Rescue By CurKss-Wright?

A deal was in the making last week for ailing Studebaker-Packard to sell control to thriving Curtiss-Wright. Despite its critical shortage of cash and falling sales (TIME. April 23), S-P had much to offer: two famed lines of cars, a solid reputation as a defense producer, plus $70 million in losses, including a record $14.3 million deficit piled up in first-quarter 1956. The losses could be turned into a tax saving of at least $35 million by a prosperous purchaser.

To Curtiss-Wright, one of the biggest makers of aircraft engines in the nation. S-P seemed a custom-made bargain. By taking over SP, Curtiss-Wright could gain a valuable defense subcontractor and further its long-term goal of diversification into civilian production. SP, which has 6,440,455 shares outstanding, offered to sell Curtiss-Wright 7,000,000 unissued shares of treasury stock at $5 a share. Thus the automaker would immediately raise $35 million, while Curtiss-Wright would gain 52% control of SP. The most attractive feature of the deal: If Curtiss-Wright's earnings stay at the record $36.8 million-a-year level set in first-quarter 1956 (up 35% over the same 1955 period), the aircraft company could in four years more than recoup its $35 million purchase price with tax savings from SP's loss carry-forward.

Conditional Contract. If the deal goes through, a group of 23 banks that had refused the automaker's requests for additional capital in January will extend it another $15 million; insurance companies which had given S-P $25 million in long-term loans two years ago agreed to postpone the first payment, which is now due next year.

More help was expected from Washington. Curtiss-Wright had made it plain that it was not interested in bailing out S-P unless the auto company could land some hefty defense orders. To push the deal, the Defense Department indicated it would award S-P new contracts for J47 jet-engine parts, trucks and ground-to-ground guided missiles which S-P has helped develop through its subsidiary, California's Aerophysics Development Corp. The U.S. would thus make use of more than $100 million worth of Air Force-owned machine tools which have lain idle in SP's Detroit plants since the Government canceled a $426 million order for jet parts in 1954. At the same time the Administration could take credit for saving 1) a vital defense industry from possible liquidation, and 2) the jobs of 22,000 auto workers at a time when unemployment was on the rise throughout the auto industry.

Pick & Shovel Man. If Curtiss-Wright takes over, S-P plans to continue making both lines of cars, though it will only face-lift its 1956 models for next year. S-P is expected to consolidate auto production in a single plant, leaving either its South Bend or Detroit factory free to handle an increasing amount of defense orders, both for the Government and as a subcontractor for the aircraft company. Curtiss-Wright has a $665 million backlog in military and civilian orders, could use SP's facilities to fill them.

Though S-P President James J. Nance has been asked to stay on, the industry expects him to take another job if Curtiss-Wright takes over. In as chief executive would go Curtiss-Wright President Roy T. Hurley, a self-styled "pick-and-shovel operating man." Hurley, 59, went straight from high school into a mechanic's job at an aircraft factory, founded two small sparkplug companies before going to Bendix Aviation Corp. After 13 years as manufacturing chief for Bendix, Hurley was hired by Ford as a top production executive to "get quality up and cost down."

When he took over at Curtiss-Wright in 1949, all but three of its 19 plants were shut down. By "putting a price tag on every operation" and branching out into new products, e.g., plastics, nuclear measuring devices for industry, Hurley in seven years got plants going again and boosted the company's sales 255% (1955 gross: $509 million).

Hopeful at last of survival, S-P last week pushed work on the radically new 1958 models with which it plans to drive out of the red. Its big task, meanwhile, will be to sharpen merchandising, beef up dealerships in key cities in the hope of recapturing 4% of the U.S. auto market. This week, for the first time in months, S-P executives were confident that they could get the help to do the job.

This file is automatically generated by a robot program, so reader's discretion is required.