My recent tome on how Rambler survived the 50s focused on the cars, statistics and some commonly accepted snippets of Nash/Rambler/AMC history. It didn’t adequately delve into the key player that made it happen, George Romney, as well as many important details of the history of Nash/Rambler/AMC during the years he was there. Romney was arguably the best automotive CEO of the era; his vision, determination, salesmanship and solid judgment were instrumental to the company’s survival during the crisis of the mid-’50s and the spectacular success in the latter years of his tenure.
The book “George Romney – An American Life” by Patrick Foster, provides the key source for this overview of Romney’s career at Nash/AMC. It not only fills in a lot of gaps, but also debunks some commonly-regurgitated “facts” and assumptions. I’m going to share those here in a condensed version, although I do recommend the book, not only for the AMC era but as an excellent portrait of Romney’s life.
Romney had been the president of the AMA (Automobile Manufacturers Association) since 1939. His intelligence, political, organizational and persuasive skills were put to good use there, but by 1948, he was feeling restless. He felt something bigger was out there waiting for him. Word got out that he was available.
His first offer came from Packard, and a very appealing one it was, for 40-year-old Romney: a fat $50k per year for the first two years as Executive VP, after which he’d become President and CEO with a large increase in salary. It was a very tempting offer, as Packard was of course still a very solid and prestigious company at that time. After some consideration (and prayer) he decided to accept it. President of Packard in two years, at the age of at 42? It sounded mighty good, if a bit ambitious.
Before formally doing that he needed to resign from the AMA, whose current chairman was George Mason, Chairman, CEO and President of Nash-Kelvinator. When Mason heard from Romney, he convinced him to hold off and discuss a counter-proposal to come to work for him instead.
Mason had done an excellent job of stabilizing Nash after the Depression, and had brought Kelvinator along with him as part of the deal to take leadership at Nash. Mason had ambitious plans for the post-war era, to increase production to some 360k and 1.1 million appliances per year. N-K also had an excellent export operation, and several assembly plants outside of its main factory in Kenosha. It was well situated after the end of the war.
Mason showed Romney prototypes of the 1949 Airflyte cars, which were very ambitious, with their radical streamlining and other features. But what really impressed Romney was a prototype of the upcoming 100″ wheelbase 1950 smaller car—the future Rambler—not yet named. Romney had just absorbed the contents of AMA’s recent in-depth analysis of the use patterns of American car owners, and it pointed to significant changes: As Americans rapidly moved to the suburbs, average trip lengths were becoming shorter, as many frequent trips were being made to the store, school, etc., which had previously not been undertaken by cars. This pointed out that second cars were going to become inevitable, as women were not going to be able to function without a car.
Romney felt strongly that these women were going to prefer a smaller car, for obvious reasons of parking, ease of handling and fuel economy. The 100″ wheelbase prototype that Mason showed him made a deep impression on him: this was the car of the future, a new category between the little imports and big American cars, one he could really get behind.
Mason’s offer to Romney was not nearly as financially attractive: He would have to spend two years learning the automobile and appliance business inside-out as Mason’s assistant, at $30k per year. After that he would likely become a VP, but no guarantees. Romney did some difficult soul-searching and decided to accept Mason’s offer, as he felt that the timetable at Packard was too ambitious, given his lack of experience. He also just preferred Mason, who was intelligent, hard-working, warm, and had the highest ethics. Mason had vision, unlike Packard, whose management was dominated by lots of old men seemingly trying to relive the glory years of the fading company.
Mason’s vision included a merger of some of the key independents as well as some parts makers, in order to create the scale and efficiencies necessary to compete with the Big Three. He had already sounded out Hudson and Packard back in 1946 in an effort to create the “Big Fourth”, but since both were doing well at the time, he was turned down.
Romney threw himself into his two year apprenticeship, putting on overalls at times, working in all aspects of appliance and automobile production. Romney had worked hard physically starting as a young boy and was not afraid to get his hands dirty. Not only did he learn all the technical aspects, but in the process also discovered that communications in the company were poor, and that the union situation, particularly at the Kelvinator factory, was very dysfunctional. Supervisors were in the union, so there was no actual supervision. There was rampant abuse of company paid time for crap and card games, and small businesses were being run right out of the factory floor, all on company time. Productivity was falling fast, hurting Kelvinator’s profitability. Mason was spread too thin to properly manage the large company.
In February 1950, Romney became a VP, but still without a specific portfolio, handling various assignments that Mason delegated to him. Around this time, the new 100″ wb Rambler premiered, which Romney had wanted to name “Diplomat”, but was outvoted. Shortages of various parts and materials factored into the decision to limit production only to high end body styles and trim levels, and priced accordingly. The Rambler was well-met, and established its image as a cut (or two) above the typical lower-end of the market, never mind the cheapest cars on the market. It sold well to women and wealthier buyers as a second car. The model range was expanded to include a wagon and in 1951, a two-door hardtop.
Romney tackled the very difficult problem with the union at Kelvinator by appealing directly to the workers, telling them that the plant was imperiled by its inefficiency. One of Romney’s superpowers was his persuasiveness; he was at his best trying to convince others of the right thing, whether that was changing union control of supervisors, selling America’s consumers on the advantages of the compact Rambler, or convincing financiers that AMC had a future. No wonder he ended up in politics. After a months-long campaign that included over 60 letters to workers, the foremen agreed to withdraw from the union. It would be the first of many difficult but successful union battles, always won through persuasion rather than ultimatums and strikes.
In late 1953, Mason and Romney reached a preliminary agreement with Hudson, which was now in deep financial crisis. While that agreement was being hashed out by the respective boards, Mason had Romney approach Packard about creating a three-way merger. It was a solid plan, as Nash and Packard were still in good financial health, and ailing Hudson had a large dealer network, instrumental to expanding Rambler’s reach.
As an alternative to full mergers, Romney had also put forth what would be called an alliance today, with major reciprocal buying and selling of parts and components to each other, to achieve necessary scale. This “reciprocity concept” was seen as an essential fallback in lieu of a full merger.
The talks with Packard quickly hit a major obstacle: James Nance (above) had been hired as Packard’s president, also from the appliance industry (GE’s Hotpoint division). He demanded that he be named CEO of the newly merged company, despite his lack of automotive industry experience. Mason simply wouldn’t accept that.
The commonly-held (and oft repeated) myth that Mason also wanted to bring Studebaker into a four-way merger is also refuted. According to Romney “I was in on all the merger discussions and there were no talks with Studebaker”. Mason was not interested in Studebaker for quite practical and obvious reasons: Studebaker had the highest labor costs in the industry, and they were solidly entrenched in South Bend, Indiana, which would have posed a major logistical problem in any consolidation of production. Studebaker was seen as too directly competitive to Nash and Rambler, and Studebaker’s narrow BOF body construction meant there was little or no possibility for sharing a body shell with the significantly larger and wider big unibody Nash and Hudson.
Mason and Romney appear to not have been very enamored of Studebaker all-round, considered Nash’s unibody construction to be superior, and that their engineering priorities, such as world-leading HVAC and other comfort aspects (reclining seats, etc.) were more market-oriented than Studebaker’s priorities. Even Raymond Loewy, Studebaker’s design consultant, was frustrated by Studebaker’s management and their unwillingness to make their dull and drab interiors more contemporary. He was told by management that “Studebakers are bought by old and retired men“. That’s about the polar opposite of Rambler’s target demographic. It’s perhaps best summed up by saying that Studebaker was from Mars, Nash was from Venus.
In 1953, Henry Ford II decided to go nuclear, and launched an all-out volume battle with Chevrolet, vowing to outsell them or kill the company trying. Neither of those two things happened, but the collateral damage to the independents was absolutely deadly. It might have well been Henry’s war on the independents. Ford and Chevy cranked up their recently expanded production plants and flooded the market with heavily discounted cars. The independents, which already had higher prices (and costs) to start with, were now in an existential crisis, one that would last for some four years.
Nash-Kelvinator had been a very healthy company before this was war broke out, but by early 1954, they were losing money, as was Packard. Meanwhile, the merger with Hudson was consummated in May 1954, by which time it was essentially moribund. American Motors was born.
Mason and Romney made a final run at a merger with Packard, including a presentation to the board that was well-received. But Nance wouldn’t budge from his demand to be the CEO, and talked his board out of their decided inclinations towards a merger.
Mason and Romney wasted no time in extracting maximum value from the merger with Hudson. Within the same month, it was announced that Hudson car production would be consolidated with Nash, using the Nash body. It was hoped that some defense contracts could be found for the Hudson plant.
AMC was in desperate need of a V8 engine to stay competitive, but Mason and Romney had no desire to spend the large sum to develop and build one. Of course if Packard had merged with AMC, they would have brought their fine V8 (and automatic transmission) with them, a key asset in Mason and Romney’s eyes. So in August of 1954 they resorted to buying the engines and transmissions from Packard. In exchange, Packard agreed to buy components from AMC, in roughly comparable dollar amounts. Since Packard had no body plant, Mason and Romney assumed Packard would buy substantial body stampings from the now-idle Hudson plant. This was a key element of the “reciprocity” concept that had been the fallback in lieu of a merger.
Only six weeks later, Mason died suddenly from pancreatitis. Romney was in shock, but delivered a stirring eulogy. After the funeral, Romney found himself in a fight with the board of directors, who were not prepared to give him all three of Mason’s titles: Chairman, CEO and President. Once again, his powers of persuasion stood him well, and eventually the board acquiesced. AMC’s iffy future was now solely on his shoulders.
Although it was realistically a non-starter, due to Nance’s CEO demands, the issue of some arrangement with Packard-Studebaker was still in the air, especially by the media and Wall Street – as something, anything, to better survive the raging price and volume war seemed increasingly a necessity. But bad blood was spilled when Nance started bad-mouthing Romney behind his back.
Romney continued to defend his position, pointing out that AMC had a much higher level of working capital, and that he (rightfully) didn’t see just where there could be any synergies between Studebaker and Packard, as their bodies were so different, and that it would take at least two years and a massive investment to create a new body that could be shared by both.
Instead, Romney put his energies to the difficult task of convincing potential customers and dealers that AMC was a viable concern, and one with a future. It was an uphill battle, as consumers were increasingly wary of being stuck with an orphan car, creating a self-fulfilling prophesy. Romney was ideally suited for the job, and there is no question that his determination, sincerity, and enthusiasm were almost certainly the key ingredients that allowed AMC to survive the following two years, when things only became increasingly difficult.
The situation with Nance came to a head when it became obvious that Packard-Studebaker was not going to order parts from AMC, reneging on the “reciprocity” agreement. Romney was furious, and telegraphed Nance, who took his time responding, pointing out that there was a loophole in the contract that allowed S-P an out. It was a technicality, but Romney was a man of his word, and expected the same of those he did business with. It was the last straw.
Romney instantly told his VP of engineering to begin the design of a V8 engine, a project that would cost some $10 million at a time when the company was bleeding money. But Romney was determined to cut off all relations with S-P. The irony is that the Packard V8 was killed just three years later, and its assembly/transfer line sold for scrap.
There were issues closer at home too: a number of AMC execs were not really on board with the direction towards smaller cars, and still in love with the big cars, despite their steadily declining sales. A similar situation existed within the Nash-Hudson dealer body. Romney addressed both issues, and quite effectively, purging the executive ranks of those that couldn’t get on board, re-organizing the executive structure, and effectively convincing the dealers of Rambler’s bright future. He instituted a bonus program for the dealers, whereby all dealers got additional amounts per car as certain company sales goals were met. It incentivized the dealers and gave them access to desperately needed additional cash during the dark years. As it was, AMC’s dealer network dropped from 2800 stores in 1954 to 1900 in 1956.
Romney also instigated a complete make-over in AMC’s advertising, moving it away from the vague, dreamy ads typical of the time to very factual-based advertising. Superlatives were out; facts and “news language” were in, with ads focused on the very specific features that made Ramblers unique and/or superior.
1954 would end with a loss of over $22 million, but Romney was optimistic that 1955 would see an upswing.
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