American Dream: The Rise and Fall of Studebaker
Standing in a leaking, cold, and shuttered warehouse building in South Bend, Indiana, the city’s mayor, Pete Buttigieg announced his candidacy for president of the United States. He could have chosen a nicer, newer venue for his historic announcement, but he chose this building for a reason. It was once part of the sprawling Studebaker production facility. For more than half of the 20th century, Studebaker dominated the domestic car manufacturing scene, employed generations of workers, and had a reputation for being a company built on the American Dream. So how did the dream turn into a nightmare? Let’s look at the rise and fall of Studebaker.
Descendants from German immigrants, the Studebaker brothers—Henry, Peter, John, Clement, and Jacob—founded the Studebaker Brothers Manufacturing Company in South Bend in 1868. This was originally a metal working factory that made the metal components for wagons. Various historical events—the Civil War, the Homestead Act, the California gold rush, and manifest destiny—all helped the Studebaker Company achieve success.
At the turn of the 20th century, America was abuzz about the new-fangled automobile, or horseless carriage, as it was known. The executives at the Studebaker Company realized that the automobile could drastically hurt their wagon business, therefore they decided to join the car manufacturing business. In 1902, Studebaker electric cars hit the market. A few years later, gasoline-powered cars took over.
The Roaring Twenties
Following World War I and throughout the 1920s, Studebaker flourished. Their well-built, American-made, stylish, affordable automobiles were quite popular with the American people. Sales were good and the Studebaker Company was looking to the future. In the early 1920s, they built enormous buildings in South Bend. They even constructed an enclosed outdoor proving ground for their cars, complete with a concrete track.
The Great Depression
Most companies in the United States suffered business losses during the Great Depression of the 1930s and Studebaker was no exception. The company launched a failed product—a low-cost vehicle named the Rockne—and was forced to lay off many of its workers. As debts climbed, the company’s president, Albert Erskine, took his own life. Although things looked bleak for Studebaker, the company secured some financial backing to help it dig itself out of debt. Within a year, Studebaker was back to being profitable. As the Great Depression drew to a close, more than 200 new Studebaker dealerships were opened. The company’s 1939 Champion car was hugely popular, and sales of the Champion helped to doubled Studebaker’s sales.
Studebaker and the War Effort
As the United States entered World War II, many manufacturing companies shifted gears to help with the war effort, including Studebaker. In three of Studebaker’s production facilities, workers produced the engines for the B-17 Flying Fortress while also building cars. For a five-year stint in the 1940s, Studebaker built a two-and-a-half-ton truck for military use. The company would revisit this design again for the Korean War in the 1950s.
When the economic boom hit following the end of World War II, Studebaker was ready to capitalize on the middle-class spending power. A fleet of shiny, new, sleek Studebakers rolled off the assembly lines in the late 1940s and 1950s. The bullet-nose grills and gun-sight ornaments on the hood helped Studebaker establish the automotive design trends that dominated the car industry of the era. Studebaker offered vehicles at every price-point, from the Starliner to the lavish President Speedster.
A Crumbling Dream
It seemed that Studebaker was unstoppable in the 1950s, but behind the scenes, things were starting to crumble. Studebaker was facing stiff competition from Ford and GM. In fact, these two companies were engaged in a price war and Studebaker was inadvertently affected. Add to increasing labor and production costs, as well as some quality control issues, and the once-mighty Studebaker began slipping backward. A partnership with the Packard car company didn’t help matters either.
The End of an Era
By 1959, Studebaker was not producing any new models. Production at the South Bend factory stopped in 1962, leaving hundreds of workers without jobs and with few employment options. The last Studebaker car was made in Ontario in March of 1966. After that, the almost-100-year old company, which transformed itself from a wagon maker to a top automobile manufacturer, was out of business. When presidential hopeful, Pete Buttigieg, used the crumbling Studebaker factory as the backdrop for his candidacy announcement, he was doing so to evoke the nostalgia of the Studebaker name.
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