Quote:
Originally Posted by Rahul Bhalgat
When one looks into why such factories closed, following lessons are evident: - Failure to read the changing customer expectations or denial of changing market situation
- Disputes or politics among the owners / top managers
- Bold business plan with hidden risk and abscence of plan B
- Owner's / Management's failure to maintain balance in what investors, vendors, employees and customers get from the company.
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Earlier in life I had a special interest in Packard, as my father had driven a 1939 model 120 coupe - originally owned by an engineer uncle - in high school in the beginning of the 1960's. As kids, we grew up playing in it / pretending to drive as it slowly sunk into the dirt floor of my grandfather's garage. It was patiently awaiting a restoration when, due to various family relocations and lack of time, it was sadly sold off sometime in the early 2000's, amazingly via e-bay (and not surprisingly, never heard from again).
Anyway, most analyses in Packard's case suggest that the company's mistake was actually NOT in "failing to recognize changing customer expectations", but (quite ironically in view of point 1 above) rather in
assuming that their market had changed (after some painful years of 1930's "Great Depression"), when in reality it probably had not. Will explain here briefly:
Prior to the mid/late 1930's, Packard had never produced anything but relatively lower-volume, higher-end motor cars for the relatively (or extremely) well-off. "Ask the Man Who Owns One" was for years the sales slogan, and seemed to subtly suggest that such a man was a bit distinguished / rare / exclusive himself. In view of the 1930's economic crisis, it was decided that production of something cheaper should be undertaken, hence the introduction of the 110/120-series. Still great cars of high quality and classic styling, but truly not in the same league as the excessive, opulent, world-class V-12's, etc, which had found ample place in the stables of more than one Indian maharaja and various other royalty / heads-of-state.
As expected, the less-costly new cars sold in much higher volume than Packard had ever managed previously. Trouble is that 1) at the price point, they were entering a much more competitive market, especially as the economy picked up post-WWII;
And more than anything: 2)
the exclusivity and image the brand (and its traditional buyers) had always enjoyed was lost, and thus the marque became uninteresting to the luxury buyers who had made the company prosperous and famous in the first place. Most of these in time probably turned mostly to Lincoln and Cadillac, whose managers had wisely chosen to keep those divisions (of Ford/GM respectively) wholly upscale.
All this to say that Packard probably misread then-current conditions as a trend rather than a more temporary anomaly. Might have also failed to realize that their rich traditional customers were considerably more recession-proof (or resilient) than other categories of car buyers.
So long story short, they adjusted when they'd probably have been better off not to. Funny twist there. Was it excessive pessimism (re: the economy) or excessive opportunism (lust for market share), or a lack of due regard given to their existing customer base (mistaking "the market" for "their market"), or something else? A lot has been written about it, for anyone inclined to dig deeper. I seem to remember that (re: point 2) there were some personalities involved, but can't remember the details.
As for me, I hadn't realized that so much of the old plant still exists, and is so utterly abandoned. Great thread, thanks.
-Eric