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It is a speaker and output transformer combined. As the loose transformer lamination moves, it modulates the speaker cone. GE also used that concept on some early paging receivers. The communication engineers took the idea from the consumer guys as a cost and weight measure.
Try passing the entire speaker assembly through a color TV degaussing coil or some other strong AC field while shaking it, to release the filings. You may not even need to remove it from the radio.
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