Checker Motors Corp

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Checker Motors Corp

2016 North Pitcher Street
Kalamazoo, Michigan 49007-1869
U.S.A.
Telephone: (269) 343-6121

Wholly Owned Subsidiary of CC Industries, Inc.
Incorporated: 1922 as Checker Cab Manufacturing Co.
Employees: 300
Sales: $50 million (2007 est.)
NAIC: 336370 Motor Vehicle Metal Stamping

BEGINNINGS

YELLOW CAB CO. ACQUIRED IN 1929

MARKIN BUYS CORD IN 1936

MODEL A8 INTRODUCED IN 1956

END OF CAB PRODUCTION: 1982

PRINCIPAL COMPETITORS

BEGINNINGS

Checker Motors was founded in Joliet, Illinois, by Morris Markin. Born in 1893 in Smolensk, Russia, Markin had immigrated to the United States at age 19 to join an uncle in Chicago, where he worked as a tailor before buying the business on his employer’s death. With one of nine brothers he helped bring to the United States, he expanded the operation into a trouser factory that won a lucrative contract to produce clothing for the U.S. Army during World War I. Markin also lent $15,000 to an auto body manufacturing firm owned by Abe Lomberg, which he took control of when Lomberg could not keep up with payments. Markin Auto Body Company, as it became known, made bodies that were grafted to undercarriages built by Commonwealth Motors Co. to produce Mogul taxicabs, which were mainly sold to the second largest taxi operator in Chicago, Checker Taxi Co. When Commonwealth entered bankruptcy in late 1921 Markin bought it, and in early 1922 he merged it into Markin Auto Body to form the Checker Cab Manufacturing Co.

Production began at three cabs per day, but as sales increased to clients beyond Chicago the firm began running seven days a week to keep up with orders. By the spring of 1923 some 600 cabs had been sold in New York alone through a newly established affiliate called Mogul-Checker Cab Sales Co. In April the company moved to larger quarters in Kalamazoo, Michigan, where Markin bought the manufacturing facilities of Dort Body and Handley-Knight Motor Cars and lured away key employees from crosstown rival Barley Motor Car Co. The first Kalamazoo cab was produced in June, and the firm, which employed 700, introduced the new E series model the following year, with a limousine selling for $2,340 and a Landau priced at $2,440.

In the spring of 1924 Morris Markin was convicted of violating Illinois securities laws and sentenced to 30 days in jail and fined $2,000. He stepped down as president of the firm, though he later took the title of vice-president. Markin’s home had been bombed a year earlier in the midst of the increasingly violent “taxi wars” between the various cab operators, which had reportedly influenced his decision to relocate the company to Kalamazoo. For 1924, vehicle production reached 4,000.

In 1925 Markin founded the American Country Insurance Co. to sell insurance to taxi drivers. The firm’s cabs were becoming known for their durability, and they were in widespread use in a number of large cities around the United States including Los Angeles, New Orleans, Minneapolis, Cleveland, and Kansas City.

Sales tapered off in the late 1920s despite the introduction of a new six-cylinder engine in 1927, and in 1928 the firm again completely redesigned its vehicle line to create the larger K series, which sold well.

YELLOW CAB CO. ACQUIRED IN 1929

In 1929 an investment group led by Markin bought a 60 percent share of the Yellow Cab Co. of Chicago, which provided a new revenue stream and increased the firm’s customer base, Yellow having by this time abandoned its own cab manufacturing operation.

Checker also took full ownership of its New York-based sales unit during the year, which had sold some 8,000 cabs in the area, more than a third of the total for the city. Checker stock was being traded on the Midwest and New York stock exchanges.

In 1930 Checker bought controlling interest in the Parmelee Transportation Co., which operated a fleet of 7,500 cabs, trucks, and buses in Chicago, Pittsburgh, and Minneapolis, as well as the Motor Cab Transportation Co., which had 2,100 cabs in New York. A year later Morris Markin, who had moved to New York, formed the Empire Cab Association there to represent independent operators who were struggling to compete with larger concerns.

Although the stock market crash of 1929 had a severe impact on vehicle sales, Checker was one of the few auto manufacturers to remain profitable into the 1930s. It began to falter in 1932, however, and that year the firm closed for several months due to lack of orders. In January 1933 production resumed with the introduction of the eight-cylinder T series cab, and 500 workers were recalled.

Seizing on the financial crisis, Checker’s board fired Markin, but he quickly exercised an option to buy 60 percent of the firm’s stock, which board members had believed he could not leverage. He was backed by industry magnate E. L. Cord, whose numerous auto and aviation interests included the company that made Ly-coming engines, which Checker cabs utilized. The firm was soon reorganized, with Markin named president and Cord board chairman. Checker subsequently began making Saf-T-Cab taxis for Cord’s Auburn Motor Car Co., and production rose during the mid-1930s, which saw new vehicles introduced including six- and eight-door limousines.

MARKIN BUYS CORD IN 1936

In early 1936 Morris Markin bought Checker back from Cord, who a year later would be forced to sell all of his automotive interests to settle charges that he and Markin had manipulated the price of Checker stock. Markin himself was able to avoid further sanctions and remained in charge of the company.

KEY DATES

1922:: Checker Cab Manufacturing Co. is founded in Joliet, Illinois.
1923:: Operations move to Kalamazoo, Michigan.
1929:: Firm buys 60 percent of Yellow Cab Co. of Chicago.
1930:: Majority interest in Parmelee Transportation Co. is acquired.
1930s:: Company gains control of Checker Taxi of Chicago.
1952:: Expansion adds new offices, manufacturing facilities, and test track.
1956:: Classic Model A8 cab is introduced.
1958:: Company changes name to Checker Motors Corp.
1964:: Firm renames its cab and passenger car line the Marathon.
1970:: Morris Markin dies; son David Markin assumes leadership role.
1982:: Production of cabs ends as firm focuses on making parts for other companies.
1989:: International Controls buys firm; Checker Taxi is sold, West Virginia plant is added.
1996:: Checker is acquired by CC Industries; Yellow Cab is sold, West Virginia plant is closed.

By the late 1930s the firm had gained a sizable stake in the Checker Taxi company of Chicago and also branched out to make vehicle trailers for Sears, Roebuck as well as truck bodies for Ford, Dodge, and Hudson. In 1940 the company closed the former Dort facility and consolidated its manufacturing operations in the larger Handley-Knight plant on North Pitcher Street, where during World War II a record 800 employees produced vehicles and trailers for military uses including tank recovery and fuel delivery.

After the war the firm began a complete redesign of its cabs, though the rear-engine and front-wheel-drive concepts that resulted were abandoned for a modified version of the prewar car. Checker also manufactured buses for several years beginning in the late 1940s, but quit when it was unable to make headway against more established competitors.

During the Korean War the company won $22 million worth of military contracts, and in 1952 Markin took the profits from this work to expand, adding two manufacturing facilities, a new office building, and a test track.

In 1954 New York’s taxi rules were changed to allow smaller vehicles to be used as cabs, which hurt the firm’s near monopoly there. Its New York cab company subsequently began selling operating licenses (also known as medallions), and over the next decade sold 4,000 of them for between $10,000 and $21,500 apiece.

MODEL A8 INTRODUCED IN 1956

New York’s regulation changes also forced another redesign of Checker’s cabs, and after closing the plant for a year to retool, the firm introduced the Model A8 for the 1956 sales year. The new car featured coil spring suspension, better driver visibility, and optional power steering, power brakes, and automatic transmission. Its roomy back seat offered plenty of headroom as well as folding “jump seats” to accommodate extra passengers in a pinch, while bolt-on fenders made repairs easier, and less expensive, to accomplish. With a few modifications such as quad headlamps, added in 1958, this basic design would remain unchanged for more than two decades, though continuous refinements were made in response to driver suggestions.

In 1958 the company changed its name to Checker Motors Corporation, and late the next year introduced a consumer version of its cab called the Superba, which was offered through a small dealer network in four-door sedan and station wagon models, with a list price just over $2,500. The company had occasionally sold small numbers of cabs for use as passenger cars in the past, but Markin projected the better promoted Superba might sell 30,000 per year, about five times the number of cabs.

Despite efforts to promote the conservatively styled car’s roominess and durability, only about 1,000 Super-bas were sold in 1960, which grew to nearly 3,000 in Checker’s record sales year of 1962, when a total of 8,173 cars were built. A year later the deluxe Superba model was renamed the Marathon, and in 1964 all Checker autos were given this name. The firm also switched from engines made by longtime supplier Continental to ones from Chevrolet, with both six-cylinder and eight-cylinder models offered.

During the early 1960s Checker formally merged with Yellow Cab of Chicago, which had $16 million in revenues and 3,000 employees. The firm also introduced a new line of six- or eight-door airport limousines called the Aerobus, several hundred of which were built each year.

In July 1970 company founder Morris Markin died at the age of 77, and his son David took control of the firm. During the year the company ended a six-year, $45 million lawsuit against Chrysler Corp. over alleged restraint of trade. Details of the out-of-court settlement were not revealed.

In the 1970s Checker sought to diversify by increasing the amount of work it did under contract for other automakers. By 1975 sales stood at $78.6 million, with a profit of $313,000. Annual production of vehicles of all types was just under 5,000.

The firm was struggling to keep its share of the market in the face of less expensive competitors and rising gas prices, with a Marathon getting about ten miles to the gallon in city traffic. Seeking to revive its cab business, plans were announced to build a new fuel-efficient diesel-powered model adapted from the Volkswagen Rabbit.

In March 1977 former General Motors executive Edward Cole and East Coast Cadillac dealer Victor Potamkin reached an agreement to buy half of Checker for $6 million, with Cole to serve as CEO and chairman and David Markin as president. Cole died in a plane crash near Kalamazoo less than two months later, however, and Markin resumed full control.

After Cole’s death several attempts to sell Checker or redesign its cabs failed, and it was taken private by Markin in late 1980. Potamkin subsequently sold his stake back as sales continued to decline and the firm laid off more than half its staff of 1,000.

END OF CAB PRODUCTION: 1982

Changes to New York’s taxi regulations were making it more and more appealing for drivers to buy smaller cars including the Chevy Caprice and Ford Crown Victoria, at the same time that their makers boosted incentives for fleet purchases. With annual sales down to 3,200, in 1982 Checker announced it was ending production of the Marathon. During its more than 25-year production run the firm had made over 100,000 of the vehicles. The cab’s end was mourned by many, particularly in New York where its 1950s-era styling had become an integral part of the city’s visual landscape.

After the last one rolled off the assembly line in July the company laid off 190 union workers, keeping 600 others to produce stampings for the Big Three automakers. Checker Motors’ products would include such component parts as lift gates, chassis subassemblies, truck boxes, and body panels. Revenues for 1983 slipped to $84.1 million from $106.8 million, though net income declined less dramatically from $6.4 million to $5.4 million. Checker continued to operate its taxicab companies, in 1984 selling a unit called Continental Air Transport to its management for $4.5 million.

In early 1989 David Markin and several other investors took over a holding company called International Controls Corp., which owned Great Dane Holdings, Inc., the leading manufacturer of truck trailers and containers in the United States. Checker Motors was also purchased by International Controls, while the Chicago-based Checker Taxi operation was sold. The company had been ordered by a court to divest itself of about a third of its 3,000-plus taxi medallions there by 1997.

In August 1989 Checker Motors bought South Charleston Stamping and Manufacturing Co. of West Virginia for $19.9 million. Checker’s remaining subsidiaries at this time included Yellow Cab, which operated more than 2,200 taxis in Chicago, Chicago Auto Werks, which repaired cabs and provided other services to taxi drivers, and American Country Insurance Co. During the year the firm was also awarded a major contract by G.M. to produce roofs, end gates, lift gates, rear cargo doors, and rear door frames for Suburban, Jimmy, and Blazer vehicles.

By 1995 the company employed approximately 1,000, about half of whom worked in South Carolina. A major production category was sheet-metal stampings for light trucks, with General Motors accounting for 81 percent of sales. Other customers included Freightliner Corp., Saturn Corp., Ford Motor Co., and Toyota. During the year the firm received a $65 million loan that was used to pay down debt.

In 1996 Chicago-based CC Industries, Inc. purchased the company, with David Markin retaining a majority stake in the Checker operation. The firm also sold Yellow Cab and closed its West Virginia stamping operation, with the facility there taken over by Mayflower Vehicle Systems. American Country Insurance was later sold, as well.

In July 1999 the last Checker cab operating in New York was retired, a 1978 model with one million miles on the odometer. Its owner, who had paid $9,000 to buy it new, subsequently auctioned it at Sotheby’s for $134,500. A few Marathons continued to operate in other cities, while numerous examples were lovingly restored by collectors, with a choice selection held by Checker in Kalamazoo.

During the early 2000s stamping orders declined in the wake of the U.S. recession, and by 2002 the firm’s sales had fallen to $55 million. It employed 400 at its 630,000-square-foot plant in Kalamazoo, more than a quarter of which lay idle. Checker’s primary customer continued to be General Motors, which accounted for about 90 percent of sales. Though it had earlier tried branching out into tubing and plumbing equipment, these endeavors were abandoned to focus on auto parts.

In 2006 the firm licensed the Checker Taxi Co. colors and name to the owners of the Yellow and Wolley cab companies, the latter of which would become known as Checker. Now in his late 70s, David Markin continued to run the firm his father had founded more than 80 years earlier, which operated out of the same facility it had first occupied in 1923.

After 85 years Checker Motors Corp. continued to have a place in the auto industry, albeit as a supplier of parts to other firms, rather than as a manufacturer of vehicles under its own name. The company’s fortunes were tied to those of the Big Three automakers, in particular General Motors, and as they downsized it struggled to turn a profit while hoping for better times down the road.

Frank Uhle

PRINCIPAL COMPETITORS

Principal Competitors: Magna International, Inc.; Dana Corp.; ArvinMeritor, Inc.; ThyssenKrupp Budd Co.; Tower Automotive, Inc.; A.G. Simpson Automotive, Inc.; Midway Products Group, Inc.; Hendrickson International; Action Tool & Manufacturing, Inc.