The Triumph of General Motors

When Alfred P. Sloan became president of General Motors in 1923, he took charge of a concern whose future was still far from assured. Its survival was reasonably certain and its financial and organizational soundness could be taken for granted after the end of the second Durant régime, but the figure that the corporation would cut in the automotive world was as yet to be determined. There were enough weaknesses in the structure to create the possibility that General Motors might shrink rather than expand.

In its automobile line Buick and Cadillac had always been consistent money-earners, and their position in the market was too solidly established to be affected even by the departure of men like Chrysler and Leland. Oldsmobile was steady if unspectacular, but Chevrolet had proved a disappointment after its promising start, and Oakland was a weak competitor among the high-priced cars. Durant's latest acquisitions, the Scripps-Booth and the Sheridan, were quietly dropped after his departure.

There was, moreover, some question of morale in the General Motors organization. There was disorder and confusion left behind by Durant's haphazard administrative methods, and some uncertainty over the change of management, since only a few people knew exactly what had happened. Among dealers there was disgruntlement because General Motors' long delay in reducing prices when the panic of 1920 struck had hurt their sales badly.

Sloan approached these problems in systematic, orderly fashion. He rejected the whole idea of playing hunches; he was not the type to have hunches anyway. He believed that managerial technique demanded "a constant search for the facts, the true actualities, and their intelligent, unprejudiced analysis. Thus, and in no other way, policies and their administration are determined." The reorganization of General Motors on the decentralized plan which Sloan had initiated was carried through to completion, so that increasing size did not bring unwieldiness. Needless to say, Sloan put an increased emphasis on technological research, with the great advantage of having Charles F. Kettering to take charge of the research program--even though "Boss Ket" has to be classed as a hunch-player. Dealer discontent was taken care of by sheer hard work. Sloan himself and other top executives made personal visits to every General Motors dealer to find out by direct contact what ideas and grievances they had.

This methodical procedure can be taken as a conspicuous example of the engineering approach to management. If so, it was the engineering approach at its best. As the visits to the dealers indicated, Sloan was perfectly aware that the successful administration of General Motors required something more than organization charts and tables of statistics. The most accurate information in the world would be worthless without competent leadership to make use of it, and Sloan had already made it abundantly clear that he regarded the leadership of an enterprise the size of General Motors as a group rather than an individual function. Consequently, his selection of the lieutenants who were to run General Motors with him should be ranked as his greatest achievement.

First on the list of lieutenants unquestionably comes William S. Knudsen. In 1922, shortly after he left the Ford Motor Company, Knudsen was introduced to Sloan by Charles S. Mott, former head of the Weston-Mott Axle Company and now a vice president of General Motors. Sloan at first gave Knudsen a roving commission to improve production, but soon put him in charge of the Chevrolet Division, where Knudsen's talents were urgently needed. Chevrolet, as has been pointed out, had been going down hill, and a firm of consulting engineers employed by Pierre S. duPont to survey the General Motors properties had recommended that the Chevrolet operation be liquidated, on the ground that General Motors could not compete in the low-priced car market. To Sloan this verdict was completely unacceptable. He refused to agree that there was any part of the automotive field in which General Motors could not compete, and he persuaded DuPont to disregard the recommendation. Sloan then of course had to make good, and this was the task that he delegated to Knudsen.

What Knudsen did with this challenge is automotive history. By 1924, Chevrolet sales, although still well behind Ford's in total volume, were showing the most rapid rate of increase in the automobile industry; two years later Chevrolet was approaching the goal with which Knudsen had brought down the house at a convention of Chevrolet dealers: "Vun for vun"; in 1927, Chevrolet moved into first place and held it with only occasional lapses for the next 20 years. Knudsen admittedly was materially assisted by Henry Ford's blunder in hanging on to the Model T and by the nine-month suspension of Ford production when Ford finally realized his mistake. On the other hand, Knudsen did not make the error of trying to compete directly with Ford. He was aware, as Henry Ford was not, that the American people had become sufficiently automobile conscious to be willing to pay a little more for style and comfort. So the Chevrolet was priced from one to two hundred dollars above the comparable Model T, and for that the buyer got a car with distinctly more graceful lines and such features as a self-starter, a three-speed transmission, and a spare tire.

The other lame duck, the Oakland, underwent more drastic if less highly publicized treatment. The initial step was Sloan's decision that General Motors should have a low-priced six-cylinder car to compete with popular newcomers like the Essex, and that this car might as well be produced by the Oakland Division, which was not doing very much anyway. The preliminary work was done by Sloan's M.I.T. classmate, Henry M. Crane, who was brought into General Motors as technical adviser to the president. 20 Crane's design, however, was going to be too expensive for Sloan's purpose and was turned over to the Oldsmobile Division.

Meanwhile, Oakland's affairs were put into the hands of Alfred R. Glancy, a mechanical engineer who, as a student at Lehigh University in 1903, had written a thesis on the automobile, arriving at the conclusion that it was a rich man's toy and had no commercial future. After his graduation, Glancy spent several years in an assortment of mining and construction jobs, plus a session as a salesman of mining and quarrying machinery along the New York State Barge Canal. He then joined a chemical company which was acquired by DuPont during the war, and it was this association which brought him at long last to General Motors and the automobile industry. The circumstances of his arrival might well have led Glancy to wonder if perhaps his original judgment had been correct after all. In 1920, he was made general manager of Durant's ill-advised Samson tractor venture and also of the Sheridan Motor Company, his principal responsibility with each being to liquidate the enterprise as painlessly as possible. He did well enough for Sloan to pick him out in 1924 as the man to reconstruct the Oakland Division.

Glancy assembled a new engineering staff, headed by Benjamin Anibal, who had formerly been chief engineer at Cadillac under Henry M. Leland, and went to work on the six-cylinder car. They redesigned Crane's engine, put it into an enlarged version of the Chevrolet chassis, and came up with a car that they called the Pontiac after the city in which it was to be built, just as the Oakland was named for the county in which Pontiac is located. The new car went on the market in 1926, so successfully that presently the Oakland was withdrawn and the manufacturing facilities given over completely to the production of Pontiacs.

Another figure to move up rapidly under Sloan was Charles E. Wilson. A graduate of the Carnegie Institute of Technology in 1909, Wilson made his first acquaintance with the automobile industry by working on automotive electrical equipment for Westinghouse. 22 In 1919, he joined the Remy-Electric subsidiary of General Motors and seven years later became president and general manager of the merged Delco-Remy organization. He was made a vice president of General Motors in 1928.

Sloan's taste in lieutenants, it can be seen, ran understandably to engineers: Crane, Mooney, Wilson, Glancy. It was not an exclusive preference; Knudsen was primarily a production man with some formal technical training, while Harlow H. Curtice, who reached the top echelon as president of A. C. Spark Plug in 1927, had started with the company as a bookkeeper. In any event, the test of results provided a convincing endorsement of Sloan's selections.

While the weak spots were being bolstered, the General Motors giant was continuing to grow. In 1925, it bought the Yellow Cab Manufacturing Company of Chicago for $16,000,000 and merged it with the General Motors Truck Division under the title of Yellow Truck and Coach Manufacturing Company, with the founder of the Yellow organization, John B. Hertz, as president. 23 Hertz had founded his company in 1910 after a varied career as a sportswriter, fight manager, and automobile salesman. 24 He became a taxicab operator because he found himself with nine unsalable Thomas Flyers on his hands, so started an automobile livery service with them. When he found that too few calls were coming in, he sent the cars cruising in the streets of Chicago, painted yellow to attract attention. Then, as the business grew, he decided to manufacture his own cabs, and later developed a motor bus business as well.

General Motors also began at this time to acquire foreign subsidiaries, as other American manufacturers were doing in order to bypass the accumulation of restrictions on international trade which sprang up after the First World War. An attempt to buy the British firm of Austin Motors, Ltd., in 1925 got as far as approval by the Austin directors but was blocked by the shareholders. 25 Two months later, a similar deal with Vauxhall Motors, Ltd., was carried to completion. Germany's Adam Opel Company was added in 1929. This step by no means completed the structure of General Motors, but the corporation was clearly in first place among automobile manufacturers--it had been since 1925, in fact 26 --and, since 1929 marks another watershed for the automobile industry, as for so much else, the further development of General Motors can be postponed for subsequent discussion.

No comments: