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Studebaker legacy lives on in South Bend 50 years after closing

Sunday, December 8, 2013 - 3:58 pm

SOUTH BEND — When Data Realty executives announced in 2011 that they would build a new data center at Ignition Park, company President Rich Carlton decided to read up on Studebaker history.

After all, the state-certified technology park is on the very ground that for decades was the smoking, clanging heart of Studebaker's vehicle business. The land where generations of men muscled their way into the middle class is now designated for sleek offices where people with advanced degrees will write algorithms, manage computer servers and develop software, hardware and microchips.

Carlton wasn't even born when the last Studebaker rolled off the line in South Bend a half-century ago, and he wasn't all that interested in why the company went out of business.

What he found striking was the story of how Studebaker survived here for 111 years — a remarkable lifespan in the business world.

From its humble start in a blacksmith shop at Jefferson Boulevard and Michigan Street, the company grew into the largest wagon manufacturer in the world and the only one to succeed in making automobiles.

Some may feel — 50 years after news of Studebaker's closing broke Dec. 9, 1963 — that locals still talk too much about the company.

But Carlton said people in South Bend should talk about Studebaker, not as a source of sadness but as a source of inspiration.

Studebaker is a great American success story, and it's a South Bend story.

"It grew to be the largest vehicle manufacturer in the world," Carlton told the South Bend Tribune, "and it was completely homegrown in South Bend."

The fundamentals that made it great are still in the town today, he said.

Honoring and learning from Studebaker's legacy, without being weighed down by nostalgia, has been South Bend's challenge during the past five decades.

Kevin Smith, who owns Union Station Technology Center, said too many people stopped believing in the city in the years after the automaker closed.

"We moved forward in the darkness, so to speak," he said.

Now Smith's hoping to rekindle the type of innovative energy that drove Studebaker for decades.

"You have to have visionary people. Vision spurs innovation, innovation becomes entrepreneurial. Then you have businesses, and that is the crux of why a community exists," he said. "That's what formed South Bend."

Smith owns the last large Studebaker production building still standing in the city.

The six-story Ivy Tower was built in 1923 along Lafayette Boulevard in an area Smith is calling The Renaissance District.

He plans to connect Ivy Tower with Union Station via a tunnel under the railroad tracks and fill the 800,000-square-foot building with a mix of data centers, technology offices and residential space.

Smith sees his project as building — literally and figuratively — on top of Studebaker's innovation.

"That whole innovative culture that built South Bend needs to be rejuvenated, and we're going to rejuvenate it," he said. "If we want to be a vibrant city again, we have to go back to our roots."

Patricia Ann Graham remembers Dec. 9, 1963.

Studebaker workers shuffled into the company's benefits department, where she was a clerk, to fill out pension applications.

"I actually saw some of them cry," she told The Tribune recently, "and it was all I could do to keep from crying with them."

Sue Ann Ciesiolka, whose father was a Studebaker test driver in the 1940s and '50s, used an analogy many have relied upon to describe their grief at the automaker ending its operations here. Production ended Dec. 20.

"When Studebaker's closed," she said, "it felt like a death in the family to me."

The roughly 7,000 people Studebaker employed in South Bend accounted for 8 percent of St. Joseph County's total employment. The average Studebaker worker was 54; 60 percent had relatives who worked for the company. It was difficult for older employees to say goodbye to the company where many had worked their entire adult lives and built their best friendships.

It also was difficult for many residents to imagine South Bend without the company, which was not just important to the local economy but a big part of the city's identity. Studebaker started making wagons here in 1852 — 13 years before South Bend was incorporated — and the city grew up as the company became a mighty manufacturer.

"Studebaker was a global presence you could point to and say, 'That was built in South Bend, Indiana,'" said Andy Beckman, archivist at Studebaker National Museum.

So, when Studebaker decided to consolidate vehicle production in Hamilton, Ont., people in South Bend were affected psychologically as well as economically.

"I think, economically, the city recovered more quickly than people expected, but the town was devastated psychologically because many families were deeply rooted in South Bend and deeply rooted in Studebaker," said Donald Critchlow, a former University of Notre Dame history professor who wrote "Studebaker: The Life and Death of an American Corporation."

Studebaker had been slowing down for years, struggling with high costs, antiquated factories and increasing market domination by General Motors, Ford and Chrysler. The company had already reduced its South Bend payroll from more than 22,000 workers in 1950 to about 7,000 at the time of the shutdown.

In late 1963, Bendix — not Studebaker — was the city's largest employer.

South Bend staggered after the closing as its unemployment rate, which was 2.1 percent in November 1963, rose to 9 percent in early 1964.

But the city recovered as the national economy roared and other companies, such as Allied Products, Cummins Engines and Kaiser Jeep, moved into former Studebaker buildings.

By September 1965, the jobless rate was 2.6 percent.

The bigger challenge for South Bend was ahead, the same test every Midwestern factory town has faced in the new economy. Technology has made manufacturing less labor-intensive and more reliant on advanced training, while globalization has pulled production out of the United States.

St. Joseph County has a more diverse economy than it did 50 years ago, when 40 percent of local employment was in manufacturing. Now about 12 percent of the county's jobs are in manufacturing. Local residents, however, are less wealthy in a job market where transportation, health care, education and services are the top four sectors.

Nostalgia for Studebaker has remained strong here through the decades, perhaps because the company symbolizes those "good old days" when a person could graduate from high school and step into a middle-class job. The Studebaker manufacturing corridor — a mile-long tangle of massive factories and towering smokestacks south of downtown — stood for decades as a rusty reminder of the company.

Former Mayor Stephen Luecke said the lingering psychological impact those buildings were having on the city is part of the reason his administration took steps to tear them down and develop Ignition Park as a hub for new technology businesses.

"They were not only a blight on our landscape but a blight on our psyche," he said.

Luecke said he hopes the city has exorcised the ghost of Studebaker while holding on to the positives of the company's legacy. Clearing the land at Prairie Avenue and Sample Street for Ignition Park opened up 84 acres of new possibilities and an opportunity for South Bend to reinvent itself.

"What we really wanted to carry forward from Studebaker was a sense of innovation, that we know how to make things in South Bend, and that we have the ability to build homegrown businesses," Luecke said.

That tradition is carrying on in laboratories at the University of Notre Dame, which in the past five years has nearly doubled its annual research budget to $158 million, and in the 25 startup companies at Innovation Park across the street from the university.

Data Realty became Ignition Park's first tenant last fall when it opened its $15 million data center, and Great Lakes Capital announced in October that it will build a $6 million facility to house early-phase companies at the park. Smith saved Union Station from demolition in 1979 and turned it into Indiana's second-largest data center; he plans to invest $10 million in Ivy Tower.

Countless other local businesses have negotiated the transition to advanced manufacturing and the new economy, but there are still many problems to fix.

South Bend has lost 30,000 residents since 1960, leaving hundreds of abandoned houses throughout once vibrant neighborhoods. Downtown shows signs of revitalization, but city officials and business owners agree it has yet to recover from the 50-year-old malaise.

The county's unemployment rate of 9 percent is higher than state and national figures, and local company heads have complained about a "skills gap" that makes it difficult to fill available jobs.

Despite those challenges, Data Realty's Carlton said South Bend still possesses the strengths that made Studebaker's rise possible.

The city's new businesses might not make cars and trucks, but whatever they make will be based on the same key ingredients of innovation, capital, collaboration and talent.

And Critchlow, the author and former Notre Dame professor, said the city doesn't have to forget Studebaker to move forward.

"The innovation that the Studebaker brothers brought to South Bend needs to be projected into the future," he said. "The people of South Bend can continue to have fond memories of what once was while looking to a future of what will be."