Steel on Wheels

Over the 37 miles from Chicago to Aurora, Ill., the Chicago, Burlington & Quincy Railroad hauls some 15,000 commuters a day. Some cars are half a century old, draughty in winter, hot and sooty in summer. Last week the Burlington served up a pleasant surprise: it rolled out three new stainless steel, 148-passenger, double-decker cars, the first of 30 being built by Philadelphia’s Budd Co. at a cost of $152,000 each. With them, and 70 modernized conventional cars, the Burlington hopes to wean many a new customer from the highways, put its money-losing commuting service into the black.

Supplying money-making equipment to railroads is an old story to the Budd Co., which sold the first stainless steel streamliner, the Pioneer Zephyr, to the Burlington in 1934. Since World War II the company has sold some $115 million of railroad equipment, gained such a fat share of the market that it is now second only to Pullman as a railroad passenger-car builder. With the help of this booming sideline (Budd gets 83% of its revenue by making auto bodies, wheels, brakes), the company rolled up $137 million in sales for the first six months of 1950, boosted first half profits 50% up to $11,001,104.

Wheels for Pershing. Making such profits is relatively new to Budd. The late Edward Gowen Budd, who founded the company* 38 years ago, was often willing to toss good profits overboard in order to try a new technological twist. He built the first all-steel auto body for Charles Nash (then president of G.M.) in 1912, made the first U.S. all-steel auto wheel to fit General John J. Pershing’s staff cars during World War I. The manufacturing company expanded with the auto industry to the point where it grossed $24.7 million in 1925, but it never made much money (it actually lost $300,000 during the three boom years 1926-29).

When the depression flattened the auto business, Budd’s loss snowballed to $1,785,000. To keep his shopmen busy, Budd began building lightweight railroad passenger cars, using the company’s patented “Shotweld” process for joining stainless steel sheets. Roads bought the cars eagerly, but Edward Budd spent money hand over fist experimenting on such products as stainless steel masts for ships.

No Long Shots. Budd Sr. died in 1946 and Edward Jr., who had grown up in the company as tool & die maker, factory foreman and general manager, took over as president. He cut out the long-shot experimenting on such things as a stainless steel amphibious plane, and concentrated on railroad and auto equipment. Budd became the world’s biggest independent producer of auto body parts, began paying its first regular dividends in 16 years.

In the railroad-equipment field, Automan Budd cannily foresaw the end of the postwar rush for long-haul passenger cars, developed the Railway Diesel Car for economical passenger service for shorter runs. Thus, when the railway car market virtually vanished this year, Budd’s foresight paid off: out of 18 passenger car orders placed with U.S. car builders this year, 16 are for Budd’s new “RDCs.”

* The Edward G. Budd Manufacturing Co.; four years later he founded the independent Budd Wheel Corp., merged into the present Budd Co. in 1946.