Business: Man on a Lark

HAROLD CHURCHILL

THE comeback champion of U.S. business so far in 1959 is a horn-handed engineer who has a word of Art Shay advice for every faltering firm: “You must compete in areas where you are prepared to compete.” With this credo, Harold Eugene Churchill, 56, climbed to the presidency of Studebaker-Packard Corp. and led the company back from the brink of bankruptcy. Unlike other auto chief executives, Churchill does not compete as a supersalesman or financial whiz. He came up as an oldtime, dirty-fingernail mechanic, who still loves to tinker under an open hood. Realizing that S.P. could not battle model-for-model against the Big Three, he put all his mechanical skill into a single car —the compact, chrome-clean, low-priced (from $1,925) Lark. The results: S.P. has produced 126,000 Lark ’59s (v. 50,000 Studebakers of all kinds a year ago), lifted first-half sales to $210 million (v. $71 million), earned $12 million (v. a first-half ’58 loss of $13 million).

All his working life, Harold Churchill figured that the way to compete was to produce an “ideal” small car, but it took him many years to do it. He got into Studebaker 33 years ago as a half-trained engineer (two years at Western Michigan University), gained a name as “the guy who did everything.” He was one of the three men who engineered the “economy” ’39 Champion (priced as low as $675). During the war he began turning out the famed tanklike Weasel for the U.S. just 50 days after the company got the order. He filed more than 50 automotive patents, but he still had not produced his “ideal” compact car.

THE chance finally came when Churchill was elected S.-P.’s do-or-die president in 1956. Out rolled his austere, cheap ($1,795) Scotsman. That car missed, but it taught Churchill that U.S. buyers want more than a stripped-down version of a costlier car. So he built a new car, presided over every mechanical detail, hustled out to the plant at any hour of day or night when a decision was needed. The Big Three have been working on their compact cars for a year or more. The Lark was driven into showrooms just seven months after the decision to build it, because, says Chief Engineer Gene Hardig, the company has no tangle of committees to worry about. “I just call Church and get a decision.”

The company’s ad budget and dealer network are so limited that, as Churchill says, “our car must sell itself.” He constantly preaches quality, plasters plants with signs proclaiming, QUALITY CAN’T BE REPAIRED INTO A CAR. He fears that as the U.S. living standard has gone up, the pride of the U.S. worker in doing a quality job has gone down. “Mercedes-Benz products are the highest crafted autos in the world,” he says of the West German cars that S.P. distributes in the U.S. “We couldn’t build the kind of product Mercedes-Benz builds.” Mercedes’ maker, Daimler-Benz, also has a high regard for Churchill. It has invested about $5,000,000 in S.P. preferred shares that can be converted after 1960 into some 5% of S.-P.’s common. S.P. stock has already risen so high (from a ’58 low of $2.87½ to $12.50 last week) that a group of banks that last year forgave $38.2 million in corporate debt in return for convertible preferred with a par value of $16.5 million have begun to sell the shares at a profit.

SINCE taking over at S.-P., Churchill has cut executive payrolls from $1,250,000 to $350,000, even reduced his own salary from $64,000 to $60,000 a year—peanuts by Detroit standards. Like other S.P. executives in South Bend, Ind., he occupies a small office amid a clutter of gingerbready desks, cheaply painted walls. He lunches in S.-P.’s small dining room; one of his favorite dishes is hash. His home life is just as plain. A man who cannot keep from.working with his hands, he rebuilt a loo-year-old farmhouse from a tumbledown wreck, sanded his own floors, put in plumbing and electricity. On his 80 acres he raises cattle (56 beefy Herefords) and corn (yield: no bu. per acre), enjoys gardening (from Bibb lettuce to small yews) and finishing furniture in his home workshop (“It’s the scabbiest workshop you’ve ever seen”).

Churchill admits that his Lark is not the ultimate. One fault: the six-cylinder model is underpowered (he is beefing it up). He is not afraid of the Big Three’s forthcoming compact cars. “They will have six-cylinder compact cars, but we have an eight,” says he. S.P. will add a 1960 Lark four-door station wagon and a convertible, but confidently will make no basic changes in style. Churchill is betting that the Big Three’s entries will fan public interest in U.S. smaller cars, double the market to more than 20%. And he believes that his Lark—already off to a flying start—will wing away with a fair share of it.