Studebaker-Worthington was a diversified American manufacturer created in 1967 through a merger of
Studebaker Corporation
Studebaker was an American wagon and automobile manufacturer based in South Bend, Indiana, with a building at 1600 Broadway, Times Square, Midtown Manhattan, New York City. Founded in 1852 and incorporated in 1868 as the Studebaker Brothers Man ...
,
Wagner Electric
Wagner Electric Corporation was an electric equipment manufacturing firm established in 1891 that became part of Studebaker-Worthington in 1967.
History
Wagner Electric Corporation was founded by Herbert Appleton Wagner and Ferdinand Schwedtm ...
and
Worthington Corporation
The Worthington Corporation was a diversified American manufacturer that had its roots in Worthington and Baker, a steam pump manufacturer founded in 1845. In 1967 it merged with Studebaker and Wagner Electric to form Studebaker-Worthington. Th ...
. The company was in turn acquired by
McGraw-Edison in 1979.
Origins
Founded in 1852, Studebaker began as a wagon manufacturer which eventually entered the automobile business in the early 1900s. However, since the early 1950s sales had been steadily declining resulting in a lack of funds to develop new models. In December 1963
Randolph H. Guthrie, chairman of Studebaker,
announced that the company was closing down its automobile factory in South Bend Indiana, where it had made cars for 50 years, but would continue to make cars in
Hamilton, Ontario
Hamilton is a port city in the Canadian Provinces and territories of Canada, province of Ontario. Hamilton has a 2021 Canadian census, population of 569,353 (2021), and its Census Metropolitan Area, census metropolitan area, which encompasses ...
.
In 1965 auto sales were slightly less than $45 million.
On 4 March 1966 Studebaker announced the termination of auto production after less than 9,000 1966 models had been produced. Management said the decision was due to "heavy and irreversible losses" in the automobile division.
Business results for 1966 had total sales of $172 million, excluding automobile sales.
Automobile sales for 1965 had been slightly less than $45 million.
Net income for 1966 was $16.4 million, much more than the previous year.
The company was now profitable, and also had tax loss carry-forwards that made it an attractive target for a takeover.
Studebaker further improved its position by selling off some unprofitable businesses. The most profitable of the divisions that remained were
Clarke Floor Machines,
Gravely Tractor, Schaefer Chemical Compounds (later to become
STP Corporation) and
Onan Story of Onan
Onan was a figure detailed in the Book of Genesis chapter 38, as the second son of Judah who married the daughter of Shuah the Canaanite. Onan had an older brother Er and a younger brother, Shelah as well.
Onan was commanded ...
.
Formation
The 1967 merger that created the company was arranged by the entrepreneur
Derald Ruttenberg, who took the risk of buying Studebaker despite the liabilities that came with it, including dealer warranties and union agreements. He saw that Onan generators and STP engine additives were healthy businesses. The large tax loss was also valuable. Worthington was expected to continue to earn steady profits, but could use the tax loss to avoid paying taxes.
The stockholders of Studebaker and Worthington approved the merger despite rumors that the Federal Trade Commission considered the merger would be "substantially anti-competitive".
The combined 1966 gross revenues of the two companies had been $672 million, with net income of $24.5 million.
Studebaker was acquired by Wagner Electric, which in turn was merged with Worthington Corporation to create Studebaker-Worthington.
The merger was completed in November 1967, creating a company with $550 million of assets.
The combined company included the profitable divisions from Studebaker, brake and electrical automobile component manufacturing from Wagner Electric, and diverse operations from Worthington that included manufacture of construction equipment, valves and power generation plant.
History
The former chairman of Worthington,
Frank J. Nunlist, was appointed president and chief executive officer.
Randolph Guthrie of Studebaker was chairman of the new company.
1967 sales were over $650 million.
In January 1969 the board of directors replaced Nunlist with Derald H. Ruttenberg as president and chief executive officer.
Ruttenberg determined to weed out all poorly performing units.
He treated the company as an investment fund, and pushed the operating subsidiaries to maximize returns to shareholders, reportedly demanding returns as high as 25% - 30%.
The
Alco
The American Locomotive Company (often shortened to ALCO, ALCo or Alco) was an American manufacturer that operated from 1901 to 1969, initially specializing in the production of locomotives but later diversifying and fabricating at various time ...
Products Division, a railway locomotive manufacturer, became a victim of Ruttenberg's drive for profit. The locomotive factory in
Schenectady, New York
Schenectady ( ) is a City (New York), city in Schenectady County, New York, United States, of which it is the county seat. As of the United States Census 2020, 2020 census, the city's population of 67,047 made it the state's ninth-most populo ...
, was closed in 1969, and
White Motor Corporation
White Motor Company (later renamed White Motor Corporation and commonly known as White) was an American car, truck, bus and agricultural tractor manufacturer from 1900 until 1980. The company also produced bicycles, roller skates, automatic la ...
purchased the diesel engine business in February 1970.
Studebaker-Worthington retained a 52% stake in MLW-Worthington of Canada, formerly the
Montreal Locomotive Works
Montreal Locomotive Works (MLW) was a Canadian railway locomotive manufacturer that existed under several names from 1883 to 1985, producing both Steam locomotive, steam and diesel locomotives. For many years it was a subsidiary of the American ...
.
MLW-Worthington continued to build diesel locomotives, mainly for the Canadian market, using Alco designs.
Sales at STP had exceeded $43 million in 1968. Early in 1969 Studebaker-Worthington floated STP as a public corporation, listed on the American Stock Exchange.
Worthington had acquired the air conditioning manufacturer Climatrol Air Coils Ltd. of
Oakville, Ontario
Oakville is a town and List of municipalities in Ontario#Lower-tier municipalities, lower-tier municipality in Regional Municipality of Halton, Halton Region, Ontario, Canada. Generally seen as a commuter suburb of Toronto, it is located on Lake ...
, in 1966.
Climatrol was earning $50–$60 million annually, but needed large investments to grow to the size needed to compete with the giant manufacturers in the field. Instead, it was sold to
Fedders in November 1970. Fedders was mainly interested in the brand, product designs and sales force, and shut down the manufacturing facilities.
Weir Group
The Weir Group plc is a Scottish multinational engineering company headquartered in Glasgow, Scotland. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.
History
The company was established in 1871 as an eng ...
, a British company engaged in pump manufacture, had been looking to buy Worthington as far back as 1938.
In December 1968 they made an offer for the Newark-based Worthington Simpson pump manufacturer.
After complex negotiations, Weir acquired 50% of Worthington Simpson in 1969.
A new company was established named Worthington-Weir for American pump manufacture.
In 1973, Studebaker-Worthington reached sales of $1 billion.
In 1974, MLW-Worthington arranged to sell 25 locomotives to
Cuba
Cuba, officially the Republic of Cuba, is an island country, comprising the island of Cuba (largest island), Isla de la Juventud, and List of islands of Cuba, 4,195 islands, islets and cays surrounding the main island. It is located where the ...
for $15 million. Studebaker-Worthington required a permit under the
Trading with the Enemy Act
Trading with the Enemy Act is a stock short title used for legislation in the United Kingdom and the United States relating to trading with the enemy.
''Trading with the Enemy Acts'' is also a generic name for a class of legislation generally pas ...
, which was denied. The government of
Pierre Trudeau
Joseph Philippe Pierre Yves Elliott Trudeau (October 18, 1919 – September 28, 2000) was a Canadian politician, statesman, and lawyer who served as the 15th prime minister of Canada from 1968 to 1979 and from 1980 to 1984. Between his no ...
protested strongly against interference by the U.S. government in exports by a Canadian company.
In the end the U.S. government under
Gerald Ford
Gerald Rudolph Ford Jr. (born Leslie Lynch King Jr.; July 14, 1913December 26, 2006) was the 38th president of the United States, serving from 1974 to 1977. A member of the Republican Party (United States), Republican Party, Ford assumed the p ...
backed down and issued a license after receiving a formal note from the Canadian government that pointed out the U.S. had promised "to be as accommodating as possible with respect to such cases to avoid a jurisdictional conflict between the laws and policies of the two governments."
McGraw-Edison purchased Studebaker-Worthington in 1978.
McGraw-Edison was in turn acquired by
Cooper Industries
Cooper Industries was an American worldwide electrical products manufacturer headquartered in Houston, Texas. Founded in 1833, the company had seven operating divisions including Bussmann electrical and electronic fuses; Crouse-Hinds Company, Cro ...
in 1985. Coopers Industries was acquired by Eaton Corporation in 2012.
References
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{{DEFAULTSORT:Studebaker-Worthington
Manufacturing companies of the United States