SOUTH BEND, Ind. -- The last Studebaker built in America was a two-door hardtop with an ironic 'Merry Christmas' across its windshield -- a four-wheeled coffin for a 111-year tradition and, some thought, for an entire city.
When that final car rolled off the line 20 years ago -- on Friday, Dec. 20, 1963 -- Studebaker Corp. closed up shop and sent its last 7,000 or so South Bend workers, 8 percent of the area's work force, to the unemployment line.
It was a holiday-killing end to a proud era in American economic history that had seen a family blacksmith shop evolve into an industrial giant.
It was an economic disaster that drew a crisis response from six Cabinet-level departments and a number of other federal and state agencies.
And there are those who say now that it was also the best thing that ever happened to South Bend.
Brothers Clement and Henry Studebaker opened for business in South Bend on Feb. 16, 1852, taking in 25 cents for shoeing a horse their first day and building three wagons their first year, selling two.
Their shop grew into the nation's leading wagon, carriage and buggy maker, picking up military contracts and providing carriages used by presidents Grant, McKinley and Harrison. In 1902, the company turned to production of the 'horseless carriage.'
Business flourished. Annual sales, which hit $1 million for the first time in 1875, were up to $25 million in 1911 and $100 million by 1922.
The company went public in 1911, went sour during the Depression, reorganized and then revived, employing more than 24,000 in South Bend in the early 1950s to build the popular Studebaker Commanders, Champions, Starliners, and other models.
Then the roof caved in again, this time for good. Sales dropped off, and Studebaker managers -- without the economies of scale available to the Big Three automakers in Detroit -- couldn't revive them. Even the Avanti, a slickly designed sports car that drew raves from the critics, couldn't turn things around.
The company lost $40 million on U.S. car production from 1959 to 1963. In the first nine months of that fateful final year, domestic car losses so overwhelmed profits from other Studebaker divisions - including record sales figures from a Canadian carmaking operation - that the overall company posted a loss of more than $9.8 million.
'What struck us all then was that Studebaker was too small to compete with the big boys in Detroit,' said New York University President John Brademas, who was then a Democratic congressman from South Bend. 'I don't think management could save it.'
On Dec. 9, 1963, the dreaded announcement came from company brass meeting in New York: Studebaker was shutting down its South Bend plant and consolidating all future car manufacturing in Canada.
'We were being bled to death,' board chairman Randolph H. Guthrie explained to reporters.
The sudden loss of a $45 million annual payroll was a terrible blow - some thought a final blow -- to South Bend, a city that had already seen Studebaker employment shrink by more than 17,000 in a decade and had suffered through the loss of several other major manufacturers.
'Studebaker was the heart and soul of this community for a hundred years,' says Eli Spicer, now 69, who co-owned a Studebaker dealership across from the factory. 'The history of this city is Studebaker.'
But the city's history did not end with Studebaker's demise.
Unemployment, a modest 5 percent or so and falling in a booming national economy, leaped to 9.1 percent in South Bend within a month of the shutdown.
But the other carmakers sent recruiters into the city to fill out their work forces. Kaiser Jeep Corp. moved in to take over Studebaker's defense contracts and six other businesses were rolling inex-Studebaker buildings within 10 months of the closing.
President Lyndon Johnson created a task force composed of representatives from the departments of Commerce, Labor, Agriculture, HEW, Defense and the Post Office as well as smaller agencies to coordinate the federal response, which included massive job retraining programs.
Indiana Employment Security Division staffers, bolstered by reinforcements om from elsewhere in the state, paid out more than $5.5 million in jobless benefits in 1964 and placed more than 7,300 unemployed workers in new jobs.
By December, one year after the plant gates closed, South Bend unemployment was back down to 5.9 percent, and in 1966 it averaged 2.7 percent, well below nationwide figures.
'We had a very severe situation for a short period of time,' says Indiana University Professor John Peck, an expert on the South Bend economy. 'Very soon after the departure of Studebaker, things picked up a lot.'
Looking back, say Peck and today's South Bend government and business leaders, the city was lucky that Studebaker folded when it did, when there was a surging national economy to pick up the slack and when the modern decline of the industrial Midwest was not yet so apparent.
'You still had firms considering the Midwest as an option for growth and development,' Peck said. 'To have these other companies come in and pick up Studebaker's work force suggests there was shortage of facilities and shortage of work force in other parts of the country. Today, I would think the business would have floated to the South.'
Also, the Studebaker shutdown, while not the economic catastrophe it would be today, was bad enough to force local businesses -- while they still had a chance -- into diversification that has forged a stronger, more stable city economy.
'I think the Studebaker closing in 1963 was the best thing that ever happened to South Bend,' said Patrick McMahon, director of Project Future, the public-private task force responsible for economic development in the city and neighboring Mishawaka.
'When a community's economy is too focused in one specific area, you're liable to get hurt badly. Not only did we have a substantial number of our manufacturing work force employed in one facility, but all the little job shops around town were automotive-oriented and a lot of them tied into Studebaker. That was not healthy.'
Some of the city's many machine shops switched almost immediately to supplying other carmakers; some got into the aerospace market. Some switched businesses altogether. The plastics industry, which had only handful of firms in South Bend in the early '60s, now boasts nearly 40.
Additionally, just after the Studebaker shutdown, a civic committee began working to attract new industry to town and created an industrial park which, 20 years later, is the largest employer in the community.
The result, says Peck, was the net loss of only 4,000 manufacturing jobs in South Bend during the '60s and 70s while employment in the service sector -- on the rise nationwide -- was jumping about 28,000.
Both changes -- diversification within the manufacturing sector and diversification away from manufacturing into service work -- have made South Bend's post-Studebaker economy remarkably stable, Peck says.
'If you compare our performance during recent phases of the business cE:le, particularly downturns, we have one of the lower major urban center unemployent rates, because of the diversification,' he said.
That's not to say there aren't still major economic problems in the city. About 40 to 45percent of the roughly 5 million square feet in the Studebaker complex still lies vacant or underutilized. It's old, outmoded and may never be used again.
Bendix Corp., another major area employer, is slowly trimming its employment rolls and sending some of its South Bend production lines to smaller, more modern plants in the Sunbelt. Torrington Corp. said recently its South Bend Heavy Bearings Division will move to the Carolinas early next year.
But there is good news too, says city redevelopment director Jon Hunt. An important new synthetic fuels plant will be on line next year, along with a synthetic diamond manufacturer, which will employ up to 120 workers and spin off up to $8 million worth of business annually to local tool-and-die firms.
'We have a history of being able to react to catastrophe,' Hunt says.
McMahon adds, 'We can thank Studebaker for that.'
