Full History part 2 Cole Motor Car Company Indianapolis Indiana
The Cole Motor Car Company produced 112 cars in the last four months of 1909; 703 cars in the year 1910, and 1,318 cars in 1911. And Cole had produced them profitably, earning $227,000 in the two years and four months. What had started as a $75,000 venture was worth over a quarter of a million dollars in less than two and a half years.
The rented "livery stable" that had served to house the assembly facilities proved inadequate. The company purchased the rented property along with an adjacent piece of real estate and built a new $100,000 factory.
In 1911 the Cole Motor Car Company offered the public the first automobile to feature four doors as standard equipment. And in the same year, J. J. Cole instituted a method of "progressive assembly" - a system widely employed at the time and utilizing the same principle as today's assembly line; namely, sending the auto-mobile along a definite path, adding various components in a logical sequence. The now familiar conveyor chain had its counterpart in the "dollies" of former years. The Cole automobile started as a frame and was "wheeled" along the assembly line on two wooden, eight-wheeled dollies.
The Cole Motor Car Company introduced two new models in 1912 the Colonial Coupe, a closed car that sold for $2,500 and the Cole Speedster, a racing car built for "the man who wants to get there first."
Every Speedster was tested on the Indianapolis Speedway and was guaranteed to go 70 miles per hour. All 1912 models were equipped with electric lights, an acetylene gas-operated self-starter, Bosch Dual ignition, and a Schebler carburetor. J. J. Cole was continually incorporating the newest features in the Cole automobile. It was assembled from the best components the industry had to offer. This was brought to light in 1913 when the Cole became the "Standardized Car." In that year J. J. Cole launched a program to glorify the assembled automobile, as opposed to a manufactured automobile, the latter being defined by J. J. Cole as an automobile produced by a concern that manufactured all of the parts but specialized in none of them. As an assembled car, the Cole was advertised as having the best components that specialists were able to build. The components that made up the Cole were declared to be the standards by which all other similar parts in the industry were measured. Hence, the "Standardized Car."
An advertising program of national scope was undertaken to make known the merits of the Standardized Cole. The campaign was launched with a six-page spread in the Saturday Evening Post and followed up locally by the 400 Cole Dealers in 43 states, the District of Columbia, and Canada. In the same year, the Cole was acclaimed "The Choice of American Womanhood"; and 'The Man's Car That Any Woman Can Drive." During the 1913 season the company spent nearly $200,000 on advertising; total selling expenses were much higher.
Production of the Cole had continued to increase, going from 1,316 automobiles in 1911 to 1,991 in 1912 and on to 3,547 in 1913. The company continued to prosper, with earnings for the two-year period in excess of $300,000. And once again it was necessary to expand the assembly and storage facilities, which the company did by building a second factory building adjacent to the main plant. With the completion of this addition, the factory had an annual capacity of 6,000 automobiles.
The outbreak of war in Europe in 1914 caused a temporary business recession in the United States because of the loss of export markets. However, it soon became apparent that the American economy was needed for the production of war materials. Foreign trade was limited only by the number of ocean-going vessels that could be pressed into service.
As the economy recovered from the initial impact of war, the automobile industry shared in the prosperous years that followed. The production of passenger cars increased from 461,500 in 1913 to 1,525,000 in 1916. In 1915 the production of trucks and buses be-came an important part of the auto industry. Also during this period, a marked trend toward the low-priced can was in evidence. In 1916, 71 percent of all cars produced sold for has than $875.
During the latter part of 1914 Cole's chief engineer, Charles S. Crawford, spent the greatest part of his time at the Northway Motor and Manufacturing Company in Detroit, assisting in the designing of a V-8 engine for the Cole automobile. Cadillac had introduced a V-8 in its 1914 model and, since J. J. Cole considered Cadillac his chief competitor, he felt he had to have a comparable engine.
The "Cole Eight" made its debut in January, 1915, becoming the second car to use such an engine. The Oakland automobile soon followed with a V-8 engine, and it is of interest to note that all three V-8's - Cadillac, Cole, and Oaklandówere manufactured by Northway, a subsidiary of General Motors.
In 1915 Cole offered a "full line" of automobiles, producing four, and eight cylinder models. For 1915 Cole headlined the "Boo-hoo Limousine," a large limousine that seated six in the spacious tonneau. As the season progressed, however, and as the new engine became perfected, it was planned to upgrade all models so that the V-8 engine would be used exclusively.
Pioneering proved to be just as troublesome as it often is rewarding. The Cole Motor Car Company had its troubles with the V-8 engine. Two lubrication problems were encountered immediately. The rotation of the crankshaft threw too much oil into the right bank of cylinders, and the enclosed chain-driven fan drive threw oil out of the front of the engine. Among other troubles that were en-countered, the aluminum pistons occasionally expanded to the point where they stuck, thus causing the engine to freeze. It took a full year of modifying to perfect the engine. In the meantime, however, the company had assembled about 1,500 automobiles using the V-8 engine. The Cole Motor Car Company replaced, at considerable cost to the company, many parts of the defective engines and in some cases the entire engine. Further improvements were made on the engine in the early part of 1916. In that year the V-8 engine was used on all models of the Cole automobile, which thenceforth was known as the "Cole Eight."
J. J. Cole was very conscious of the integration that was Wring place in the automobile industry. More and more companies were manufacturing many of their own parts. Manufacturing offered the possibility of improving the quality of the automobile through control of the manufacturing facilities. It also offered the opportunity for reducing the cost of the automobile. Accounting records of the Cole Motor Car Company reveal that the cost to assemble a car was composed of 90 per cent material, 6 per cent labor, and 4 per cent factory burden. The key to the whole operation was volume. The economical conduct of a manufacturing operation clearly called for much larger volume and a great deal of new financing.
During this period the Cole Motor Car Company enjoyed a good reputation, and the possibilities of expansion were considered. Some thought was given to issuing preferred shares but this idea was soon abandoned because it was believed that the method, at best, would provide only a very limited amount of capital.
In the latter part of 1916 the company did offer 2,500 shares of common stock to the public. The offering was made at $120 per share, with the company receiving par, or $100 per share, for the 2,500 shares issued. This sale netted the corporation a quarter of a million dollars. A much larger amount was needed to undertake manufacturing operations on the desired scale. The $250,000 was used to purchase equipment needed in the assembly operation and to add to working capital.
On two different occasions W. C. Durant offered to purchase the Cole Motor Car Company by trading General Motors shares for those of the Cole Motor Car Company. From an examination of the correspondence it appears that the two parties were unable to agree upon the terms of the exchange. There was some reluctance on J. J. Cole's part because he was afraid that the Cole Motor Car Company might lose its identity or that the operation might be moved to Detroit.
Possibly the most promising method of achieving volume production at that time was through the process of merger. The Cole Motor Car Company soon became involved in a proposed ten-company combination. A rather elaborate plan was worked out whereby seven manufacturing companies were to be merged around three auto assemblers, the two principal assemblers being Cole and the Inter-State Motor Company of Muncie, Indiana. The new company was to be called the Cole-Interstate Motor Company.
The proposed company was to have total assets of $10,000,000 and an annual capacity to manufacture 30,000 automobiles. The new company was to issue stock for the real estate, plant, equipment, and inventory of the ten companies. Working capital of $2,500,000 was to be raised through a public offering. If is believed that the ten companies reached an agreement among themselves, but as a group, were unable to reach an agreement with the banking house of Redmond and Company concerning the terms of the proposed financing. Negotiations were dropped at this point and the Cole Motor Car Company continued as an automobile assembler.
The other companies involved in the merger were Inter-State Motor Company of Muncie, Indiana; Warner Gear Company, Peru Auto Parts; Logansport Castings Company: Western Drop Forge; Hoosier Auto Parts, Ruetener Motor Company; Glascock Bros. Mfg. Company.
Production of the Cole automobile had decreased from 3,547 units in 1913 to 1,748 in 1914. As general business conditions rebounded from the 1919 slump, however, Cole's production increased, being 2,703 in 1915 and reaching a new high when 4,415 cars were produced in 1918. The company earned a total of $350,000 during the three-year period and paid cash dividends of almost $300,000. The company's earnings were somewhat below the industry's average in 1914 and 1915, reflecting the low volume of 1914 and the high cost of replacing defective parts and engines in the 1915 models.
In August of 1916, J. J. Cole took his first vacation since the company had been organized. He was gone for slightly more than one year, during which time A. F. Knobloch acted as general manager of the company. Knobloch had managed the Northway Motor Company's factory and was familiar with the Cole operation. He soon discovered that the policies of J. J. Cole were strongly entrenched and there to guide him, for as W. A. P. John, writing in the magazine Motor, said:
"Few cars reflect their builder to greater extent than does the Cole. J. J. Cole, despite his wealth, appears on directorates of no banks or other corporations because his whole heart and soul and all his efforts are concerned in the Cole Motor Car Company. It is his only work. And it receives all his time. In body design, his touch is especially apparent, for the body design catches the public eye and pleases or displeases at a glance. In every department of the Cole factory you will find some personal touch of the Cole president. Every bit of incoming mail is read personally by him. All major purchases are made by him. His influence in sales and advertising is very powerful. All financing is his work."
The guiding doctrine of the Cole Motor Car Company was what J. J. Cole called "The Broad Idea." In his lexicon, a broad idea meant giving competitors full credit for what they had accomplished, a firm determination never to lose a chance whereby the general welfare of the automobile industry could be advanced, and the ability, at all times, to "keep business on a broad, humanitarian service basis." J. J. Cole's ethics were of the highest order. His will to serve the customer was evident in his operations.
Even though J. J. Cole was "on vacation" when the 1917 season opened, his touch in body design was present in the form of a new model, a model that incorporated a two-car-in-one feature and was called "The Cole-Springfield Toursedan." It was designed to give the motorist a closed car in winter and an open touring car in the summer. It had a permanent top and could be transformed to a touring car by storing all the windows and the upper sections of the door frames in provided compartments. The Toursedan was comparable to the present by "hard-top convertible."
The year 1917 also saw America's entry into the war. The facilities of the Cole Motor Car Company were offered to the government for war production. However, since those facilities were not adapted to manufacturing operations, the assembly of automobiles continued. During the course of the war, some Cole automobiles were used by the American forces in France, the most prominent instance being the use of a Cole Toursedan by General Pershing.
J. J. Cole returned to the Cole factory in November of 1917. It was only two months before the New York Auto Show, and he immediately called his executives into conference. He said:
"Boys, I'm back on the biggest job I've ever undertaken. I'm back here to superintend the building of a new automobile. I'm back home after almost a year absence to introduce to the world an absolute departure in motor car designing. I purposely divorced myself from everything that had to do with automobiles for a whole year. I forgot all the traditions. I took a fresh start. Then I looked for something new. As fast and I found it I incorporated it in my plan. I'm back now with a complete program."
And, as one executive later recalled: "Bit by bit he unfolded the ideas he had conceived for building his new ear. It sounded hike a fairy romance. It was a glorious experience. So vividly did he picture it that we weld fairly see that one grow into being there before us. And he mid, "We are going to call it the Cole Aero-Eight. We'll have one ready for the New York Show."
True to his word, the Cole Aero-Eight was displayed at the New York Auto Show. It wee credited with reflecting the most advanced ideas in automotive designing ó"actual developments of the present great war." The aerotype body featured low beveled pooch, high cowl, massive fenders, and "keen, sharp lines." The Cole V-8 engine for 1918 had "mom than eighty actual horsepower." The engine retained the aluminum alloy pistons and added a new fea-ture, the counterbalanced crankshaft.
During the period from 1917 through 1919 the operation of the Cole Motor Car Company progressed in an orderly fashion, production decreasing slightly in 1917 with the outbreak of war and, because of the material shortages caused by the war, decreasing still further in 1918, when only 2,939 automobiles were produced. With the signing of the Armistice, however, the company was in a very favorable position. The assembly operation had not been altered by the war and the company was in a position to produce at capacity in the 1919 seller's market. A new high in production was reached in that year, when 6,255 automobiles were assembled. At that time Cole was the second largest producer of quality automobiles in the United States, being surpassed only by Cadillac, which produced 19,851 autos for the year.
The company prospered during the three-year period, earning almost $3,000,000 before taxes and $1,718,000 after taxes. On December 31, 1919, the company had total assets of $4,690,000 and the stockholders' equity was $2,256,000.
During the postwar boom, the various models of the Cole were selling from $3,250 to $4,450; and they were selling fast. In 1919 sales were limited only by the factory's producing capacity. Orders went unfilled. The swelling demand for automobiles led J. J. Cole to plan for a doubling of the plants capacity, and a $1,000,000 contract was let for that purpose. When completed, the new facilities would permit the assembling of 12,000 automobiles per year.
The production schedule for the first six months of 1920 was prepared in July, 1919, and firm purchase contracts were made on the basis of an estimated production of 5,100 automobiles in the six-month period. As the very successful year of 1919 unfolded, the production schedule was increased to 1,000 cars per month for the entire year of 1920 and contracts to obtain the necessary parts to assemble 12,000 automobiles were made. As the boom gathered momentum in the early months of 1920, the production schedule was again increased and orders were placed on the basis of 15,000 auto-mobiles being produced in 1920, the company planning on more than doubling its 1919 record of 6,255 automobiles.
The company had a record first quarter in 1920 when 2,806 automobiles were produced. In line with the expanded production, the advertising program of the Cole Motor Car Company and its 1,000 dealers was increased substantially. In spite of the very liberal expenditures for advertising on the part of the Cole Motor Car Company and a great many other American manufacturers, however, the American economy began to slow down. After reaching a peak in May, activity declined gradually for several months and then the decline gained momentum. By the end of the 1920 season the demand for high-priced cars had suffered severely, and the market had literally fallen out from under the Cole Aero-Eight. For the month of December, Cole produced 30 automobiles. Production for the year was 5,838 units, with 85 percent of them being produced in the first six months.
At the year end Cole's balance sheet revealed that it was in a position similar to that of many other firms at that time, namely, inventories of high-priced goods were enormous. In Cole's case the condition was acute because the inventory was composed of parts that were for the 1920 model.
The depression continued on into 1921 and J. J. Cole reduced prices substantially. In 1921 production for the industry was off 23 per cent while Cole's production had decreased 70 per cent, production being only 1,722 automobiles. The large inventory of parts was still on hand and the 1922 models were necessarily designed to use them.
Following the hectic year of 1921, the automobile industry recovered rapidly. In the course of recovering, however, many companies were left by the wayside. The sale of luxury cars was actually declining at a time when the low-priced market was expanding rapidly.
The Cole Motor Car Company's production did not increase in 1922, it declined to 1,522 cars in 1923 and was halted in October of 1924 after 932 automobiles had been produced.
During the last three years of operations the Cole Motor Car Company had incurred operating losses of $1,800,000 and had paid cash dividends of $200,000. The stockholders' equity on December 13, 1924, was approximately $1,250,000, a decrease of about $2,000,000 in three years. The price of the Cole V-8 had been reduced to the point where the factory selling price of the car was insufficient to cover the cost of material, labor, and factory overhead, leaving no margin whatsoever to cover the general administrative and selling expenses of the firm. In spite of these drastic price reductions, however, volume had not increased. J. J. Cole, who at all times during the company's existence had owned slightly more than 50 per cent of the Cole stock outstanding, was of the opinion that to continue would only endanger the remaining assets of the corporation. When the last automobile left the factory in October, 1914, plans were made to liquidate the company.
The Cole Motor Car Company was solvent on December 31, 1924, and remained so during a five-year liquidating period. All debts were paid in full and the stockholders realized $39.08 per share on the 20,800 shares of $100 par value stock outstanding. The real estate of the Cole Motor Car Company was sold at public auction and was purchased by the Cole family. Since that time, the family has organized Cole, Inc., and is presently engaged in the business of leasing and managing industrial real estate. The Cole plants are still an important segment of industrial activity in Indianapolis.
There are a number of reasons that could be given for the withdrawal of the company from the automobile industry. The dealer organization had crumbled as a result of the postwar depression; the company was caught with an excessive inventory in 1920; and the V-8 engine had again given the company trouble in 1923. Not to be overlooked, however, was the general industry situation, for the plight of the Cole Motor Car Company was similar to that of many others during the early 1920's. Ten per cent of all automobile manufacturers failed in 1922; 15 per cent in 1923; and 21 per cent in 1924. The automobile industry was witnessing the rapid extermination of the small assemblers. The large, integrated companies were demonstrating their ability to mass produce in a highly economical manner. The low-priced automobile was being mass produced for a mass market, and just as the craftsman gave way to the machine, an did the small assembler give way to the large, integrated manufacturer. Progress is the essence of such an evolution.
J. J. Cole and the Cole Motor Car Company were a real part of this evolution. Coles broad humanitarian outlook on business created a lasting effect on many of his associates and on the business community in general; he inaugurated many "firsts" in the automobile industry, and the Cole automobile had led the way in body design because J. J. Cole looked upon an automobile as a work of art. He said:
"There can be art in the milling of a motor car as truly as there can be art in the making of a picture, or a poem, or a piece of music: the only difference being that in the case of the motor car, your art must be practical."
The principles espoused by J. J. Cole have lived on and been carried far by the modem industry, though the tangible reminders of this meaningful chapter in automobile building history are today confined to a factory basement on East Washington Street in Indianapolis. Here may be seen six Cole automobiles in a perfect state of preservation shining examples of a by-gone era when the Cole was the pride of the city and the second most numerous quality automobile produced in the United States.