Wednesday, March 25, 2009

The Jet, Hudson’s fast track to oblivion!
By, Murray D. Stahl (03-2009)

This is a sad story full of unintended consequences. We all know that consequences could be good or bad. The good, when Pfizer stumbled upon Viagra while searching for a blood pressure medication; bad, well a Pontiac Aztec. Everyone had good intentions hence the unintended part. In the case of the Hudson Jet there were many people that tried hard to improve the new product until there were so many disparate design elements that the resulting mish-mash formed a cute little car that appealed only to the Hudson true believers and didn’t advance the brand. That being said I like the Jet for its quirkiness; it somehow appeals in the way an original VW bug looked cute enough to make you forget its inherent ugliness. Some out of the mainstream cars were a success, think Studebaker Starlight coupe, Citron 2CV, Nash Metropolitan or Jeep Wrangler, others like the Jeepster, Willy’s Aero, AMC Pacer and the Bantam failed. It’s interesting to note that almost all of these “different” designs were offered by the small Independents searching for a niche while hiding from the big three. The little companies were forced into assuming more risk as they searched forever-smaller niches neglected by the major manufacturers. Alas, for many reasons the Hudson Jet didn’t tickle enough buyers fancy to save Hudson, here is its story.

The tale of the Hudson Motor Car Company's 1953-54 Jet compact is one of the saddest in all of automotive history. The annals of automotive failure are replete with four-wheel Greek tragedies. There are hundreds of tales of pathetically under engineered and terminally unreliable vehicles that failed due to their own inherent vices and flaws. The Hudson Jet is not one of these, its final visual design may have been unfortunate but it was a quality effort launched into the marketplace with few mechanical bugs and a tank like body structure.

It was superbly engineered as a unibody, very avant-guard for its time. The body structure was bank vault solid with doors that shut with a reassuring Packard like thunk. The inside passenger cabin was roomy and comfy with a number of upscale features and appointments. The little car offered very adequate performance surprising many of its contemporaries.

I personally recall a standard shift Hudson Jet running away from my buddies new 55 Chevy, automatic with Power-pack. The 265 Chevy V8 made a lot more noise with its split manifold duel exhaust setup but was no match for the hoary old flathead six in the Jet. The Dual carburetor, twin H option greatly enhanced the easy breathing flathead. I can’t say it better than the Road Test Report of Motor-Life in April 1953.“The new Hudson Jet can best be described as the performance surprise of the year. This latest entry into the low-priced field combines the utility of the family sedan with the handling characteristics and roadability of a European sports tourer. And the acceleration and top speed of the Jet will astonish all who drive it. Its performance during the road test was so spectacular for a car of its relatively small displacement that the testing equipment was subjected to several checks to verify the accuracy of the results. However, when the quiet engine is started and the transmission engaged, one thing is immediately apparent - this is truly a hot car, to be handled with care.”

The test car was equipped with the 114 bhp engine which gets its 10 hp boost over the stock from the optional equipment mentioned (Twin-H power). In theory, the 202 cubic inch engine, smaller than the Ford V-8, Chevrolet or Plymouth would not seem to be adequate in output to handle the automatic transmission. Nothing could be farther from the truth. Using Lo range on the transmission, the Jet will spin its rear wheels on macadam and lurch out in the best drag strip tradition. Driving through traffic in fourth gear, a kick-down into third will pin the driver to the seat while a slight twitch of the steering wheel will jump the car into a clear lane. The center point steering is very firm; practically no road shock is apparent at normal speeds over pitted roads. The car will smother any bump, go over grade crossing tracks with only the whisper of a rumble (and the test car was not undercoated) and come out of a dip without pitching or rocking.”

Road and Track magazine was no less complementary in their Road Test Review:
"Our approach to the new Hudson Jet was one of mild interest - perhaps even condescension. When we completed the road test our general opinion was completely reversed. No fair minded driver can give this car a trial without coming to a definite set of favorable conclusions for here is a scrappy little car that is going to give both the big 3 (Chevrolet, Ford and Plymouth) and the little 3 (Henry J, Rambler and Willys) some real competition."

"For a car featuring 'step-down' design, we thought 7 inches more overall height than a Studebaker hardly justifies calling this a low car. On the other hand, the seats are very comfortable and visibility is excellent."
The Jet was a failed effort with Performance, comfort and quite decent economy even by modern standards. In order to understand the Hudson Jet’s performance, especially in the acceleration tests, you have to consider the relation of its power to weight, it enjoyed the highest power-to-weight ratio (1 to 24.8) of any car in the low-price field. That, plus the 8-to-1 compression ratio, is the reason why this 114 hp car could hit 97 mph and why it does so well in the zero to 60MPH 11.99 seconds with a standard transmission. The Super Jet's engine simply had to lug around proportionately less weight than many other cars.

It should have been enough, the car had no serious flaws but creating it without a cohesive design vision effectively sealed the fate of the Hudson Motor Company as an independent company.

The senior Hudson Hornet and Wasp models had been designed in 1948 and sales were slowing fast. The highly praised, innovative “step-down” styling that allowed a lower profile in 1948 looked old and stogy by 1952. Hudson management had a small bucket of cash and could use it to develop a new “senior” line of full size cars or copy the path that Nash (AMC) had taken and concentrate their resources on a small car enterprise. There was risk in either case for a smallish company like Hudson. In the end they decided to pretty much bet the company on the development of a small car. Like Nash with their rambler development in 1950 they analyzed the reality of the marketplace and determined that the small, quality automobile niche was about the only tidbit the big companies had left on the table. Once the basic small car route was determined they would realize that a small car could utilize their existing 6 cylinder designs; since they had little cash to develop a new engine that was probably the clinching argument for a small car program.

The automotive world was fast changing in the early fifties. Both Cadillac and Oldsmobile had robust new V8s and the customer base was all a-twitter over the bragging rights that owning this “new” technology afforded. In the driveway bragging sweepstakes nobody’s Dad was touting the old L-head, side valve engines designed decades ago.

Hudson fancied themselves as direct competitors to Oldsmobile but just couldn’t muster the financial resources to develop their own V-8 or even a proprietary automatic transmission. Going the “clean sheet of paper route to a smaller, quality car avoided the nasty decisions inherent in redesign of their large cars. In theory the new Jet would sell well and throw off enough cash to afford a redo for the senior car lineup. This was essentially a Hail-Mary pass with all their chips on the table.

As all the world knows, costs frequently overrun; the $12 million dollar development program became $16 million and debt levels soared. During the development stage rumor had it that Hudson was putting step-down principles into a lighter car. When produced, the Jet's basic suspension and chassis features were similar to the bigger Hudson’s of 1948 design. Suspension is by coil springs at the front and leaf springs at back. Tubular shocks are used all around and Jets set on a 105-inch wheelbase. The big Hudson’s “step-down” designs made it look lower while the production Jet just looked high and stubby.

The story of the Jet had began with the success of the Nash Rambler. All by itself it had created the first successful American compact in 1950. Beginning as a well-equipped little convertible that was suitably cute and quirky it defined a different track than stripping a full size car to market a cheaper alternative. Packard and Studebaker went the route of simply marketing essentially cheapened models of their “big” cars but were finding that this made their senior lines less exclusive and dimmed desire. The successful businessman buying a senior Packard just didn’t appreciate seeing one of his salesmen showing off his “starter” Packard. The cheaper “big car” route greatly sapped sales from the senior lines. Rambler had started with a unique little convertible but the line had soon broadened into everything from coupes to station wagons. Nash had found a very comfortable niche in the small car market and was selling them as fast as they could make them.
Hudson had thus determined to create a brand new, “clean sheet of paper” small car design but in the classic unintended consequences mode simply allowed too many disparate opinions spoil the effort. Hudson President Edward Barit had decided that his company would try to get in on the compact market that Nash seemed to be doing so well in. The new car would be built on a 105-inch wheelbase, and use a small-bore, high-compression version of the venerable L-head six. Hudson's talented chief stylist Frank Spring came up with a smooth, low-slung design reminiscent of the contemporary Mercedes Ponton sedan. Due to the involvement of dealers and senior management the pretty Frank Spring design wasn’t built. The car put into production was kind of in the middle between cute-ugly like a PT-Cruiser and the unrelenting ugliness of the Aztec. They were surely guilty of suborning design malpractice.
President Barit insisted that the new car have "chair-high" seating and enough headroom to wear a Stetson hat while driving. This stretched the design in the vertical dimension. Then the management meddling got worse. Mr. Barit invited Hudson's biggest dealer, a Mr. Jim Moran of Chicago, to consult on the design of the new car. Mr. Moran sold an incredible 3,000 cars a year, 5% of Hudson's total output, and so he was someone that Hudson probably needed to pay attention to. In and of itself, consulting a major dealer on design issues is not a bad idea. The dealer, if he's any good, might know a thing or two about what customers are looking for.

Unfortunately, Mr. Moran's suggestions were based, not on what Hudson customers might have wanted, but on what Mr. Moran personally wanted. Mr. Moran's tastes were, shall we say, a bit out of the mainstream. Like Mr. Barit, he liked high seating and hats and high rooflines. He also liked Oldsmobile tail lights and the curved backlight of the full-sized 1952 Ford cars.

Thanks to the meddling of management and their cronies the Jet’s original graceful design was ruined. They ended up with a high fender line, a high roof line, tail lights that looked like an afterthought, and a rear window styled for a much bigger car. Pittsburgh Plate & Glass was able to supply back windows of the proper width to Hudson, but only if it used the exact same curvature as the Ford window, the Ford was a wider car. The finished car was either too tall for its length and width, or too short and narrow for its height, depending on how you look at life.

The "Bullhead-mouth" grille with turned down edges made it look a little unhappy, as though it knew it wasn't going to win the beauty contest and had only just realized it perhaps shouldn't have entered in the first place. It’s of note to realize that tastes have changed; the new Mini for 09 has a close to identical, sad little turned down mouth grille and it’s successful.

If you look closely at Jet photos you'll note that there's a crease running along the side below the door handles. On the fancier Jets, it's set off with a chrome strip. Legend has it that Frank Spring worked that crease into the final styling to demarcate where his original fender line would have been had the guys in the fedoras not messed with the design. The original design was elegant and this story might have had a happier ending if Hudson Management had realized that design wasn’t their strong suit.

Viewing the Jet from the perspective of a half-century later, it's perhaps a little hard for us to appreciate just how "off" its proportions looked in 1952. Picture, if you will, one of the more attractive "three-box" compact sedans you see on the road today. Now, imagine it next to a Chevrolet Aveo or Scion. The Aveo appears a little too tall, a little too narrow, and comes off looking very dorky by comparison; yet these contemporary ugly ducklings are popular. Not so in 1953 as the automotive market was galloping into an era of high style and horsepower. The major companies were moving into a two-year styling cycle while simultaneously packing on the state of the art mechanical bits. With hindsight we can see that the independents simply couldn’t pedal fast enough to keep up. Expensive developments like engines weren’t the end all they became in the fifties when everyone wanted their new car to be bigger, better and faster than last years. The automotive market had been stable for years allowing a decent engine design to soldier on for decades with only incremental changes. Ford, Chevy and Plymouth engines in 1953 were all well over 20 years old. This design stability afforded companies like Hudson, Packard, Studebaker and the others breathing room; they could exist as long as the major companies didn’t push expensive, new technologies too fast.

Like most postwar Hudsons, the Jet used unibody construction that Hudson called “Monobuilt.” It was solid, yet relatively lightweight. The high-compression engine (available with the "Twin H" induction system) gave it excellent acceleration (12 seconds 0-60, at a time when 20+ seconds was considered average), and the handling and braking were equally worthy. It got 24 MPG when cruising at a steady 50 MPH. Fit and finish and interior appointments were up to Hudson's usual high standards. Other than its odd proportions, it was a car that had absolutely nothing wrong with it except for price, that is.

Hudson subcontracted out the fabrication of the Jet unibodies to Murray Products. Hudson didn't have the cash to pay the tooling costs up front, so the tooling was financed by adding an amortization charge to the price of each Jet body furnished to Hudson. This, and other expenses, along with Hudson's inability to take advantage of economies of scale the way the bigger firms could, drove the price of the Jet a little too far down the demand curve for its own good. A 1953 Hudson Jet in base trim with no options cost $1,858. In comparison, a base-model full-sized Chevrolet 150 cost only $1,670. For about the price of stripped-down no-frills no-options Hudson Jet, you could get a top-of-the-line Chevy Bel-Air, a Ford Customline V-8 4-door sedan, or a Studebaker Lowey coupe.

In the 1953 model year, Hudson sold 21,143 Jets. In 1952, Hudson had sold 70,000 or so cars and made $8 million in profit. In 1953, it sold 66,000 total cars and, thanks to the Jet's development costs, lost $10 million. In 1954, it got worse: sales of Jets slid to 14,224, and Hudson lost another $6.2 million through April 30th putting it on pace for an $18 million loss in the calendar year. With about 35,000 total Jets sold at around $1,800 each, Hudson’s cost was about $45K for each Jet.

I can imagine the consternation in the boardroom at Hudson as they realized that they were caught in a confluence of unfavorable market forces and unfortunate decisions. Trend graphs would be distributed showing decreasing sales, mounting debt load and loss of manufacturing scale. The end was near for the proud, old company and it was very visible.

These losses were so devastating that Hudson was more or less forced to merge with Nash or go completely bankrupt. The two manufacturers joined to form American Motors on May 1, 1954. One of the first things AMC's board did after the merger was to discontinue the Jet as it directly competed with their Rambler and was selling so poorly as to be an asterisk in the marketing plan.

So, then, it is entirely fair to say that the Jet brought about the end of Hudson as an independent automaker. It was a perfectly good little car, but Hudson could not get the price down to where it needed to be to succeed in the marketplace. When management stuck their big thumbs in the designer’s pie the resulting awkward looking car simply couldn’t attract enough sales to reach any kind of economy of scale; they were doomed. The car was a solid, high quality effort that just didn’t sell.

What makes the story even sadder is to consider the opportunity cost of the Jet. It cost Hudson $16 million to bring the Jet to market. (That's about $130 million in today's dollars.) That $16 million could have been used to develop modern overhead-valve engines and freshen the styling of the full-size Hudson’s. Hudson was an established, high quality, player in the mid-priced, full-sized car market. While there's no way to know for certain, it's probable that a restyled Hornet with a modern V-8 would have sold much better than the ill-fated Jet but would only postpone the end. All the smallish, Independent companies faced the same reality, their costs weren’t competitive. A famous study in 1953 showed that the Studebaker Lowey coupe could have been produced by Chevrolet and sold profitably at 27% under what Studebaker had to charge.

There's a history in the US of troubled companies developing trend setting new cars just as they are failing as a business. The list of trendy, milestone cars devised during a companies dying gasp is long and a few that come to mind are the Stutz Bearcat, Coffin-nose Cord and Dusenberg SJ. In the more recent past we see the Packard Caribbean, Studebaker Avanti and the Hawk GTs. I sincerely hope that the new Cadillac STR and the Corvette ZR1 won’t end up on the last gasp list, as GM flounders, but it’ll be a close thing. The Jet wasn’t a milestone by any measure but it was a progeny of the Falcon and Valiants to come.

As for the Jet itself, in 2009, it doesn't look nearly as awkward as it did in 1953. It looks like just another old car, a little smaller than most. To the extent it's sort of homely, it's homely in an endearing way. Its problems weren't really its fault, it had a good heart under that dorky exterior, and it deserved a better fate than it got. In any event the Jet is an interesting part of fifties history as a last gasp effort of a great company.

Oh yes, they were raced, sometimes not successfully as in the photo. Surprisingly enough, all photos shown in this article were taken off of the Studebaker Drivers club Forum.

Monday, March 16, 2009

A straightforward look at taxes

I don't often post anything even mildly political but this seems to be so on point that I could'nt resist.
A straightforward look at taxes from an Accounting Professor at South Dakota UniversityHow Taxes Work....Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing;
The fifth would pay $1;
The sixth would pay $3;
The seventh $7;
The eighth $12;
The ninth $18;
and the tenth man (the richest) would pay $59.

That's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement-until one day, the owner threw them a curve (in tax language, a Tax Cut).Since you are all such good customers, he said, I'm going to reduce the cost of your daily meal by $20. So now, dinner will only cost $80.00.

The group still wanted to pay their bill the way we pay our taxes.The first four men were unaffected. They would still eat for free.But what about the other six-the paying customers? How could they divvy up the $20 windfall so that everyone would get his fair share?

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, Then the fifth man (who was paying $1) and the sixth man (who was paying $3) would end up being PAID to eat their meal.

So the restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same percentage amount, and he proceeded to work out the amounts each should pay.And so the fifth man now paid nothing;

The sixth pitched in $2;
The seventh paid $5;
The eighth paid $9;
The ninth paid $12 Leaving the tenth man with a bill of $52 instead of his earlier $59.Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings. I only got a dollar out of the $20, declared the sixth man, but he, (pointing to the tenth) got $7.00.Yeah, that's right, exclaimed the fifth man, I only saved a dollar, too, ........It's unfair that he got seven times more than me!That's true! Shouted the seventh man, why should he get $7 back when I got only $2? The wealthy get all the breaks!Wait a minute, yelled the first four men in unison, We didn't get anything at all.

The system exploits the poor!So, the nine men surrounded the tenth and beat him up. The next night he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered, a little late, what was very important. The bill for dinner was still $80.00 and they were now FIFTY-TWO DOLLARS short of paying the bill! Imagine that!And that, boys and girls, journalists, college instructors and prospective officeholders, is how the tax system works.

The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy (see: European Tax Exiles), and they just may not show up at the table anymore. Where would that leave the rest?Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!

T. DaviesProfessor of Accounting & Chair,Division of Accounting and Business LawThe University of South DakotaSchool of Business414 E. Clark StreetVermillion, SD 57069