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When New Hampshire's sharp-tongued Senator Styles Bridges charged last November that the Air Force was paying Kaiser-Frazer $1.2 million apiece for the same C-119 Flying Boxcar that Fairchild Engine and Airplane Corp. made for $260,000, K-F's President Edgar Kaiser cried foul. He took newspaper ads in ten cities to answer the charges of K-F's inefficiency (TIME, Nov. 24) and invited a congressional investigation. Last week...
When Fairchild executives protested, McCone assured them that K-F would simply be a secondary source for planes-something the Air Force was trying to set up for all prime contractors. But a few months later, K-F became a prime contractor on its own. It bought working control of Chase Aircraft, whose C-123 is Fairchild's principal competitor. The decision to give K-F a contract to make Flying Boxcars, said McCone, was made four days before K-F had even submitted its written proposal for one (Senator Bridges wryly called this "faster than fast...
...with RFC insistently pressing for payment, Old Henry Kaiser had to decide whether to let K-F go under or take the risk of propping it up with more of his own money...
Last week Kaiser took the risk. His personal holding company anted up $37.6 million in cash to enable a K-F subsidiary, Kaiser Manufacturing Co., to buy all the plants and equipment of Willys-Overland Motors for $62 million. If approved by Willys stockholders, as seems assured, the deal will be the biggest automobile merger since Chrysler bought Dodge for $170 million in 1928. In terms of assets, it will make the combine the fourth biggest U.S. motormaker...
Since Willys made big profits in 1952 (an estimated $24 million, cut by heavy taxes to about $6,500,000), most schoolchildren might have guessed that Willys would buy K-F, instead of the other way around. But in today's topsy-turvy, tax-ridden world, a big loss is a kind of asset because it can be "carried back" against profits over a five-year period. Thus, the driving motive in the merger is the fact that K-F can apply $31.2 million of its losses against future profits. Thus also, if Willys in 1953 should again make...