ThyssenKrupp Magazin

An entrepreneur with a vision
By Carsten Knop | Photos Hagley Museum and Library
He became famous for
a ground-breaking invention:
at the beginning of the last
century, Edward G. Budd
replaced conventional production
materials with more modern
materials. He became the father
of the all-steel car body in the
United States
TK Magazine | 1 | 2004 |
Today he is listed in the Automotive Hall of Fame because of his
achievements on behalf of the industry in the United States. But
there were times when it was far from certain that Edward G. Budd
would go down as a business success story.
No corporate executive likes reading headlines such as “Pioneer
without profit” about himself, but that is what Fortune wrote about Budd
in February 1937. The business magazine’s editors had obtained the
accounts of the Edward G. Budd Manufacturing Co. and calculated that
this steel processor and supplier to the automotive industry had lost a
total of $3.3 million over the previous 11 years.
That did not read well, but those who were put off by the discouraging
headline and did not read on missed the description of an
interesting milestone on a long road to success. For Budd, who was indeed
for some years a pioneer without profits, had consciously accepted
the losses in true entrepreneurial spirit. He wanted to pull his
company out of the Depression with the help of new products; it took
longer than expected, but it secured the jobs of thousands of employees
in difficult times.
AN INVENTOR WHO FOLLOWED HIS OWN APPROACH
Times have changed. Today, the headline in a comparable situation
would probably describe a “visionary entrepreneur” and talk about a
courageous business founder who had turned something like a garage
shop into a global player. One thing that has not changed since then,
however, is that entrepreneurs still need capital providers who do not
fear calculated risk. Budd found himself in this fortunate situation,
being helped by New York’s Ladenburg Bank to restore his balance
sheet after the company came under severe financial pressure during
the especially grim days of 1934.
In the previous two decades, Budd had expended considerable
energy in convincing the automotive industry that an all-steel body was
EDWARD G. BUDD 63
From modest beginnings,
Budd and his company rose
to become a provider of topnotch
stainless steel
railroad passenger cars, among
other products. Budd’s new
train cars cut the travel time
between Chicago and Denver
by a full 10 hours.