A Few Who Failed - unsuccessful automakers

Automotive Industries, Sept, 2000 by Don Sherman

Bucking the Big Three was just one of many misjudgements that dashed their dreams.

Tinkerers, engineers, industrialists, entrepreneurs and con men -- all have at one time aspired to the "automaker" title. But few have had the right combination of vision, capital, product and market to see their dreams become reality. There have been more than 5,000 attempts to manufacture automobiles in the United States, according to Automobile Quarterly's comprehensive reference book, The American Car Since 1775. By World War II, the number of active brands had dwindled to 23, owned by three conglomerates and five independents.

For the last six decades, a half-dozen entrepreneurs have attempted start-up ventures in defiance of the odds against them. Their case studies point out some of the deeper potholes on the risky road to automobile manufacturing. And their legacies continue to cause newcomers to pause before embarking down similar routes.

Henry J. Kaiser

Five months after the end of WWII, Henry Kaiser and Joseph Frazer responded to America's pent-up demand for cars with the Waldorf-Astoria premiere of two new models bearing their names. The crush of interest literally smashed in the doors to the ballroom.

During five days, 156,000 spectators filed by the prototypes, leaving behind 8,900 signed orders. The lack of a sales organization, fully engineered designs, or an assembly line capable of producing cars didn't stop Kaiser from touting plans to build 13-million automobiles. But by the time his final Kaiser Manhattan rolled off a Toledo, Ohio, assembly line nine years later (1955), the tally was 2.7-million autos produced at net loss of $62 million.

Joe Frazer, former president of Willys-Overland and Graham-Paige, brought ample auto industry expertise to this enterprise. Kaiser has been called "America's boldest and most spectacular entrepreneur," with a long string of successes in shipbuilding, dambuilding, and highway construction. He was a titan in America's steel, aluminum, and magnesium industries and was even involved in health care. But competing against the Big Three automakers resulted in epic failure for Kaiser and his son Edgar (who replaced Frazer as president in 1949).

Kaiser-Fraser (KF) cars began rolling out of the former B-24 bomber assembly plant at Willow Run, Michigan, only seven months after their spectacular New York introduction. Chief engineer Henry McCaslin assembled a staff in 60 days and took only 90 days to advance rough prototypes to sound production models. To expedite the process, engines were purchased from Continental Motors and Kaiser's pet front-wheel-drive project was shelved.

In spite of Buick-grade prices, strong 1947 and '48 sales moved KF to first place among the independents. The following year brought a head-on collision with the Big Three's first new postwar models. In spite of innovative hatchback sedans, four-door hardtops, and four-door convertibles, KF sales plunged by 56 percent. A desperate attempt to woo budget buyers with the compact Henry J model failed. The American public wanted V-8s.

After merging with WillysOverland in 1954, the first and last major attempt by an independent to challenge Detroit abandoned the car business, but not before relaunching Jeep as a post-war phenomenon and establishing South America's auto industry. KF's failure can be attributed to fixed costs spread over too small a volume, and the $42-per-car premium the company paid for steel. Ultimately, KF simply misjudged the costs of competing against the Big Three.

Preston Tucker

Former Cadillac office boy-turned-automotive visionary Preston Tucker had even grander plans for rattling established automakers. Like KF, his empire depended on a common stock issue and an empty war-materiel plant leased from the government. But the Tucker '48 was notably sleeker and more sophisticated than any automobile ever built in the Motor City. For less than the price of a Cadillac, Tucker hoped to incorporate innovative safety features, disc brakes, fully independent suspension, a fluid-drive system, and a fuel-injected flat-six engine located at the rear.

When technical problems delayed the introduction of his dream machine, Tucker simplified designs, purchased Air Cooled Motors for a reliable source of engines, and invented a truly creative financing scheme. To reserve a place in the delivery queue, Tucker customers were asked to pay $125 for a Motorola radio, seat covers, and three-pieces of cowhide luggage. Thousands did just that and Tucker added $2 million to the $17 million he'd raised by selling distributorships, dealerships, and company stock.

While his engineers and accountants struggled to check soaring costs (such as $1,500 per engine for a $2,500 car), Tucker maintained his shoeshine and showman's smile. His 2,200 employees were poised to produce 100 cars per day in a suburban Chicago plant covering 475 acres. That is, until the Securities and Exchange Commission (SEC) launched a fraud investigation in June, 1948. Radio commentator Drew Pearson howled that the SEC "would blow Tucker higher than a kite."