Troubles at Studebaker

Every year lately has been a year of crisis for the beleaguered Studebaker Corp., but this year may prove to be the year. Studebaker is the only U.S. automaker to turn out fewer cars in 1963 than in the year before; in nine months, it has sold 47,319 units, a 20% drop from 1962's 59,264 for the same period. For 1963's first nine months, its deficit is $9,800,000. And, despite considerable restyling, its '64 models have got off to a poor start: the company has an 86-day inventory on hand, compared with an industry average of 26 days. Last week Studebaker, which has already laid off 1,200 employees because of slow sales, announced a four-day shutdown of assembly lines so that its inventories could be brought down.

As if this were not enough trouble, Studebaker is having management problems. The company announced that President Sherwood Harry Egbert, 43, was on indefinite medical leave of absence. (Egbert was released from a Boston hospital at week's end after minor surgery to remove scar tissue from a successful abdominal operation last year.) Chairman Randolph Guthrie insists that he expects Egbert back. But Egbert is headed for convalescence in Palm Springs, and will say only: "After that, we'll just have to wait and see."

Whether Egbert's absence proves temporary or permanent, his reign at Studebaker has produced controversies as well as cars. Egbert balks at the slightest hint that Studebaker might eventually withdraw from automaking. His radically styled Avanti sports car, tooled up at a cost of about $25 million, is a failure. Though Egbert predicted that at least 10,000 a year would be sold, the nine-month total is only 2,083. "If the Avanti had made it," says a former Studebaker staffer, "Egbert would have been a genius."

Under Egbert, Studebaker has diversified into more profitable areas, such as plastics, power tools and electric generators. Its nonautomotive interests now account for 50% of sales, and earnings from these lines keep the company afloat. Egbert's duties were taken over by Financial Vice President B. A. Burlingame, 63, who was promoted to executive vice president and, as his first act, radically curtailed Studebaker's auto production. He and Guthrie face the task of deciding whether to take Studebaker out of the auto business al together. If this model year turns out to be as bad as last, it is hard to see how Studebaker's auto division can continue indefinitely wheeling along at a $12 million annual loss.

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