Letter to Ken VanAkin (Ford Motor Company)
December 8, 1967
This letter from A.O. Smith is addressed to Ken VanAkin, Senior Buyer - Purchasing
Department at Ford Motor Company, and references some of the worked
performed for Shelby American and Ford Motor Company in relation to the
Shelby Mustang program during calendar year 1967. No
vehicles are directly referenced by VIN or inventory number. The
contents or this letter have been retyped for easier reading and our
analysis has been added below.
Ford Motor Company
Post Office Box 628
Purpose of the letter is to confirm the discussions at our
recent meeting involving Ford-Shelby programs in which we have
been involved for many months, and for which purchase orders
have not been issued. As you know, we fully appreciate the
problems that we have had on a mutual basis in getting the
Ford-Shelby relationship modified. We are now in a
position, however, where the combination of the tooling money
and the engineering money has reached what is for us a very
significant proportion and, quite frankly, my management
associates are beating me up about the ____ to collect some
substantial amounts during calendar year 1967.
follows a list of the specific projects involved, the actual
expenditures, or our estimates. These accounts are, of course,
all subject to your audit, should you so desire.
(Ionia Work Order #2630)
Shelby purchase orders
#7007 and #7008 were issued to cover this engineering.
Invoices were sent to Shelby until the decision was made
to change the Shelby organization and to move the
segment of the operation in which we are involved to
Detroit and Ionia. The total charges submitted
were in the amount of $14,340.86, through May 26, 1967.
No payments were received against these invoices.
We estimate that the total engineering cost involved in
this project will not exceed $165,000. The total
expenditure through November 19, 1967 was $136,347.
1968 Die Models
(Ionia Work Order #2631)
A detailed breakdown
of the models is attached to this letter.
Total charges to
date - $69,969
December 8, 1967
during 1967 Shelby Program, including paint and
finishing technician's time in California and the
engineering requirements involved in the emergency
fabrication of components for the 1967 Shelby.
(Ionia Work Orders #2633 and #2635)
Total charges -
for 1968 Photographic Cars.
(Ionia work order #2639)
Temporary tools were
made and prototype parts shipped to California to modify
two cars for photographic purposes. Included with these
shipments were two sets of hoods, front ends, rear lower
panels, and consoles. A significant amount of premium
time was involved.
Total charges - $14,792.
(Ionia Work Order #2643) (Ford Purchase Order
This purchase order
was originally written on a not-to-exceed-$7500 basis.
Content of the job, however, increased significantly,
and the actual charges total $10,480.
(Ionia Work Order #2658)
Total charge against
this job - $3780.
One convertible and
one fastback returned from Dearborn Steel Tubing
converted to 1968 configuration. One car modified for
wind tunnel use.
(Ionia work orders #2644, #2645, #2646)
Paris Show Car
2 + 2 GT-350 Show Car
Convertible GT-500 Show Car
2 + 2 GT-500 Show Car
Convertible GT-350 Show Car
2 + 2 GT-500 Show Car
(Ionia work orders #2647, #2654-1 through -5)
against these six cars were $12,725. Of this, $5,000 was
regular production supervision. We are deducing the
$5,000 on the basis that the cars served a partial pilot
function. Actual amount to be invoiced . . . $7,725.
reproduction services are being provided in accordance
with an agreed-upon schedule of charges. I am
attaching copies of this schedule for your reference.
We would suggest that a purchase order be set up for one
year against which we will invoice on a monthly basis.
(Ionia Work Orders #2648 and #2655)
Total charges to
date - $518.
December 8, 1967
In this same
category, we have agreed upon other services which we
will provide Shelby in accordance with the schedule also
attached, for which we have established a fixed charge
of $500 per month. Here again, we suggest that a
blanket purchase order be issued against which we can
invoice on a monthly basis. I might point out that
the $500 figure was arrived at jointly, and the attached
schedule indicates the basis on which this was
established. We have agreed that we will both
watch the history of these expenditures and should the
$500 figure prove to be too high or too low, we will
adjust as experience dictates. Again, this would
be done only on a mutual basis.
(Ionia Work Order #2656)
including detailing of all components involved, redesign
of the grille, and the fog lamp installation,
illustrations as required by San Jose, parts and DSO
lists, and releasing of all components.
Not to exceed
Wind Tunnel Car and Two Durability Cars
(Ionia Work Order #2676)
Total not to exceed
In addition to the
specific items covered in this letter, we have as you know been
advancing petty cash, the total amount now approaching $800, and
we could appreciate receiving a purchase order against which we
can invoice this.
We also will need a
purchase order covering the slave hoods and deck lids used in
shipping. Mr. Kerr is establishing the basis for the
pricing of these items. When this can be established, it
will also be possible for us to arrive at the premium cost of
the hand layup components which should be covered by a separate
We realize, Ken, that
from your standpoint this is a hell of a way to run a railroad;
but, in looking at the multitude of problems that were attendant
upon moving the Shelby organization from California to Michigan,
reorganizing the relationship between Ford and Shelby, bringing
A.O. Smith into the picture, had we attempted to, on a formal
basis, tie up each lose end as we went along, the program
wouldn't be off the ground yet. We have agreed, however,
that for the 1969 program we do have time to get the job done in
an orderly way.
I would suggest that for
a starter we have a purchase order from you covering the
engineering of the 1969 Shelby GT-350 and GT-500, with the
engineering work to ve done in accordance with the table
of rates attached, the engineering hours to be subject to our
audit, and the cost of the engineering not to exceed $200,000.
December 8, 1967
It seems appropriate here to
again thank you for your patience and continued help in these
unusual negotiations, and to ask that, insofar as possible, you
provide us with your purchase orders so that we can invoice
prior to the end of December.
A.O. SMITH Corporation
Manager-Sales and Engineering
Smith Plastics Division
cc: Mr. John Kerr
Attachments - 3
of this document:
lack of letterhead, we believe the source of the letter to be the A. O. Smith
Plastics company because it references relationships with
Shelby, Ford and DST.
We don't know
the person's name that drafted the letter. Perhaps if we
find more than the first three pages, the author will be revealed.
Teaches us us
that the decision to shutter Shelby American happened sometime
before mid-May 1967, and that didn't leave much time to think.
Shelby American's Los Angeles operation was closed just 90 days
later (mid-August 1967).
We learn that
A.O. Smith was actually involved much earlier than the '68 Shelby
program. Apparently their involvement dates back to the '67 Shelby
program. Based on the term "emergency," this is most
likely a reference to creating new molds for the front-end and hood.
This would date this line item circa October 1966, when the
first batch of cars arrived and the 'launch problems' happened.
A definitive reference to the '67 convertible (0139) and the '67
fastback. Most important is this line item taught
us that the prototype '68-styled fiberglass components were designed by
Ford and fabricated by A.O. Smith in
for fabricating two sets of hoods, front-ends, rear [tail light]
panels and consoles, was $14,792. Adjusted for inflation from 1967
to 2014, that's $103,473.68 or $51,736.84 per car in today's
that trunk lids
and brake scoops are not listed among the prototype components produced
by A.O. Smith. That's because those components didn't change
from the '67 fiberglass that was already installed on the two cars.
this work order would have taken place circa March 1967.
understand. The description does not elaborate on the reason behind
shipping a convertible and fastback to DST. It mentions conversion
to 1968 configuration, but is unclear if this conversion happed at
DST or A.O. Smith after the cars were returned from DST. Furthermore, it is unclear if
the vehicle "modified for wind tunnel use" was a one of the two cars
discussed in the preceding sentence of it was a a third and separate
The first car on the list is merely referred to as the
"Paris Show Car," and based on Peter Disher's excellent detective
work, was a Gold G.T 350 fastback. It was shipped to the
54th annual Paris
Automobile Show (Le 54 e Salon De l'Automobile), held October
5-15th, 1967. The six cars were most likely some of the '68 pilot cars or the
first handful from regular Mustang production. Photos found from the show indicate
that the DZUS hood locks still had the same lanyards we saw used in
v2 of the styling prototype cars from July 1967.
Item 10 & 11:
references to the 1968 Mustang GT/CS (California Special) which went
into production in mid-February 1968. 4,118 cars were built,
including 251 that were remarketed as the High Country Special in
Denver, CO. The lone '67 Coupe, #0131, was the precursor to the