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Too Early. Studebaker had almost weathered the crash when President Erskine made a fatal mistake. Recalled Hoffman: "Erskine figured that in 1931 the back of the Depression was broken, and that business would be on the upswing. So he started to expand in that year. Harold Vance went to Detroit to be president of our Rockne company and bring out the Rockne, which was our challenge to Ford. But Mr. Erskine was a year too early. He made the awful mistake of expanding in a dying market." Studebaker fell $21 million in debt, went into bankruptcy. President Erskine put a bullet through his heart, and Hoffman, Vance and Ashton Bean, head of Stude-baker-controlled White Motor Co., were made receivers of the company.
Working in adjoining offices seven days a week, 14 hours a day, Vance and Hoffman streamlined production, sales and distribution, ruthlessly cut costs. By 1935 they managed to float a $6,500,000 new stock and bond issue, unloaded White Motor Co. and pulled Studebaker out of receivership—the only time in history that a U.S. automaker has done so. Hoffman was made president, Vance chairman.
In the strike-torn '30s, the U.A.W. organized Studebaker without a work stoppage. Vance and Hoffman persuaded the union to retain the piecework pay system that had been a company policy for years. (Studebaker wages now are equal to or better than its rivals'—a potent factor in preserving the company's 101-year record without a strike.) With the track cleared, Vance and Hoffman were ready to step on the gas in search of new markets.
Bread & Butter. Designer Loewy was hired because, says Vance, "we felt that our own designers were paying too much attention to the production engineers, instead of letting themselves go."
Studebaker let itself go in 1939. It put out its lightweight Champion, which was so successful that sales nearly doubled (to $82 million) and a $1,700,000 loss the year before was turned into a $3,000,000 profit. When World War II came, the company was ready to take on $1.2 billion in war contracts, turning out 198,000 trucks, 64,000 engines for Flying Fortresses, and 16,000 amphibious Weasels. When Hoffman left to become ECA administrator, Vance became president as well as chairman.
Since 1947, Studebaker sales have jumped from $268 million to $550 million; profits rose from $9,000,000 to a peak of $27,500,000, before being nipped by the excess-profits tax. (In the first three quarters of 1952, hit by E.P.T. and the steel strike, net was $9,000,000.) Studebaker stock has risen from $18 to $41. Like everyone else, Studebaker has been pinched by metal allocations. When all controls are off and defense work diminishes, Vance expects to turn out 520,000 cars a year, 150% more than current production, and get 8% of all auto sales within the next five years.