Two once great automobile manufacturers had their fate decided in bankruptcy court last week. Chrysler, after stiffing dealers, secured creditors, unsecured creditors, pensioners, and products liability claimants, was unceremoniously dumped onto a willing Fiat. The dowry was paid by taxpayers.
On Monday, June 8, 2009 a bankruptcy judge in Grand Rapids, Michigan approved the sale of Checker Motors’ plant to two Canadian parts manufacturers for $1.6 million. They will close the facility at the end of June, lay off the remaining 125 workers, and move the tools and equipment to Canada. Checker Motors of Kalamazoo, Michigan will cease to exist after 87 years.
The company was, ironically, founded as the outgrowth of $15,000 in bad debts. Morris Markum collected on the assets, fulfilled a contract, and Checker Motors was formed, originally under the name Parmalee. From 1922-1959 it manufactured only commercial taxi cabs, and in 1960 entered the consumer market on a small scale with the Super Superba and Checker Marathon. They were distinctive, a throwback to the days when cars were made of heavy metal rather than thin sheets of tin.
The iconic Checker cab was a sturdy (that’s a good word for a cab plying the streets of New York), non-aerodynamic cab. Its ruggedness was because it was designed from the ground up to be a taxi cab rather than as a regular passenger car modified to be a cab. A stretched version, predecessor of today’s airport limos, was the Checker Aerobus.
Checker Motors owned operating cab companies under various names, such a Checker Cabs and Yellow Cabs. It obviously manufactured the cabs driven by these companies. We call it vertical integration, but the Justice Department called it monopolization. Checker cab companies owned 86% of the cab licensees in Chicago, 15% in New York City, 100% in Pittsburgh, and 58% in Minneapolis.
The biggest problem with the Antitrust Division of the Justice Department is that it often doesn’t bring enough actions. For example, The Johnson Administration brought suits against AT&T and IBM, but decided not to prosecute GM for monopolization or attempted monopolization - unfortunately for the long term viability of Detroit. (As a sidebar, IBM won the case, enriching the partners at Cravath, Swain & Mooree, and AT&T settled, breaking up the phone company into Little Bells. The pieces have since been reassembled into AT&T by Ed Whitacre, Jr., ironically recently named as the new Chairman of GM).
This time though, The Justice Department brought one suit too many against a minnow in a Big Three sea of whales. Checker ultimately won the suit in 1948, but the writing was on the wall.
It subsequently filed its own antitrust suit in 1965against Chrysler, which was giving $183 rebates to cab companies which purchased Plymouths. Checker lost.
Competition finally caught up to Checker, which ceased manufacturing vehicles in 1982. It lacked the economies of scale possessed by the Big Three. It continued with its other major division, parts manufacturing. Its biggest customer is GM, which explains the January 16, 2009 bankruptcy filing.
The last Checker was retired from service in New York in 1999. It received an obit in the New York Post. If you have never seen a Checker Cab, check out reruns of Taxi. The cabs in the garage are Checkers.
Checker is notable in the Civil Rights Movement in America. It was the first to hire African American drivers and the first taxi company to require their drivers to pick up all fares – not just whites.
Goodbye Checker; you deserved a better fate.
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