Quality Weenie

Today in Automotive History

1945 Odd Couple

Henry Kaiser and Joseph Frazer announced plans to form a corporation to manufacture automobiles on this day in 1945.

The two men formed an unlikely pair. Kaiser, raised in modest circumstances, was a true American self-made man. By 1945, he sat atop an empire of shipbuilding, cement, steel, and other basic building businesses, and had amassed a considerable fortune. His company's shipbuilding feats had made him a media favorite during World War II, with reporters labeling him "the Miracle Man."

By contrast, Frazer was a direct descendant of Martha Washington, and he'd attended Hotchkiss and Yale. Frazer never finished his studies at Yale, opting to take a manual labor job at Packard. At Packard he rose steadily through the management structure, becoming by the mid-1940s a solid, respectable executive.

The two men first encountered one another when in 1942 Kaiser urged car companies to plan ahead for postwar production; Frazer answered on behalf of Packard, labeling the suggestion "half-baked" and "stupid." The men met again in 1945 in San Francisco, and two weeks later Kaiser-Frazer was born. With Frazer's contacts in the auto industry, and Kaiser's capital and experience with huge government contracts, the two men were optimistic about their chances. In addition, labor groups were encouraging competition to the Big Three and had announced a willingness to cooperate with any new entries into Detroit.

Kaiser and Frazer had to generate enough capital to acquire and build full production facilities. They had to find reliable sources for raw materials and negotiate labor contracts, and they had to do it all before the Big Three could convert back from wartime production if they were to have a chance at surviving.

Amazingly, they pulled it off, leasing the Ford Willow Run Plant and producing 11,000 cars in 1946. Unfortunately, their financiers gave them trouble: while losses were anticipated during their first year, the two men didn't expect to be punished so severely by squeamish investors. The company lost $19 million, and their stock plummeted.

A year later, however, Willow Run produced 100,000 cars and Kaiser-Frazer recorded $19 million in profit. Success was within their grasp, and the next year they made $10 million--but the downturn in profits and the impending release of Big Three postwar models caused the company's stock to slip. Without money Kaiser-Frazer couldn't afford to come up with new models, and consumers turned away from them.

In 1949, the company lost $30 million and was poised to endure the fate of so many other independents after the war. The differences between the two partners manifested themselves during the bad times, and management failed to respond positively to the difficulties. Frazer left the business, and Kaiser presided until 1953 when he sold out to Willys-Overland. Ironically, in Kaiser's last year the company turned out a few remarkable cars including, arguably, America's first compact car.

P.S. - Can anybody tell me, without searching, what Willys-Overland eventually became?

Posted by Quality Weenie at July 25, 2005 08:12 AM | TrackBack