Business: White to Studebaker

“South Bend 3-7111.”

”Atlanta calling Mr. Erskine.”

“Who is calling in Atlanta?”

“Mr. Woodruff.”

“Is that you Bob?”

“Yes, hello Russel. I have an important plan I want to talk over with you.”

That, in effect, is the way it began, four weeks ago. Out of the telephone conversation a meeting was arranged in Manhattan. And out of the meeting last week came a plan by which Studebaker, subject to the formality of a stockholders’ ballot, will acquire White Motor Co.*

White’s vendor was its chairman, Robert Winship Woodruff, 42. Mr. W’oodruff became Atlanta’s biggest businessman in 1923 when he resigned as vice president and general manager of Cleveland’s White Motor Co. to become president of Atlanta’s Coca-Cola Co. Although from 1923 to 1929 President Woodruff devoted his working hours to Coca-Cola (sales went from $24,000,000 to $39,000,000), he remained a director of White and so close a friend of the late Walter Charles White that a type of dual management almost existed between the two companies. When in 1929 President White, an expert driver, was killed in an accident, the directors elected Mr. Woodruff to succeed him. He accepted with the remark, “I guess I will have to live in a Pullman.” For a year Mr. Woodruff held both presidencies. Then he resigned as White’s chief executive and became chairman. For some time it has been rumored that he and other big White holders wanted to sell out in order to give more time to their own businesses. But the reports have always coupled White to its biggest competitor, Mack. And despite the close friendship of Alabama-born Albert Russel Erskine of Studebaker and Atlanta’s Woodruff, news of their telephoning and meeting came as a complete surprise.

Both companies are venerable. In 1852 Harry and Clement Studebaker began making covered wagons in South Bend. Seven years later Thomas White perfected a sewing machine. The Studebaker covered wagons were joined by electric cars about 1900, chiefly because of the foresight of Frederick Samuel Fish who had entered the firm in 1891. Son-in-law of one of the five Studebaker brothers who joined in the business, Mr. Fish, 80, is now chairman of the company. White’s entrance into transportation came at about the same time. First roller skates were added to sewing machines, then bicycles. The company was profitable, frugal Thomas White often saying that a man loses value if he is paid more than $5,000 a year “because he spends all his time thinking about how to invest it.” In 1899 Founder White and his three sons were rich enough to buy a Locomobile steamer. Tinkerish by nature, they soon were at the boiler and saw a way to improve it. The Locomobile company was not interested, so the Whites built a steamer of their own in 1900. They soon were in commercial production and obtaining a tight grip on all steam patents. The result was that other manufacturers turned to gasoline engines, started propaganda against steamers. In 1906 White offered to license its patents but found no takers. Quick to sense the change, the management turned to gasoline engines although it did not waver in its belief that steamers were safer, faster, more economical than gasoline cars.

White made both passenger cars and trucks until the end of the War. The War brought it big orders and a reputation for performance. In the Battle of Verdun the only White trucks to break down were those disabled by shells. ‘The result was that 2,500 of them received the distinction of France’s Croix de Guerre. Geared to truck production, White decided to specialize in it after the War, just as Packard decided to specialize in passenger cars. The White line is now complete, from light city delivery wagons to heavy duty trucks, patrol cars, armored cars, busses. Last year it sold $23,000,000 worth of trucks compared to Mack’s $27,600,000. For White, Studebaker plans to give $5,800,000 worth of its own stock. $16,250,000 in 6% notes, $3,250,000 cash. For each White share stockholders will get $5 each, $25 in two-year 6% gold notes, one share of Studebaker common.

Under Studebaker, White will be run as a separate unit, just as are Fierce-Arrow and Rockne. Economies will be made by joint purchases of raw materials, by White’s use of the big Studebaker sales organization. Studebaker’s truck business, hitherto small, will probably be combined with White’s. It is thought that the chief White executives will be retained. First among these is Ashton G. Bean who succeeded Mr. Woodruff as president two years ago. He is a forceful, hard-headed executive who has made automobile accessories, automatic telephones, phonograph motors and is still president of Bishop & Babcock, makers of soda-fountain parts. White’s chief engineer is Vice President Harold D. Church who was with Packard for twelve years, later with Chevrolet. Secretary of the company is Theodore R. Dahl, statistician and speechmaker, able in combating railroad and tax propaganda for National Automobile Chamber of Commerce.

Simple in set-up is Studebaker. It has two vice presidents—Harold S. Vance (production, also president of Rockne) and Paul Gray Hoffman (sales). Salesman Hoffman last week was hurrying to California to attend the funeral of his father, George Hoffman who was head of Hoffman Specialty Co. (valves & machinery) and who ran it well for years despite the fact that its plant was in Hartford, Conn. and his home in Pasadena. But mainspring of Studebaker is its Mr. Erskine, first citizen of South Bend. He was with the company as treasurer when the present corporation was formed in 1911. In 1915 he succeeded Frederick Samuel Fish as president. Under him Studebaker did its $24,000,000 War business (saddles, wagons, harness as well as cars).

In 1920 the wagon business was dropped and Mr. Erskine, accountant-trained, began cutting down inventories. The result was that the company was not affected by the deflation of 1921, a managerial feat mentioned in many a text book. Studebaker engineers point with pride to the adoption of free-wheeling in 1930, the first convertible top (1924), full power mufflers (which increase horse-power), 90% elimination of motor roar by a carburetor silencer, ball-bearing spring shackles, hydrostatic gas gauges. Figure-wise Mr. Erskine last spring saw that the plants were overvalued, ordered a $16,000,000 writedown (TIME, April 4). Like many another western executive Russel Erskine is at his office before 8 a.m. But he often interrupts the day to play 18 holes of golf after lunch, returning then to his desk.

A family company for years, Studebaker is now widely owned. Its first financing was handled by Goldman, Sachs & Co., and now a member of Lehman Brothers sits on its board. Best known members of the profuse Studebaker family at present are Col. George Studebaker, son of Founder Clement Studebaker, and his brother Clement. Neither is connected with the company. Wealthy Col. Studebaker founded South Bend Watch Co., Studebaker Mail Order Co. (watches) and has been “angel” to Colin B. Kennedy Corp. (radio). His brother showed a flair for utilities, is president of North American Light & Power Co. (Insull sub-sidiary—See below).

*Widely rumored last week was a manufacturing and sales agreement between International Harvester’s truck department and Willys-Overland Co. Possible result: a $400 car to sell to farmers through International Harvester’s 200 branches.