1954 Studebaker Starliner

Front Right Red and White 1954 Studebaker Starliner Picture

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Studebaker in 1954 was facing a shortage of money due to keeping shareholders happy and possibly because the company did not deal effectively with labor problems. The workers at Studebaker had good salaries compared to other car builders but the company worked out a deal where the employees took a cut in pay which should have happened earlier in the company's history.

With the profits going down, the Studebaker firm thought a merger with Packard might solve some of its problems. Three individuals Harold Vance, Paul Hoffman, and James Nance brought about a Studebaker-Packard merger with the blessing of Lehman Brothers who saw the deal as a Packard takeover of Studebaker, a car builder which could not survive without an injection of cash. Packard did not realize that to break even, however, it would require a lot more Studebaker sales than what was first planned. The break-even point was raised from 165,000 units per year to around 282,000; a significant increase that Studebaker had only met twice in its past.

Studebaker's sale of military vehicles had declined with the Korean War having ended. The loss of this revenue was estimated to be around $426 million. Over the next couple of years, the Studebaker-Packard operation was driven by Nance making the key decisions.

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