Receivership Declared at DeLorean
February 20, 1982 | by STEVEN RATTNER, Special to the New York Times www.nytimes.com/1982/02/20/business/receivership-declared-at-delorean.html LONDON, Feb. 19— John Z. DeLorean, the flamboyant American entrepreneur, in a move that amounted to a declaration of bankruptcy, called in receivers today for his Belfast auto maker in a last-ditch effort to keep a slimmed-down version of the company operating. In the face of a weak car market -the $25,000 stainless-steel two-seat sports car is sold exclusively in the United States – and what it viewed as overambitious plans, the British Government, which has already invested $150 million in the project, refused to grant any more aid, ending Mr. DeLorean’s role in car production. Mr. DeLorean, an engineer who had been a rising star in the General American Motors lost $47.2 million in the fourth quarter and $136.6 million in 1981. Page 36. Motors executive suite until he stunned Detroit by quitting his $650,000 job in 1973, had tried to start the world’s first major new auto maker in decades in a strife-torn region of Northern Ireland, where the previous Labor Government had given generous assistance in the hope of providing jobs in an area of 20 percent unemployment and resuscitating the economy. Today’s development threw into doubt the fate of that effort. Not since the Chrysler Corporation was begun in 1920 has a major new American car maker met long-term success. Nevertheless, when he began producing his low-slung, high-performance, safety-oriented car last spring, Mr. DeLorean predicted that the DeLorean would revolutionize the industry. But after an encouraging start, sales slumped badly, and only half the 7,500 cars shipped to America have been sold, even discounted. Nevertheless, Mr. DeLorean said at Claridges Hotel, shortly before departing for New York by Concorde: ”I am delighted at the outcome.” (”We came out largely unscathed,” Mr. DeLorean said in an interview late Friday in New York. ”The Government has the problem, and we have the fun end of the business.” He said that the American parent company, the DeLorean Motor Company, was not affected by the agreement restructuring DeLorean Motor Cars Ltd. Mr. DeLorean, who owns about 80 percent of the shares, said that the American company, which controls the sale and licenses the manufacturing of the cars, would also be relieved of a $70 million obligation to guarantee notes used to build the plant if he put up $5 million, which, he said, he planned to do by next week.) Today, the two receivers, from the firm of W.H. Cork, Gully & Company, estimated that they would have to put together financing of between $75 million and $95 million in the next five weeks, to keep the plant operating. The goal is to sell 8,000 cars a year, instead of the 20,000 envisioned by the 56-year-old Mr. DeLorean. Charges of Mistakes In denying further assistance, James Prior, who as Northern Ireland Secretary effectively governs the troubled province, said bluntly that ”very considerable management and marketing mistakes have been made over the estimate of sales.” ”The time had come when the Government just had to say no,” Mr. Prior, a Conservative, told the House of Commons this morning. ”I do not think there would have been any credibility left in a whole range of matters in which one is seeking to try to help in Northern Ireland if we had taken any other course,” he said. Sir Kenneth Cork, who was joined as receiver by Paul Shewell, said that a number of expressions of interest had been received from businessmen hoping for ”a clean new company not loaded with an overweight debt.” ”There was a dichotomy of management,” Sir Kenneth said. ”I think it was too extravagant a setup for the size of the business.” But he added: ”The receivers believe that there is a market for these motorcars, and it would be a great pity if the skills which have been learned in Belfast were lost.” He said that he would apply to the Government for a short-term working grant. Lien to Government The receivership means that the British Government has effectively written off its investment. However, as the principal creditor, the Government would have a lien on the assets that could be sold or leased to the operating company. Until a rescuer comes forward or the receivers give up, the plant will continue at its current reduced level of output, and the 1,500 remaining jobs will be temporarily preserved. Even before the collapse in sales, Mr. DeLorean had been seeking further British Government aid to develop a second, larger model automobile. The Government had come under considerable pressure not to grant the request because of disclosures that DeLorean Motor Cars Ltd., had just $1 million of private investment, none of it from Mr. DeLorean. In Belfast today, the reaction was almost relief among a work force that had been expecting a complete shutdown. ”It is an encouraging sign at least for the company that Sir Kenneth has given a commitment to maintain it,” said George Clarke, the Transport Workers Union shop steward. —- Statement by DeLorean Mr. DeLorean said in a news conference at the company’s New York headquarters yesterday, that the decision gave the auto maker ”a new foundation” and that it was now ”in significantly better financial shape.” He said he did not intended to sell the company but to get money from American investors to help the company in Belfast. He called ”the continuity of production, sales and service for the DeLorean car” insured.
Central Jersey distribution point for import sports cars
August 13, 1981 | The Courier-News (Bridgewater, New Jersey) | by CARL AYERS; Courier-News Staff Writer Stainless steel autos filling Bridgewater lot The first shipment of the sleek DeLorean sports cars arrived this week in Bridgewater, which will serve as the eastern distribution center for the $25,000 imports. Brought in from Northern Ireland, the cars are lined up on the old Dooley Chevrolet lot at 385 Route 202-206 to be readied for delivery to dealers. There should be 400 on the lot by the end of the week. The unpainted, stainless steel cars, which a spokesman admitted were made with the affluent in mind, are manufactured by John Z. DeLorean, a part-time Bedminster resident. They can hit a maximum speed of 125 mph. DeLorean, a former high-ranking executive at General Motors Corp., shocked the auto industry eight years ago when he left his lucrative job at GM to start his own company. Another surprise came later when he obtained financial backing from the British government to help construct the company’s assembly plant in Belfast. Last April, he and his wife, fashion model Christina Ferrare, bought the 430-acre estate of the Cowperthwaite family for $3.4 million — reportedly the highest price ever paid for a Somerset Hills residence. They live in New York and use the estate’s Lamington House as a weekend and summer vacation home. The automobile lot in Bridgewater, which is being leased from its current owner, is the site of the firm’s Quality Assurance Center for the eastern half of the country. DeLorean could not be reached for comment, but Michael Knepper, a spokesman for the company, said the facility is being used to “make sure everything fits.” The cars get a final cars get a final check before being shipped to dealers east of the Mississippi River. Once the facility is fully staffed, which Knepper said should be within a week, it will take about five days for a shipment of cars to be checked out before being trucked to dealers. He said he did not know how many people would work at the site. “I would hope by the end of next week we’ll have cars being shipped out to dealers,” he said. The center is one of two in the country, he said. The other is located in California and is the distribution point for cars being sent to dealers in the western part of the country. He said that 8,000 of the autos have already been bought by dealers throughout the U.S., who have in turn sold their orders of the highly touted sportscar. “Each dealer has made a minimum investment of $25,000 in equity stock in the company,” Knepper said. The dealers also had to purchase some special tools and spare parts and guarantee to sell between 50 and 150 of the cars within the first two years they are available. The car’s black interior is a mixture of leather and vinyl. The carpet is a light shade of gray and the two bucket seats are genuine leather. Standard equipment includes an AM-FM stereo radio and cassette player, air conditioning, digital clock and electronically controlled windows. It has a standard 5-speed transmission; a 3-speed automatic transmission is available at additional cost. The engine, in the rear, is a V-6 built in France by the consortium of Peugeot-Rennault-Volvo. The company says the fuel-injected engine gets 19 miles per gallon (mpg) in the city and 29.4 mpg on the highway. The automatic transmission engine gets 18 mpg in the city and 24.5 mpg on the highway. There are 14 dealers of the DeLorean cars in New Jersey, including Autosport on Route 22 in Somerville, Knepper said. More than half of the 345 dealers across the nation are GM distributors. The car, the only model produced by the company, has been on sale out West since June. It is now being sold only in this country, and the company is completing arrangements to make the cars available In Canada and Europe, Knepper said. Dealers have received 12,000 orders for the cars from customers who had to deposit between $1,000 and $5,000. Knepper said the company expects to sell 20,000 cars next year. “The only problem we have is building them fast enough.” He said people placing orders for the car might have to wait two months to a year before delivery. Knepper said the car’s “gull-wing doors” — which lift up rather than swing out — are examples of aspects of the auto that attract the people “who buy quality no matter what the price.” Although they are not painted, the cars are “brushed stainless steel,” which gives the autos a silver color. DeLorean left his $650,000 a year job at GM in 1973, citing the company’s growing dissatisfaction with his desire to build smaller and sportier cars. The British government, anxious to aid the economically depressed Belfast area, offered the DeLorean Motor Co. $160 million in grants, loans and equity for the company if its production plant were built in the troubled Northern Ireland city. The 56-year-old DeLorean and Ferrare, 30, have two children, Zachary, 9, and Kathryn, 3. One of the world’s highest paid fashion models, Ferrare was on the March cover of Harper’s Bazaar. She has also been on the cover of other top fashion magazines.
The $200 Million Car
When John Z. DeLorean startled Detroit by quitting his $650,000-a-year executive position at General Motors, it was with the idea of starting his own car company. This was not thought of as the wisest of decisions. No one in his right mind started his own car company anymore. Remember the Kaiser‐Frazer? The Tucker Torpedo? The Bricklin? But now, six years later, DeLorean’s fantasy has_materialized in the form of a two‐seat sports car temporarily named the DMC‐12. By the beginning of next year, the DMC‐12 is scheduled to roll off a Northern Ireland assembly line straight into the hot exhaust fumes of automotive‐industry competition. DeLorean follows in a classic American entrepreneurial tradition, but his undertaking is still regarded as an outrageous gamble. The last American to start an independent mass‐produced automobile company, and succeed, was Walter P. Chrysler back in 1925. Last year, American auto dealers sold a record 15.4 million vehicles and G.M., Ford and Chrysler maintained their spots in the top 10 of the Fortune 500 list of major American corporations, though Chrysler says it needs a $750 million Government loan to stay in the competition. Yet DeLorean believes he and his new DeLorean Motor Company can overcome the odds against him in the Detroit and foreign‐car markets by concentrating on the prosperous but slightly less competitive American sports‐car field, in which his goal is to sell. So far, he has disproved most Wall Street and Detroit analysts, who thought he wouldn’t get enough financial backing in the first place. He has, in fact, raised $200 million. In large part, it was his 17‐year record at G.M.’s Pontiac and Chevrolet divisions, where he set longstanding sales records, which lured investors. Some 400 of them include Johnny Carson, who will also be a D.M.C. spokesman; there are also executives of Merrill Lynch and Sears, Roebuck, about 300 car dealers across the United States and the Government of Northern Ireland. DeLorean put up $4 million of his own. The birth of the new American sports car really began when General Motors made the mistake of promoting John DeLorean in the fall of 1972. After just three years of running Chevrolet — the company’s largest division — he had turned sagging sales into record profits, and so he was made a group vice president. DeLorean tried to resist. “Nobody had ever heard of that before,” he said. Not that this mattered. The style of this 6-foot-4 misfit — his long hair, Gentlemen’s Quarterly dress, his preference for foreign sports cars, for buying into sports teams like the Yankees and the San Diego Chargers, for dating actresses like Ursula Andress and Candice Bergen, between his three marriages — hadn’t conformed precisely with the anonymous, blend-with-the-wallpaper-G.M.-executive But DeLorean was talked into the promotion and the Detroit intelligence network had him, at 48, all but appointed G.M.’s next president. He was bored by the upper echelon, however, by what he saw chiefly as attending meetings and pushing paper. He also realized that part of his leverage was gone. “In the past, the main defense latio worked had for the way I lived and worked was that I’d made a helluva lot of money for the company,” he said. “Suddenly, ‘When you’re a staff guy, your future is how much they like you.” In fact, one of his staff bosses had told him right off: “Now we’re expecting you to blend in.” So he quit the company in April 1973, shortly after he married a 23-year-old model, Cristina Ferrare. He then spent a year as president of an American business group that seeks to find work for the hard-to-employ. He also began studying the problems and possibilities of starting a car company. The moment G.M. found out about that, it canceled his remaining $600,000 in bonus pay. With that rather important bridge burned, DeLorean realized he had to speed up or get out and walk; he chose the former, and, as the complete car expert (he once owned 40 cars and trucks), selected the sports car as the vehicle for risking his reputation. For one thing, the American sports‐car market was growing (from 6.3 percent of United States car sales in 1972 to 12.4 percent in 1977) and its affluent clientele was less affected by recessions and fuel crises. From his years at Chevrolet, DeLorean also knew that G.M. sold out its 40,000 Corvettes each year and, in fact, “we had to send back 8,000 sold orders a year because we couldn’t deliver them.” Another revelation came during the 1973 OPEC oil crisis: while large segments of the auto industry slumped by 30 percent, “Corvette and BMW went[] For a new company planning to do battle against giants, it made sense to attack the smallest link in G.M.’s mighty chain. The Corvette amounts to 0.8 percent of the company’s 6.8 million cars and trucks produced last year, so Corvette’s tooling costs are higher than most of the mass‐produced models, giving DeLorean a chance to compete. Otherwise, he said, “if you try to play them in the Super Bowl, they’re going to kill you.” The DMC‐I2 will be in the Corvette / Porsche 924 $14,000 price range. At this end of the scale, profit margins are also higher. DeLorean explains that, if you compare the fenders and bolts on an old Chevy Vega with a four‐cylinder BMW, “there’s almost no difference on paper. They’re made within a fraction of the same percentage of rubber, copper, aluminum, plastic, vinyl and steel.” Yet, while their costs of assembly are also about the same, there are astonishing differences in the performances of the cars, their prices and their profitability, principally because of design and prestige. “At that point Chevys were selling for $1.25 a pound,” DeLo“ and BMW’s about $6 or $8.” To get his car into the $8-a-pound price range, DeLorean, who started out himself as an auto engineer, persuaded one of G.M.’s top engineers, William T. Collins, to leave the company after 20 years, and Collins teamed
DeLorean cancels car plant in Puerto Rico despite loan
August 2, 1978 | The Akron Beacon Journal WASHINGTON (AP) — The Commerce Department confirmed Tuesday a proposed sports car plant in Puerto Rico will not receive $40 million in government-backed financing because its builder has cancelled the project. Last Thursday, the department released a detailed announcement of the approval of federal loan guarantees totalling $40 million for the plant, to be built by former General Motors executive John Z. DeLorean. Up the ladder Carl J. Smeller has been named sales manager of Packaging Corp. of America’s Rittman plant. Jens A. Hansen has been appointed director of taxes for General Tire. Richard E. Amos was appointed assistant administrator of Doctors Hospital of Stark County. Marilyn J. Mekeal has been appointed Hudson branch manager by Marsh & McLennan Inc. Edward J. Clark, formerly of Cuyahoga Falls, has been named executive vice president of marketing and research and development for Haworth Inc. of Holland, Mich., maker of open office interior systems. NRM Corp. has appointed Daniel Shiclunan corporate director of research and development and limas A. Koewler director of sales and marketing. Anita Levin has been named director of sales training and development for Goges & Co. Realtors. William A. Shaffer has been named marketing manager-accelerators by B. F. Goodrich Chemical Division. Edward Baumgartner has been named field sales manager for new products and specialty chemicals. Both are new positions. The guarantees would have been among the largest ever granted for the start-up of a new business, although Lockheed Aircraft once received a $250 million loan guarantee to help stay in business. DeLorean had planned to build about 30,000 models annually of the sports car known as the DMC-12, with a retail price of between $12,000 and $13,000, according to reports. The plant was to be located at the site of the old Ramey Air Force Base near Aguadilla on Puerto Rico’s economically-depressed northeast coast, where unemployment is over 30 percent. The island government would train the 2,000 workers needed for the plant. But DeLorean apparently began to have second thoughts about the project. ON MONDAY, Puerto Rico Gov. Carlos Romero-Barcelo said DeLorean had abandoned plans for the plant in Puerto Rico in favor of a site in Northern Ireland. A statement issued Tuesday under the name of Assistant Commerce Secretary John T. Hall said, “The DeLorean Motor Co. decided not to establish an assembly plant in Puerto Rico because it was unable to raise the necessary equity.” Hall is in charge of the Economic Development Administration (EDA), which was to guarantee half of the loan. The Agriculture Department’s Farmers Home Administration was to guarantee the other half. “EDA is, of course, disappointed for the people of Puerto Rico, who would have benefited from the 2,000 jobs and related expenditures associated with the plant,” the statement said. ROMERO-BARCELO has threatened legal action against DeLorean, calling his move “an open violation of good faith.” In addition to training the workers, the island government had also agreed to loan DeLorean $17.7 million for the project, the total cost of which was estimated at $85.6 million. A spokesman for the EDA, Tom Register, said there was “no legal problem I’m aware of” as far as the EDA was concerned. But he did indicate the agency was embarrassed at the sudden turn of events. “We approved the project, and obviously any time we approve a project, we wouldn’t do so if we didn’t expect it to go into fruition,” he said.