Chrysler and Dodge, The Chrysler car was a success from the start

The arrival of Walter Chrysler as an independent automobile manufacturer has already been described. The Chrysler car was a success from the start, with the result that it was possible to organize the Chrysler Corin Delaware on June 6, 1925, to take over all the business and properties of the Maxwell Motor Corporation. The Maxwell car, which Chrysler had never liked, was then discontinued.

Chrysler thus realized his dream of having his own company and his own car, but he was too experienced an automobile man to stop there. As a onecar producer, he would be just another of the struggling group of independent automobile manufacturers. To attain major stature in the industry he had to expand his line and above all compete in the low-priced field. His first step in this direction was to bring out the De Soto early in 1928. The next step was to issue a direct challenge to Ford and Chevrolet, but for this purpose Chrysler required far more extensive facilities for production and distribution than the Chrysler Corporation at that point possessed. In particular, he needed to be able to cut his production costs by becoming independent of outside suppliers for such elementary items as forgings and castings. 33 The solution to his problem came when he was offered a chance to buy the Dodge Brothers Manufacturing Company.

For this part of the story it is necessary to go back to 1920, the year in which both John and Horace Dodge died. Ownership of the company passed to their widows, and management to Frederick J. Haynes, who had been vice president and general manager and was elected president early in 1921.

Haynes was a natural choice. A one-time mechanical engineering student at Cornell, he left college after three years because of financial troubles and took a job with the E. C. Stearns Company of Toronto, bicycle manufacturers. This company was later sold to the National Cycle and Automobile Company of Hamilton, of which John Dodge was general manager. Then there was a 10-year interlude while Haynes worked as factory manager for H. H. Franklin, an association undoubtedly originating in the fact that E. C. Stearns had made bicycles and steam automobiles in Syracuse also. In 1912, after turning down an offer from Ford, Haynes joined the Dodge organization.

Under Haynes, the Dodge company went along successfully if uneventfully until 1925, when the Dodge widows sold the company to Dillon, Read and Company of New York for a reported 100 to 125 million dollars in cash and about 50 million in securities. 35 Haynes's principal achievement was to put Dodge firmly in the motor truck business by joining forces with the Graham Brothers, Joseph C., Robert C., and Ray A. This was a family which had begun with a glass-manufacturing business in 1901, using machines invented by Joseph. Ray, the youngest of the brothers, was graduated from the University of Illinois in 1908, and, while he was managing the family's farm properties, became interested in designing a light-weight motor truck. 36 He first designed a rear axle which could be used with a Ford frame. Then the glass company was merged with the Owens Bottle of Toledo [so that the Grahams flater became major participants in Libbey Owens], and the rest of the brothers went with Ray to establish a factory in Evansville, Indiana, to build truck cabs and bodies.

In 1921, the Grahams made an arrangement with the Dodge company whereby they manufactured trucks in Detroit under the Graham name but used Dodge engines and transmissions and marketed the vehicles exclusively through Dodge dealers. To keep this association intact, Dodge bought a majority interest in the Graham Brothers Truck Company six months after its own sale to Dillon, Read. The Grahams then became officials of Dodge Brothers, Ray as general manager, Joseph as vice president in charge of manufacturing, and Robert as sales manager, with John R. Lee, formerly of Ford and Wills Sainte Claire, as his assistant. Haynes remained as president.

This arrangement dissolved six months later. Haynes became chairman of the board and was replaced as president by Edward G. Wilmer, a lawyer who had been an official of various industrial corporations and had recently distinguished himself by reorganizing the Goodyear Tire and Rubber Company--also in behalf of Dillon, Read and Company. At the same time, the Graham brothers sold the rest of their truck company stock to Dodge and withdrew completely from the Dodge organization. The reasons for this upheaval are unexplained. It was announced at the time that Haynes had wanted to retire from active management earlier but had stayed on at the request of the Dodge family and later of the banking house, and this could well have been so.

The same explanation will not work for the Grahams. They may have had disagreements with the bankers, or they may simply not have wanted to stay with Dodge as subordinates. It would have been an unaccustomed role for them. At any rate, they returned to automobile manufacturing on their own a year later by buying the Paige-Detroit Motor Car Company and converting it into Graham-Paige.

Dillon, Read and Company's intention all along was undoubtedly to hold the Dodge firm only until it could find a suitable buyer. If the banking house entertained any ideas about running the company itself, they were dissipated in 1927 when Dodge, although still one of the top sellers, lost ground to its competitors and the company paid no dividend on its common stock. So, in the spring of 1928, Clarence Dillon approached Walter Chrysler on the subject of purchasing the Dodge concern. It was an interesting bargaining situation. Chrysler wanted to buy, and Dillon knew it; Dillon wanted to sell, and Chrysler knew it. So they haggled, each trying to appear indifferent but each in fact eager to make a deal. In the end, an agreement was reached whereby the Chrysler Corporation acquired Dodge Brothers for $170,000,000 in Chrysler stock and the assumption of various Dodge liabilities including $56,276,000 in debenture bonds.

This one transaction made the Chrysler Corporation the third of the automotive giants. Contemporary observers placed the market value of the securities of the two companies at $432,000,000, of which $174,000,000 was Dodge and $258,000,000 Chrysler, and their assets at $131,569,968 for Chrysler and $103,894,691 for Dodge. The consolidated organization would have 18 plants, including ample forge and foundry installations, a manufacturing capacity estimated at between 700,000 and 1,000,000 cars a year, and 12,000 dealers.

So Walter Chrysler had arrived. It was now possible for him to execute the plan he had already been formulating and put a car on the market in direct competition with Ford and Chevrolet. The Plymouth made its appearance in 1928, and if it did not exactly set the automotive world on fire, it still managed to get itself securely established.

Most of the credit for this achievement is due to Chrysler himself, but he never at any time claimed to have done it all single-handed. His experience at General Motors gave him all the training he needed in the desirability not only of choosing good subordinates but also of giving them a free hand to do their jobs. Consequently, while the Chrysler Corporation was not decentralized like General Motors under Sloan, neither was it the one-man operation that Ford had become. The three men who had helped to develop the Chrysler car were still very much on hand, Zeder as vice president in charge of engineering, Breer and Skelton as directors. So was treasurer Hutchinson, who had done the figuring in Detroit while Chrysler was dickering with Dillon in New York. And when the Dodge purchase was consummated, the management of what was now the Dodge Division of the Chrysler Corporation was put into the hands of Kauffman T. Keller, who would later be Walter Chrysler's successor.

Keller, who was 42 years old when he became head of the Dodge Division, was a machinist by training, having served an apprenticeship at the Westinghouse Machine Company after being graduated from high school in Mount Joy, Pennsylvania. He eventually arrived at the Metal Products Company in Detroit as inspector of Chalmers and Hudson axles, served as general foreman of the Metzger Motor Company, and as chief inspector at the Tarrytown, New York, plant of United States Motors. He entered the General Motors organization in 1912 as general superintendent of Northway Motors and came under Chrysler's supervision as master mechanic of Buick in 1917. He later became manufacturing manager of Chevrolet and then vice president and general manager of General Motors' Canadian branches. He had wanted to leave with Chrysler, but the latter persuaded him to stay where he was--until the Chrysler Corporation was a going concern and Keller could be brought in as vice president in charge of manufacturing.

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