LYNN TOWNSEND & CHRYSLER'S COMEBACK

IT was a bumper-to-bumper year in Detroit. The big increase in auto sales this fall contributed more than anything else to keeping the U.S. prosperous; and one of the big contributors to the increase in auto sales was the long-ailing Chrysler Corp., which in the space of one year did a surprising turnaround. Thanks to the energetic leadership of its new president, Lynn Alfred Townsend, 43, Chrysler in 1962 was the comeback story of U.S. business.

Congenital Flaw. Chrysler still has a long way to come back, but at least it seems headed in the right direction. It took an aggressive and impatient young man to do it. Some of Chrysler's difficulties, as well as its success, stem back to the character of its founder, the late Walter P. Chrysler. A cocky, self-educated industrial genius, Walter Chrysler so constructed the corporation that he constituted the only real link between its major divisions. This was all right so long as he was around. His successor was K. T. Keller, like Chrysler an ex-master mechanic, who cared about well-built cars but lacked a gift for administration. Gradually Chrysler's prestigious engineering division seized dominance over the financial and manufacturing divisions and committed the company to years of solid but stodgy cars. Nobody knew that the cars cost too much to make because Chrysler had no cost control.

Difficulties came to a head under Lester Lum ("Tex'') Colbert, 57, former Chrysler attorney who took over command of the company in 1950. Colbert began a feverish drive to modernize Chrysler's plants, and was responsible for the rakish "Forward Look" that made Chrysler's 1957 cars a runaway success. But in the process, he let the company's quality standards slip scandalously. By 1959, Chrysler sales had slipped from a solid 25% of the U.S. auto market under Walter P. down to 11.3%. From a $120 million profit in 1957, the company staggered into a $34 million loss in 1958.

After a conflict-of-interest scandal involving William C. Newberg, Colbert's personal choice to run Chrysler's day-today operations, there was an outburst of stockholder suits and public recriminations. Chrysler Director George Love, 62, the big, amiable chairman of Pittsburgh's Consolidation Coal Co., stepped in to fill the leadership breach. With the support of a committee of outside directors, he ousted Colbert. But the task of finding a new president and operating boss for Chrysler proved difficult. Unable to persuade anyone outside the company to risk the job, the directors in July 1961 turned to Administrative Vice President Lynn Townsend, who had, in fact, been running Chrysler for seven months. To keep a close watch over operations, Love himself became chairman and demonstrated his faith in Chrysler's future by making Consolidation Coal the largest Chrysler stockholder.

Floors & Figures. Within two months after Townsend's appointment, says George Love, Chrysler's directors knew that "more by fortune than deliberation" they had hit upon exactly the man needed. Born in the automaking town of Flint, Mich., strapping (6 ft. 2 in., 195 Ibs.) Lynn Townsend spent most of his youth in Los Angeles, where his father had an auto repair shop. Lynn's mother, a gifted teacher, pushed him so fast with home tutoring that he started school in the second grade. As soon as he mastered arithmetic, his father put him to work helping with the repair-shop books.

Orphaned at 14, Lynn headed back to the Midwest to live with an uncle. He put himself through the University of Michigan by peeling potatoes, scrubbing floors and working in a local accounting office. He was also a top student. Says Economics Professor William Paton (who also taught G.M. Chairman Frederic G. Donner): "I've never had a student who had a greater flair for accounting and financial analysis than Lynn Townsend."

After graduation (class of '41), Townsend took his flair for figures into a Detroit accounting office, soon found himself auditing Chrysler for the firm, of Touche, Ross, Bailey & Smart. He became so knowledgeable on Chrysler's finances that in 1957 Tex Colbert brought him into the company as controller. Assigned to revitalize Chrysler's overseas operations, Townsend rapidly expanded them--among other things, he persuaded Chrysler to buy a profitable 25% interest in France's Simca--and launched a program that has boosted Chrysler's share of U.S. auto and truck exports from 14^% to 20%. He was made a Chrysler director at 39, administrative vice president at 41.

Down to Size. Unlike other Chrysler executives, who continued to spend as though the company still held a quarter of the auto market, Townsend with cold-eyed realism recognized that Chrysler must tailor its spending to its reduced sales. Even before he became president, he began a series of sweeping dismissals that eventually cut 7,000 white-collar workers from Chrysler's payroll. Once installed in the presidency, he closed outmoded plants, shut down one office building, and sold off Chrysler's executive planes.

All told, Townsend took some $100 million a year off Chrysler's production and operating costs. The experience was a traumatic one ("Nobody," says a Chrysler executive, "likes to be told that he has to get rid of half his department"). It was also dramatically successful. In 1959. Chrysler lost $5,000,000 on $2.6 billion in sales. In 1961, having reduced its break-even point, Chrysler earned $11 million on smaller sales of only $2.13 billion.

Dollars for Dealers. Besides a fatty headquarters operation, Townsend inherited a dealer body so discouraged that 3,000 dealers had quit Chrysler in the previous five years. Reversing the company's traditional indifference toward its dealers, Townsend has allocated $80 million to revamp Chrysler's distribution. Sales Vice President Virgil Boyd (hired away from American Motors) and Dealer Relocation Expert Stewart Venn (hired away from Ford) have taken dealers out of fading downtown areas, put them into new Chrysler-built and -owned suburban facilities. In Vancouver, B.C., the new program lifted Chrysler's share of the car market from 11% to more than 16%.

Townsend has also shown himself quickly responsive to dealer complaints and suggestions. Early last year. Dodge dealers reported to Detroit that they were losing sales because they did not have a high-priced car in their line. Only 36 days later, Townsend announced the Dodge ggo--ingeniously compounded of the front third of the Dodge Polara and the rear two-thirds of the Chrysler Newport.

Evolution & Resolution. By the time Townsend began running Chrysler, there was not much that could be done about the styling vagaries of the 1962 Chrysler cars. But he did remove a grotesque off-center tail fin running down the trunk lid of the Plymouth, and sternly admonished his stylists that "this is the radical type of styling that we are going to avoid' from now on." Townsend believes that car styles should evolve slowly so that customers can always see a similarity from year to year. "There are very few people who don't know what the Olds 88 is," he argues. "It has always been in the same position and in the same price class. But at Chrysler we have had so much interruption in continuity of size, name and styles that customers didn't know what the Dodge 440 was or what the Plymouth Fury was--and they couldn't be assured that they would still be there next year."

In Chrysler's current 1963 line. Townsend began to put some of these beliefs into effect. He had the Dodge that was planned for 1964 rushed into production as a '63, eliminated the Valiant's look-alike Lancer, and moved the Dart into the super-compact field. And as an investment in the future, he hired away Ace Ford Designer Elwood Engel, 45, who was largely responsible for the clean lines of the Lincoln Continental. In the scant time he had to work on the '63 Chryslers. Engel simplified the ornamentation on all Chrysler cars to make them look lower and wider.

Worth the Price. Along with improved styling, Townsend has concentrated on putting quality back into Chrysler cars. Every Imperial gets a two-mile road test (the less expensive lines get spot checks), and critical parts on all cars are examined for invisible defects with ultraviolet rays. Says Chicago Dealer Ronald Esserman: "It used to be that when the cars came in here from Detroit, the doors didn't fit, the moldings didn't jibe, and the upholstery wasn't straight. But this year everything fits perfectly." To drive home to car buyers his conviction that "we are now making the best cars we have ever made," Townsend three months ago inaugurated a five-year or 50,000-mile guarantee on the engine and other "power train" components of all Chrysler cars.

To revamp the '63s cost Chrysler $125 million, but it was worth every penny. Over the U.S. as a whole, Chrysler's share of domestic car sales has gone from a postwar low of 9.6% with its '625 to nearly 11.6% with the '63s. If this percentage gain is held all year, it could mean a $350 million increase in Chrysler's sales. Already it has virtually ensured that Chrysler's 1962 earnings will be at least $50 million. In response, Wall Street has bid Chrysler's stock up from its 1962 low of 38 to last week's 74.

Exotic Gardener. Despite all the energy he gives to Chrysler, Townsend gets home to his unpretentious ranch house in suburban Bloomfield Township almost every night for dinner and seldom brings work with him. "I've never been one who measures the quality of a job by the length of time applied thereto," he says. With his wife Ruth, whom he met at the University of Michigan, he is an avid indoor gardener, raising such exotic plants as orchids and sea grapes. Summer weekends they spend at their cabin on Byram Lake, 45 miles from home, where Townsend water-skis, boats and swims with his three sons.

In the office Townsend is a brusque, blunt executive who would rather duck into a man's office for a talk than use the telephone. With Townsend, says one hardworking Chrysler official, "the needle is always out--but always in good humor." Says Chairman George Love: "He has the rare capacity to persuade his associates to express opinions contrary to his own." Adds Love of his own relationship with Townsend: "Let's say Townsend has an uncle--an uncle with some experience m managing a pretty tough coal business. This uncle is looking over his nephew's shoulder because the uncle has invested $20 million of the family's money in his nephew's business." Love, so far, has found little need for uncle to second-guess nephew.

About Time. Despite his drastic clampdown on Chrysler's spending, Lynn Townsend has not mortgaged future growth for the sake of current profit. Next year the company will put 50 to 75 gas-turbine Chryslers into the hands of specially selected customers for testing--a step that Townsend hopes will give Chrysler a commanding lead in development of what may prove the auto engine of the future. But the impact of Townsend's turnaround is already apparent among those shrewdest of critics, the dealers. Says Sacramento Dealer Dalton Feldstein: "It's a new spirit, a new era--and it's about time."

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