Comeback at Continental

Most Detroiters could hardly believe it. The company lost $12,000,000 and most of its customers in the depression; it was $1,000,000 in hock to RFC; it was on the auction block only two and a half years ago. Yet last week this same outfit was sprucing itself to receive the Army-Navy Production Award, highest U.S. recognition for excellence in war-goods production. Its name: Continental Motors, manufacturer of engines for tanks, airplanes, trucks, industrial equipment. Its boss and spark plug: husky, harddriving, cigar-chomping Clarence ("Jack") Reese.

Jack Reese joined Continental as purchasing agent in 1931, partly because he remembered the glory decades when the company's famed "Red Seal" engines were used by 90% of some 600 independent automakers. But the glory was gone. Instead, the company blew its cash on fancy airplanes, a fleet of chauffeured limousines, a fling into the highly competitive, low-priced passenger-car business. In 1939 the big boot of RFC was evident when the old bosses faded out and Reese became president.

Reese went to work with a staff of efficiency engineers, reorganized the company from basement to smokestack. He built up a glib-tongued sales staff, put zip into a faltering aviation-engine division, concentrated all operations in the Muskegon plant, slashed monthly operating expenses $75,000. Soon bigtime customers like Sears, Roebuck, J. I. Case and Checker Cab came back into the fold. In 1940, sales rose 50% to $10,908,000 and the company earned $612,000 v. the preceding year's $215,000 deficit.

Now Continental has about 10,000 employes, it is the No. 1 maker of 440 h.p. air-cooled radial tank engines, ships thousands of them each month to Chrysler, American Locomotive, other tank builders. At another plant, workers piece together hundreds of 275-h.p. radials for training planes, scores of compact "Red Seal" engines for trucks, busses, mining equipment. Reese spent $3,100,000 on betterments last year, is spending $700,000 this year. Meanwhile he is hard at work testing a huge, 2,000-h.p. liquid-cooled engine designed for the mammoth cargo planes now planned by many U.S. aircraft makers.

This gusher of war work has boosted Continental sales and profits to record peaks. Last year the company cleared $3,232,000 on sales of $31,565,000. Because the company is a prime Air Corps contractor, this year's figures are secret. One clue: because skyrocketing production has greatly reduced unit costs, the Army last March was able to chop $40,000,000 off the company's backlog by merely shaving prices.

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