Fruehauf Trailer Corporation

Fruehauf Trailer Corporation, American corporation engaged in the manufacture and sale of truck trailers. Headquarters are in Indianapolis, Indiana, U.S.

The founder, August Charles Fruehauf (1868–1930), began as a blacksmith and carriage builder around Detroit. In 1914, at the request of a local lumber merchant, he built a trailer to carry the merchant’s pleasure boat, to be hauled by a Ford automobile. The trailer was so successful that the merchant had Fruehauf build similar haulers for his lumber, which Fruehauf came to call “semi-trailers.” Business boomed, and four years later, in 1918, Fruehauf incorporated the Fruehauf Trailer Company. Over the next few decades the company prospered and introduced several new concepts in trailer design and size—first under the founder and then under his son Harvey Charles Fruehauf (1896–1968), who became president of the firm in 1929.

Harvey’s younger brother Roy August Fruehauf (1908–65) became president of the company in 1949, and Harvey became chairman of the board. Tension between Harvey and Roy culminated in Harvey’s being voted off the board in 1953. Harvey retaliated by selling his shares to the Detroit and Cleveland Navigation Company (D&C Navigation), which was controlled by corporate raider George Kolowich. The subsequent proxy battle ended in 1954 with Roy Fruehauf wresting control of D&C Navigation from Kolowich. Under Roy’s leadership, the company expanded to markets in Europe and South America but inaugurated financial and tax practices that led to federal indictments and company instability. In 1956 vice president William Grace and controller Robert Rowan devised a scheme in which the price of trailers would be lowered to decrease the amount of federal excise tax the company had to pay on the trailers it sold. The difference was made up by charging customers for various services such as advertising. In 1958 the Internal Revenue Service changed its regulations so that advertising could not be excluded from the price used to calculate the excise tax. The Fruehauf Trailer Corporation responded by changing the wording on its bills from “advertising” to “printed matter, catalogues, etc.” Roy Fruehauf stepped down as chairman of the board in 1961, but his successors, William Grace and Robert Rowan, while expanding and diversifying the company’s operations, also exhibited questionable management practices. Grace and Rowan were indicted in 1970 for conspiring to evade payment of more than $12.3 million in excise tax. They were found guilty in 1975. Their appeal to the U.S. Supreme Court was denied in 1978. Rowan and Grace resigned, served sentences of community service, and were reinstated on Fruehauf’s board in 1979. A leveraged buyout in 1986 by the company’s management left Fruehauf burdened with debt, and in 1989 the company was broken up and sold, though one segment, the truck trailer unit, retained the name Fruehauf Trailer Corporation. That corporation declared bankruptcy in 1996 and was sold to Wabash National the next year.