By Paul Dwyer
When the Chrysler Corp. closes its Kenosha, Wis., assembly plant in December, it will sound the finale to a big part of automotive history.
For the Kenosha facility is the oldest operating automobile plant in the United States, perhaps the world. Three generations of workers have manned its assembly lines amid changing owners, changing times and changing fortunes. But always there was Kenosha.
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1902 Rambler at the Old Stone Fort Museum, Schoharie, N.Y.
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The onetime bicycle factory produced its first one-cylinder motorcar, the Rambler, in 1902 under Thomas B. Jeffery. In 1916, Jeffery sold his firm to former General Motors president Charles W. Nash.
Nash Motors, which merged with the Kelvinator Corp. in 1937, introduced the first modern compact, also called the Rambler, in 1950. Kenosha continued turning out its little cars through the ’50s, even as Nash-Kelvinator merged with the Hudson Motor Car Co. in 1954 to form the American Motors Corp.
The company reached its peak in the early 1960s, actually edging Plymouth out of the No. 3 spot, but began a long downhill slide in the second half of that decade and throughout the next.
In fact, without profits from Jeep sales (AMC purchased Kaiser-Jeep in 1970), the company probably couldn’t have survived as long as it did before reaching out for help—first to France’s Renault in 1978, then its own workers in 1982, and finally, in 1987, to Chrysler.
Yet while American Motors failed financially in the end, it left a legacy. There were 131,428 AMC cars on New York’s roads as of July 1, 1987, the most recent date for which records are available. Of that total, 7,183 were from model years prior to 1972. It seems like everyone has either owned or had a relative who owned an AMC vehicle—Ramblers may have inspired the greatest devotion.
Why?
The same qualities that made the “little old lady’s car” popular two decades ago still make sense today. They were economical to buy, to run and to maintain. They were solid—actually a little lightweight by ’60s standards, but extremely rugged compared with today’s thin-skinned techno-buggies. They were simple—an owner could do many of his or her own repairs—and dependable. Barring accidents and gross neglect, the first 100,000 miles was a piece of cake.
In addition, backyard mechanics have discovered, AMC cars had great parts interchangeability among models and even with other makes.
American Motors saved money by using a lot of other companies’ established technologies without the research and development costs. A typical AMC car might have an General Motors ignition system, a Chrysler alternator and a Ford starter. Likewise, you could find essentially the same engine in a 1965 American and an ’80 Concord, a 1966 Classic and a ’71 Matador.
Rick Smith of Louisville, Ky., was raised on AMCs. His dad drove Ramblers, and his first car was an American sedan.
Then he bought a Ford.
The previous owner had overheated the 1966 Fairlane’s 289 c.i.d. V-8 engine and when Smith rebuilt it, he found the flywheel was cracked. A replacement flywheel didn’t fit because it turns out Ford used three different flywheels in its 289 that year, Smith says. He had the same problem with ball joints—you needed to know the date and place of manufacture because there were four different types of ball joints used, as well as three different-size brakes, all depending on when and where the car was assembled.
Smith bought his third car in 1971, a 3-year-old Javelin with 1,700 miles he picked up for $900, and has been driving AMCs ever since.
Though known for its economy cars, American Motors didn’t shirk on creature comforts. It began offering air conditioning in 1938, and its top-of-the-line Ambassadors of the ’60s offered affordable luxury.
Al Lawrence of Albany is another AMC believer. His father owned Ambassador wagons, the last one a 1970. “Dad looked at Fords and Chevys,” Lawrence recalls, “but he said if he couldn’t wear a hat in a car, he wouldn’t buy it. He always wore his hat in the Ambassadors.” Lawrence’s own AMCs have included a 1969 Rbel, which he had to junk because of a bad transmission, though the engine was still humming along after a mere 152,000 miles.
And then there’s muscle. AMC answered the challenge of Barracuda, Camaro, Firebird and Mustang in 1968 with the Javelin and AMX, which gave the “big boys” a serious run for their money on the street and on the track.
So if AMC cars were so good, why did the company go out of business?
The 20-year decline had several causes, and has spawned a variety of opinions.
AMC was doing well in 1962 when president George Romney ran for and won the governorship of Michigan, leaving Roy Abernethy in charge. Abernethy wanted to go toe-to-toe with the Big Three by expanding into powerful, full-size autos, which could earn higher per-car profits and which America, in those gas guzzling days, was eating up.
The sleeker Ambassadors, Classics/Rebels and Marlins which followed still inspire owners, but they didn’t move as Abernethy had hoped: sales dropped precipitously in 1964 and continued to recede. Meanwhile, Big Three cars like the Valiant and Dart, Corvair and Nova, Falcon and Comet were encroaching on Rambler’s corner of the compact market.
By 1967, the company reported a $75.8 million loss for the fiscal year. AMC sold the Kelvinator division in 1968 and paid no stock dividends from 1966 to 1973.
Abernethy was succeeded by Roy Chapin Jr., whose deal to purchase the Jeep line from the ailing Kaiser company some called “Chapin’s Folly.” It was probably the best business move American Motors ever made.
In 1970 the American was replaced by the Hornet and its truncated sibling, the Gremlin; at the same time, the Rebel was rebodied and named Matador. These gestures to modern styling and economy meant the end of the Rambler nameplate, but much of the mechanics remained.
In 1976, AMC actually lowered the base price of the Gremlin by $253, making it the lowest-priced car that year. But the Maverick, Chevette and Japanese hatchbacks were moving in, accenting Gremlin’s flaws even as their four-cylinder engines were beating it in the suddenly significant gas mileage department. The ill-named gremlin is also a mythical creature that wreaks havoc with machinery—American mini that pioneered the wedge shape was being made obsolete by its imitators.
In the third quarter of 1976 alone, the company reported a loss of $51.1 million.
However, AMC dealers in the mid ’70s were reaping the benefits of Jeep sales, and the four-wheel-drive division kept the automaker from foundering. But something more was needed, something really new and innovative to recapture the public interest, not only to react but to get the jump on the new generation of front-wheel-drive imports that was to come. AMC’s answer: the Pacer.
The original design of American Motors’ car of the future was to incorporate the latest in automotive technology and styling.
Aerodynamic, with more passenger and storage space than other compacts, great visibility due to its generous glass area, and superior handling from rack-and-pinion steering, the Pacer’s trump card was to be the Wankel, or rotary, engine design popularized in the United States by Mazda. General Motors was developing a Wankel that AMC planned to put in the transverse-mounted, front-wheel-drive configuration which is now the norm but was unusual then.
The GM rotary never developed, and AMC was forced to put its standard straight-six in its place.
The 199, 232 and 258 c.i.d. sixes, while dependable and inexpensive, didn’t get the gas mileage promised by the Wankel design and, worse, forced the Pacer into the rear-wheel-drive configuration.
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This change added weight, reduced interior space due to the transmission driveshaft hump, and some maintenance tasks difficult, because the back of the long, narrow inline six was fairly inaccessible from the shallow engine compartment. The Pacer also suffered mechanical problems including leaks in its GM-designed rack-and-pinion steering unit, according to Smith, who nonetheless calls the car underrated.
For the average consumer, though, the Pacer’s outward appearance was the big turn-off. The egg-shaped car, called “hysterically grotesque” by one correspondent and likened to a fish bowl by others, didn’t send buyers flocking to AMC showrooms, though it did prefigure the aerodynamic shapes other automakers, especially Ford, would adopt in the 1980s.
Pacer sales fell from 172,085 in 1975 to 42,557 in 1978; American Motors had spent more than $150 million to develop the car.
In February 1978, Gerald Meyers, in his first speech as AMC’s new president, acknowledged the company was in financial trouble. That year, the company sold less than 140,000 cars, down from half a million worldwide in 1963.
One school of thought holds that marketing changes were made at the wrong times: In the early ’60s, when there was more consumer interest in luxury and performance, AMC was making economy cars. Later, after the company had spent precious funds on new lines to compete in the luxury and speed areas, the price of gasoline renewed interest in compacts.
Buzz Paricka, a quality auditor at the main plant in Kenosha and longtime AMC employee, adds that while the cost of developing new models and advertising were the same as for the larger companies, AMC, with its smaller market share, “never had enough capital to put programs on the board. You’re dealing with an organization with two percent to three percent of the market. The costs of putting a model on the floor and the cost of advertising is the same as for an organization with 60 percent of the market.”
Just as damaging, however, may have been the attention paid in the next decade to pollution control. It’s ironic that the company that for years tried to convince Americans to buy economy cars (Rambler ads popularized the term “gas-guzzling dinosaurs”) fell victim to emissions requirements while the Big Three, famous for its wheeled behemoths, were able to swim with the tide.
As Smith tells it, when the Environmental Protection Agency cracked down on emissions in the mid-’70s, American Motors didn’t have the capital to respond as quickly as the bigger automakers. The turnaround time on new models became longer, and AMC had to depend on interchangeability (a mixed blessing) to minimize development costs.
“With the EPA certification program,” Smith says, “you had to have tests done on every engine and transmission combination for each model. For example, a six-cylinder 199 c.i.d. engine with a three-speed manual and automatic, a 232 with manual and automatic, each V8 with manual and automatic, etc., had to be tested in each vehicle to determine emissions specifications. This was extremely costly, and reduced offerings as well.”
Failure to meet test figures in production lines could cost plenty. AMC was forced to recall 62,400 cars from the 1979 model year—Concords, Spirits and Pacers with automatic transmissions and 4.2-liter engines—to upgrade pollution control systems.
On March 31, 1978, an agreement of cooperation was unveiled between AMC and France’s government-owned Renault. The French automaker eventually would own 46.4 percent of American Motors.
In 1979, Renault put $150 million into AMC, giving it 22 percent ownership. AMC was selling French-made Le Cars as of October 1981 and began producing Alliances in the U.S. in September 1982. Throughout, American Motors was losing money, big. Company officials Company officials reported a $200.8 million loss in 1980, $136.6 million for fiscal 1981.
In a desperate and unusual move, workers agreed in 1982 to loan nearly $500 million in unfunded pension liabilities to Renault for new product development programs.
Things began to look up. After 14 straight losing quarters, the company reported a profit in 1983. The following year, AMC and the Peking Automotive Industry Corp. announced a joint effort to produce Jeeps in the People’s Republic of China. In June, AMC announced it would spend nearly $600 million to build a factory in Canada for a new line of Renault cars in time for the 1988 model year.
Events weren’t turning so well for Renault, though. Despite the advantage of AMC’s dealership network, Alliance sales were down 19.8 percent in December 1984 from the previous year. And while American Motors announced a $15.5 million profit for 1984, Renault lost about $1 billion.
The situation began to corrode the next year when, despite booming Jeep sales, AMC lost close to $100 million in the first half of the fiscal year, ending five quarters of modest profitability. The company managed to break even in the second half, according to then-AMC President Jose Dedeurwaeder, but the estimated number dealers in AMC-related products had dropped to 1,624 from 2,978 in 1960.
Part of the blame is laid on labor.
John A. Conde, a 32-year American Motors veteran and company historian, doesn’t buy the theory that AMC was making the right cars at the wrong times. He attributes the company’s demise to two main factors:
“One is the too-frequent change in management philosophy as different men took over the reins, with each criticizing his predecessors,” Conde says, “but the principal problem was the deep-seated bad labor climate in Kenosha and Milwaukee.
“Militant UAW locals hung tough in negotiations with the result that AMC’s contracts always were non-competitive, and local plant costs were burdensome and higher than those of any other competing plants.”
“For nearly 30 years ... the union got pretty much what it wanted,” Richard A. Calmes, AMC’s vice president for personnel and industrial relations, said in a 1985 interview.
At that time, Kenosha assembly workers received an average hourly wage of $13.44, including a cost-of-living allowance. That was 37 cents an hour above what was paid to comparable workers at GM, the world’s largest automaker. A three-week strike in 1963 didn’t help the company’s fortunes, either.
However, AMC pushed for, and got, some cutbacks from labor as well as the pension fund-financed investment programs; not all of the money has been paid back yet.
In addition, the merger, though helpful to American Motors, served to undercut consumer confidence, says, Lawrence:
“I’m a firm believer that the Renault merger made things go downhill,” he said. “It took away from the face of being American Motors. It’s as if Chrysler were to be partially owned by another company, like Isuzu. American Motors was going downhill for some years, but after the merger in terms of designs, all the major decisions were made by Ranault and not AMC.”
It seemed as if a new day was dawning when Chrysler Corp. acquired American Motors in August 1987 for $1.2 billion, restoring buyer confidence and ostensibly putting the brake on the company’s losses and dwindling work force.
Kenosha had been assembling Chrysler Fifth Avenues, Dodge Diplomats and Plymouth Gran Furys before the merger and later added the Dodge Omni-Plymouth Horizon line.
It soon became apparent that not only was Chrysler’s interest in AMC limited primarily to the profitable Jeep division, but that it would not keep the old AMC plants turning out Chrysler products as unions and civic leaders had hoped.
In December 1987, the company announced it would cease production of the four-wheel-drive Eagle wagon at the Brampton, Ontario, plant that month. In January, company officials confirmed that Chrysler would shut down Omni-Horizon production in Kenosha, putting 5,500 people out of work in a city of 78,000.
Within hours, Wisconsin Gov. Tommy Thompson began the process of suing Chrysler, contending the company was reneging on a promise to keep Kenosha open for five years.
In February 1988, Lee Iacocca announced the company would establish an estimated $20 million trust fund, based on Chrysler sales in Wisconsin, to help Kenosha workers after the automaker closes the plant. The move not only softened the blow to Kenosha workers but defused a threatened Chrysler products boycott in that state.
Then, in April, Chrysler announced plans to switch production of four-door K-car bodies from Detroit to Mexico for the 1989 model year, while a new plant in Detroit was to get the assembly work being pulled out of Wisconsin. Gov. Thompson called the move “unconscionable.”
Chrysler does plan to keep an engine plant open in Kenosha for the immediate future, and, as Paricka says, the main plant has been threatened with closure before and saved at the last minute. But, as things stand now it’s unlikely that Kenosha, which for one day in 1962 renamed itself “Rambler City,” will be an auto town much longer.
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