the engineering and design staffs will move to Hamilton, and only 900 production workers will be kept on in South Bend to produce some of the parts for the Canadian assembly plant. Realizing that Studebaker's future was precarious, the city of South Bend has been diversifying its industrial base for several years to cushion the shock; Studebaker has recently accounted for only 3% of the city's total payroll. Still, that payroll amounted to some $600,000 a week, and its loss will be intensified by thousands of job-searching workers joining the unemployment rolls.

Studebaker's dealers had no such cushion. With the high-priced Avanti sports car, the medium-priced Hawk and all commercial trucks discontinued, they can still sell the low-priced Studebaker sedans that will be made in Hamilton. But business has been so bad recently that it could hardly get worse after last week's announcement.

Caring for "Orphans." One problem for the dealers is the 22,500 Studebakers in stock. An auto-buying public is understandably reluctant to buy what the trade calls "orphans" (like the discontinued Edsel). Studebaker has attempted to get around this by promising that parts will be available for all its present models. Even so, prices of the remaining autos will almost certainly have to be slashed to attract buyers. Studebaker has tried to escape the anger of its dealers by continuing the Ontario operation and thus technically fulfilling its contract to supply its dealers with autos.