Lynn A. Townsend, Former Chrysler President
Lynn Townsend made Chrysler profitable and international, only to lose it all.
Lynn Townsend came on the scene at Chrysler when it needed a hard-edged thinker who wasn’t afraid to cut costs and revamp product. Tough as it was on people working for the company, it was what most people figured needed to be done, back in the early Sixties, and his policies put Chrysler on the road to profitability. Townsend pushed Chrysler into overseas markets, built up a reputation for performance and racing, and moved Chrysler to victory in NASCAR; but he was eventually derailed by the fuel crisis and internal disorganization and waste.
By the time Townsend retired - in 1975, at the age of 56 – he wasn’t certain what the company needed to survive. He had tried to make Chrysler global by buying Simca and Rootes, and planning the purchase of Mitsubishi Motors; he had tried to make Chrysler cool with high-powered street cars and racing successes; and he had tried to buffer the effects of bad sales years by cutting fixed costs. But two oil crises, problems with importing its European cars, and investment in large cars just as they fell out of fashion combined with a corporate structure that had grown fat and slow all combined to present the greatest danger in Chrysler’s history.
In April of 1975, investors and recently laid off employees took issue with what had occurred to Chrysler. The year before, the company had been left with thousands of cars unsold, and a cash flow that left many bills unpaid. What economists like to call “externalities,” such as the first oil embargo of the Seventies, forced the company to cut prices and close most of the factories for a month. Mr. Townsend was peppered with questions and some asked for his resignation.
Things had changed greatly from the time he had first taken the reigns. Time magazine had trumpeted, “Thanks to the energetic leadership of its new president, Lynn Alfred Townsend, 43, Chrysler in 1962 was the comeback story of U.S. business.”
A hardscrabble childhood molded a man who knew the value of a dollar
Lynn Townsend had spent most of his childhood in Los Angeles, where his father operated an auto repair shop. His mother was a teacher, who pushed him so much, he entered school at the second grade level; and as soon as he mastered arithmetic, his father actually put him to work helping with the shop’s finances, keeping track of expenses and general cash flow.
But fate threw him a curve ball, early on. He was an orphan at the age of 14 and had to go back to Michigan to live with an uncle. There, he ended up putting himself through the University of Michigan by both hard labor and interning: peeling potatoes, scrubbing floors and working in a local accounting office. Despite all that, or maybe because of it, he remained a top student.
“I’ve never had a student who had a greater flair for accounting and financial analysis than Lynn Townsend,” said a former teacher, Professor William Paton, in an interview with Time magazine.
Mr. Townsend graduated with a master’s degree in business administration in 1941. But like most men of his generation, he was pulled from making money to serve his country in World War II. However, again, it was in a position involving accounting, in its most basic sense, serving as disbursing officer on the aircraft carrier, the U.S.S. Hornet, in the South Pacific.
When he returned to Detroit to work at the offices of the accounting firm of Touche, Ross, Bailey and Smart, he ended up auditing Chrysler Corporation. He remained on the outside looking in, from 1957, when Tex Colbert brought him into the company as controller. Exactly why he did it is a bit of mystery, though as Curtis Redgap pointed out, Townsend did have an good ability to speak for himself. His appointment wrankled a lot of car folks, but the shareholders were being rocked year after year by poor sales/designs/scandals. Bringing in a hard-working, unsentimental Midwesterner may have seemed like a good solution to the instability and scandal of the times.
Townsend quickly became a champion of revitalizing Chrysler’s operations outside the United States. He persuaded upper management at Chrysler to buy a 25 percent interest in France’s Simca, in 1959, an investment that paid dividends for many years (unlike the Rootes Group, which must have looked attractive at the time, as their cars were generally larger and higher-powered than the little Simcas). Townsend also helped to launch a program that boosted Chrysler’s auto and truck exports from just 14% to 20%, even as domestic sales rose.
As the result of these successful works, he was made a Chrysler director at the age of 39. By the age of 41, he’d risen to become an administrative vice-president. Partly by virtue of being apart from the problems of the time, and perhaps because at 6 feet two inches tall his image was a good fit for the time, he became president of Chrysler in 1962. Still, he had only been with Chrysler for four short years. He became Chairman of the Board in 1966, and served until 1975, when he was ony 56.
“He was a classic big time head of an auto company,” recalls Brock Yates, who became Car and Driver’s managing editor not long thereafter. “He was good in front of people.”
Cutting and rebuilding
Lynn Townsend cast a critical eye onto the high-flying practices that other Chrysler executives had practiced – literally in one case, selling off the expensive Chrysler executive planes. He also closed outmoded plants, shut down an entire office building, but and began a series of dismissals that led to 7,000 white-collar workers being cut from Chrysler’s payroll. In the end, $100 million was lopped off of Chrysler’s production and operating costs. Those moves – especially of course, the layoffs – led some employees to nickname him “the Brute,” but the corporation’s breakeven point was lowered so that, in years with moderate sales or unusually high variable expenses, losses would be avoided.
In 1959, Chrysler had lost $5 million (USD) on $2.6 billion in sales; 1958 had been even worse (both years were badly affected by the immense quality gaffes of 1957). By 1961, having reduced its break-even point, Chrysler earned $11 million on sales of just $2.13 billion. The chart below shows the effects of lowering fixed costs: the merely decent sales of 1961 would most likely have resulted in a loss had Townsend not stepped in.
At the retail level, things had been even worse. The dealer body that Mr. Townsend inherited had become so discouraged, that 3,000 dealers had quit Chrysler in the previous five years to his installation as president; so he allocated $80 million to revamp Chrysler’s distribution network. He also hired Virgil Boyd away from American Motors and installed him as Vice President of Sales, and hired Stewart Venn away from Ford and put him in charge of Dealer Relocation; together they took dealers out of fading downtown areas and put them into new Chrysler-built and owned suburban facilities.
As an example, in Vancouver, Chrysler saw its share of the market go from 11% to more than 16%.
Curtis Redgap wrote,
Lynn Townsend lent an air of quiet fortitude to the Presidency of Chrysler. ... Townsend didn't like what he didn't see on the streets. No ChryCo cars kicking butt in the great American race, the one from stop light to stop light on any given city at any given time. ... Townsend had two teen-aged sons. He often queried them about what was happening out on Woodward Avenue. They dutifully reported that the Plymouth-Dodge duo had no presence at all.
Townsend also was committed to making the Petty Enterprise Group the hottest thing in NASCAR. Less than a month after assuming the Presidency, Townsend sent down a research order to the engine group. “Develop some engines that will kick some ass on the street and the track.” The engineers had the knowledge. The 413 engine was right for the job.
Townsend dutifully polled the dealers, and truly took the suggestions to research to see about development. ... There was a series of high level dealer meetings, and Dad, from his experience with the Fury, was directly invited by no less than Townsend himself. Townsend also wanted to know a lot about the way Dad ran the dealership.
Of all the Chrysler Presidents, less Walter himself, Lynn Townsend was the only one that ever came to see the operation. He would spend a week with us, just observing, and a guest in the house. He was critical of the lack of a huge showroom — this would have repercussions later on.
Lynn Townsend was as down to earth as anyone. He was always smiling, which I am given to understand belied a huge vehement temper. As he was leaving, he promised Dad that we would be the first to receive the new Plymouth Sport Fury (model name revived) along with the new race ready models.
Establishing the first African-American dealership amongst the “Big Three”
One of Lynn Townsend’s most significant achievements is has largely been forgotten: establishing the first African-American auto dealership for a major American auto manufacturer.
The late Ed Davis Jr. became a franchised Chrysler-Plymouth dealer in Detroit on November 11, 1963. He met Lynn Townsend in July 1963 the National Newspaper Publishers Association’s annual convention in Detroit. As Ed Davis remembers in his book, One Man’s Way, an introduction before the banquet speech led to the dealership.
We were all standing around, talking in groups at the cocktail reception before dinner. The men talking with Townsend were asking him about opportunities for blacks in the automotive industry. “Why don’t you have any Negro dealerships?” he was asked.
“There’s no reason why,” Townsend answered. “We’re looking for dealers, and we don’t care whom they are, so long as they’re qualified.”
“Well, I know a Negro who would qualify and make a good dealer,” one of the men said.
“Who is he? I’d like to meet him.”
“Ed Davis.” And with that, my friend drew me away from a nearby group and had me come over to meet Chrysler’s dynamic young president.
“I’m glad to meet you,” Townsend said as we shook hands. “We’re looking for dealers.”
That meeting – on a Friday -- started a months-long interchange between Ed Davis Jr. and Chrysler. The following day, Mr. Davis sent a telegram expressing interest to Mr. Townsend. The following Monday, Virgil Boyd, who was then vice-president of Chrysler and in charge of Sales, telephoned Mr. Davis. There was a phone interview and a discussion of how the dealership would be financed. (Ed Davis Jr. had been in the automobile business for 22 years, prior to that time, 16 of those years heading a Studebaker dealership; so he had good financial connections.)
It took four more months, as well as innumerable meetings with people connected to Chrysler sales. At one point, Virgil Boyd even gave Mr. Davis a private phone number to call, if he ever felt he wasn’t being treated fairly. Ed Davis got his dealership only when James Birch, the assistant loan officer with National Bank of Detroit, put up some additional money that Chrysler required – just $25,000 but a lot back then – to close the deal.
As Ed Davis recalled, years later, “That was the way it started – on a very fine and positive note. I found the top managers at Chrysler to be sincere men and fair in every way.”
Influencing the look and feel of Chrysler in the Sixties
One of the most prominent things Lynn Townsend did was to change the appearance of Chrysler, starting with its logo. In 1962 he decided the company needed a new symbol to represent all of the Corporation’s brands, one that would have strong, classic look that would be instantly recognizable.
Mr. Townsend was reportedly bothered by the fact that there was no corporate identity program that made the Chrysler dealerships stand out; he instigated the search for a new logo, and the Pentastar was chosen (story of the Pentastar).
In 1963, the Pentastar logo began appearing on the right front quarter panel of Dodge, Chrysler and Plymouth vehicles (or on the left front quarter in right-hand drive markets such as Britain and Australia).
Mr. Townsend also made known his feelings that the era of fins and filigree was past. While not educated as a designer himself, he had strong feelings about automotive design. He personally was responsible for having Chrysler designers delete a center tail fin running down the rear deck of the 1962 Plymouth and reportedly told them, “This is the radical type of styling we’re going to avoid” from then on. He told Time magazine that the exterior design of cars should evolve in a manner that allowed potential buyers to see a continuity of appearance.
“There are very few people who don’t know what the Olds 88 is,” he asserted. “It has always been in the same position and the same price class. But at Chrysler, we had so much interruption in continuity of size, name and styles that customers didn’t know what the Dodge 440 was or the Plymouth Fury was – and they couldn’t be assured that they would still be there next year.”
Virgil Exner, who had been responsible for the dramatic designs of the late Fifties at Chrysler, called the designs put forth for 1962 “plucked chickens” – the same as 1961, sans fins. Reportedly, 200 dealers gave up their Chrysler franchises, because they were so disappointed with the look of the 1961 and ’62 models. Exner left Chrysler in 1962, after shaping most of the ’63 line. He was replaced by Elwood Engel, largely responsible for the lines of the classic Lincoln Continental of the time, who was hired from Ford.
Engel simplified the ornamentation on all Chrysler cars to make them look not only wider, but also lower. Additionally, weight savings were gained, with better body stiffness, thanks to cooperation between styling and engineering; and underneath those new bodies, sealed suspension pieces saved money on service.
The Dodge planned for 1964 was rushed into production as a 1963, the Dodge Lancer (twin to the Plymouth Valiant) was dropped and the Dart was moved in to replace it. The Dart became a hot selling car (153,922 of all body types in the 1963 model year). The Dodge 880 was brought into being by using the front third of the Dodge Polara and the rear two-thirds of the Chrysler Newport.
Making Chrysler into a performance machine – again
The story is that Mr. Townsend polled his own children, as well as the dealer network, and heard that performance was important. The Plymouth Sport Fury was the first result and the Plymouth Savoy, equipped with a high-output 413 cubic-inch V8, was the second. The Savoy was reportedly good for up to 400 horsepower, when equipped with dual four-barrels on a short ram induction intake manifold; that meant quarter mile elapsed times of 13 seconds.
Plymouth and Dodge set record after record on the drag strip with the 413 engine, culminating with the 11.93 second pass and 118 mile an hour national win by the Melrose Missile, a stock 413 Super Stock Plymouth.
He then commissioned the engineers to come up with a new hemispherical cylinder head V8, to best that of the famous Chryslers of the Fifties. Thus was born the 426 cubic-inch “Hemi.” In the capable hands of a young Richard Petty, it secured the rising NASCAR star a second place position, in his first year with a 426 cid Hemi under the hood of his winning Plymouth. In 1964, Petty would win the championship, hands down – with a Hemi, only available to racers. That engine wouldn’t be available to the general public until 1966. Call it creating pent-up demand, as well as literally engineering a new image for Plymouth.
Acquisitions in Europe helped Chrysler compete against imports
The first Simca automobile that Chrysler imported in 1959, the Simca Arronde, a tiny car with a 96-inch wheelbase, and 48 horsepower (45 hp in the station wagon) courtesy of an in-line four cylinder engine measuring just 1,290 cubic centimeters. It resulted in just 625 sales, in the first three months of 1959; with the highest concentration of buyers in New York, California and Pennsylvania. Chrysler soldiered on with the French car, advertising that, “Wherever you drive in North America, Simca parts and service are right at hand through the vast Mopar network in the United States and Canada.”
By the late Sixties, Chrysler began importing the Simca series 1204, a front-wheel drive car to offer Americans an alternative to marques such as the front-wheel drive SAAB, in the 1960s. By that time, Mr. Townsend had also succeeded in making another European acquisition: the Rootes Group of England. His reasoning was not only new product, but also to take over its wholly independent European subsidiaries and compete against Ford of GM in Europe.
Marketing cars from the Rootes group met with failure in 1968, as the cars couldn’t meet the emerging exhaust emissions standards from the Clean Air Act of 1966. Even before that, though, the quality of the Rootes cars failed to meet American standards, and none were popular — not even the Sunbeam Alpine and Tiger, featured on Get Smart (bewildering generations of Americans who couldn’t quite place the car.)
A change in roles but not influence
Mr. Townsend became chairman of Chrysler on December 31, 1966, with Virgil Boyd then serving as president through early 1970. By 1968, Chrysler had almost doubled its share of the American market, from the time Mr. Townsend came on as president.
Major changes in corporate administration became evident by 1970, thanks to this shift. Quality control had become an end in itself, as engineers struggled to correct the lingering ill-repute from the disastrous 1957 models.
Mr. Townsend had centralized the former units, and moved to strengthen divisional identities between Dodge, Chrysler and Plymouth, though both Dodge and Chrysler were known to move down-market to poach customers from Plymouth and Dodge, respectively. On the whole, though, a typical Dodge could be expected to be larger and better-optioned than a typical Plymouth, and a typical Chrysler would be larger and better-optioned than a typical Dodge, with prices adjusted to match; there were no small Chryslers. This formula lasted through around 1973.
Around this time, Robert Anderson, the general manager of Chrysler-Plymouth left the company, as did Robert McCurry, the general manager for Dodge, who would lead Toyota to dominate the American market.
Anderson had been a champion of a new small car, and with his departure, plans for a sub-compact car, code-named the “25 car,” were shelved. Instead, Mr. Townsend began discussions with Mitsubishi Motors to import a line of Japanese-built cars, badge them as Chrysler products, and sell them in the States; Chrysler would buy holdings in Mitsubishi Motors from the parent company, Mitsubishi Heavy Industries, and would eventually own the company outright. In addition, Chrysler began to offer the Hillman Avenger, from its Chrysler Europe subsidiary, at the Plymouth Cricket; that would end after just two years.
Later in the Seventies, Chrysler would try to merge Rootes and Simca cars into one cohesive line of cars. Indeed, the Chrysler Europe/Simca Horizon would become the basis for the strong-selling Plymouth Horizon and Dodge Omni in the United States.
Mitsubishi cars began to be sold in 1974 under the monikers of Plymouth Sapporo and Champ, as well as Dodge Colt and Challenger names. While they were decent examples of Japanese auto making, none but the Colt sold particularly well, in part to their design and engineering concessions to the American market: softer springs, vinyl roofs and whitewall tires.
A bad idea whose time had come
Possibly the biggest mistake Mr. Townsend made in his career at Chrysler was the “sales bank.” It was created by him, and carried on by his protégé and successor, John J. Ricardo. Both men were accountants and had come to the auto industry convinced that business methods were more important to success in the auto industry than product knowledge.
The general practice in the auto industry had been to produce cars based on dealer orders. That meant that production would follow demand. However, at Chrysler, “automobiles poured out of the Highland Park and Hamtramck plants like homeless waifs,” according to Brock Yates in his book The Decline and Fall of the Auto Industry.
During the spring and summer of each model year, vehicles would be overproduced, and then stored for later sales. All over Detroit, at giant parking lots that included the Michigan State Fairgrounds on Woodward Avenue, those cars were stored. By the time later summer arrived, the sales and accounting staffs would be trying to unload surplus automobiles in any way possible. That included fire sales to leasing agencies and rental car fleets, registration transfers to Corporate Zone offices, sales contests and giveaways. But the primary method was to lean on dealers.
Zone managers would call dealers and demand that they take more cars. They exercised their leverage, according to an interview that Yates had with an anonymous Chrysler-Plymouth dealer, based on fear, coercion, and pressure. Without the zone managers being in the car dealer’s corner, specially ordered cars might get “lost,” warranty claims wouldn’t get processed, parts inventories might slip and truckloads of unwanted and hard-to-sell color combinations and body styles might show up at the store.
The dealers didn’t want the sales bank cars since many were poor quality or made with poor options choices. But they took them and sold them, as they could.
By 1974, the game was ending.
Desperate times demanded a gamble
In a time of retrenchment much like the current times the auto industry is going through, sales sank deeply in the wake of the first energy crisis, for most auto manufacturers in America. At Chrysler that was very much the case, despite a completely redesigned crop of 1974 models, still on 124 inch wheelbases, but shorter than the preceding generation of cars. Indeed, sales for of 1974 models dropped to 1970 levels and a two-month backlog piled up. Despite that, Mr. Townsend refused to cut prices, cutting production instead.
By early November of 1974, sales for Chrysler were down 34%, while GM was down 43%. In desperation, Mr. Townsend did something no one else in Detroit had ever done before: instituted cash rebates, essentially paying people for buying a car. While it must have galled him, since it meant throwing money away, it was necessary to move product. The big inventory that was setting around had been costing Chrysler $300,000 a week – a lot of money back in mid-Seventies America.
To get through 1974, Mr. Townsend had to make a painful decision. He closed most of the factories for a month to reduce the glut of cars, setting on the lots of Detroit, or on dealer lots, around the country.
In April of 1975, investors and laid-off employees confronted him at Chrysler’s annual meeting with questions as to the company’s future. His resignation was demanded by some of those who were most upset and concerned about the company’s future.
Three months later, Lynn Townsend decided to leave behind the company he’d steered for a quarter of a century, saying it would be best served by “an early and orderly transition of leadership to our younger executives.” He said that no one had pressured him. Instead, he asserted that his mind had been made up, years earlier, when he had decided that if he served as chairman of Chrysler until he was 65, “the impact of one man” would have been too great.
John J. Ricardo tried his best to fill the gap left, serving as president and chairman, but by late 1978, Lee Iaccoca was hired from Ford as president of Chrysler. Mr. Ricardo left about a year later, and Lee Iaccoca assumed both roles.
It was obvious to him that something had been lost with the departure of Mr. Townsend. In his best-selling autobiography, Iaccoca, Townsend’s replacement wrote that, “There was no real committee setup, no cement in the organizational chart, no system of meetings to get people talking to each other. I took one look at the system and almost threw up. That’s when I knew I was in really deep trouble.”
Many problems were present in Townsend’s reign; the company had taken a cost-based approach to emissions control, while Japanese and German automakers invested in technology to improve driveability while cutting emissions. Bureaucracy had grown; the brands had been allowed to poach each others’ turf for far too long, so that a low-end Chrysler was less of a car than a high-end Plymouth, and Dodge stretched from economy (Dart) to near-luxury (Polara), treading on the turf of both brand-mates (these issues started long before Townsend). While Townsend had rooted out inefficiency on his arrival, a fresh look was needed to deal with the detritus of decades under the same leader.
Despite Townsend’s strong start and general success, Lee Iaccoca never asked for his opinions. Government-backed loans, the K-car, and even more cuts in personnel, with Lee Iaccoca taking a dollar-per-year salary to boost morale and promote a communal spirit, allowed Chrysler to survive; his cost-cutting and investment in new vehicles pushed Chrysler on to strong profits. Unfortunately, just as Townsend was perhaps in office a few years too long, Iaccoca seemed to stagnate in his leadership; to his credit, he allowed other leaders, including Thomas T. Stallkamp and Bob Lutz, to dramatically change the way Chrysler engineered cars, leading to massive profitability and a string of award-winning, class-leading cars and trucks before Chrysler was acquired by Daimler-Benz in 1998.
In August 2000, Mr. Townsend passed away at the Botsford Continuing Health Center in Farmington Hills, Michigan at the age of 81. His wife, Ruth, three sons, James, Charles and Richard, as well as 8 grandchildren, survived him.
Those who knew him best said that his enduring legacy to them was the fact that he’d always made it a point to try to be home at 6:30 each evening to share dinner with his family. Mr. Townsend reportedly oftentimes told his children that he had 180,000 people working for him; so the job should get done. The man, who lost his parents at such a young age, knew full well the importance of family.