Now That We Own GM: A Little of the Early Story

Hearing that we, the American taxpayers, are now the majority stakeholders in General Motors is a bit like hearing we've just inherited a general store from an uncle we never knew in a town we've never visited. There's already a shopkeeper in place, so we don't really have to "do" anything, but it might be nice to know a little something about our new acquisition.

We all know the story of Henry Ford and his assembly line, but what is there to know about General Motors?

The company's founder, William C. Durant, was running the nation's largest horsedrawn carriage company, but he soon realized the future lay in automobiles so he began acquiring car manufacturing companies. In 1904 he took over the Buick Motor Company, followed by Oldsmobile in 1908 and Cadillac in 1909, and thereby, General Motors was born.

Durant oversaw some good years at General Motors, but the true growth of the company occurred under an engineer, Alfred P. Sloan, who became president of the company in 1923. By then General Motors sold Buicks, Pontiacs, Chevrolets, Oldsmobiles, and Cadillacs, and Sloan proved to be a marketing genius. He promoted General Motors by promising, "A car for every purse and purpose." (Sloan's tenure with the company permitted him to achieve great personal wealth, and his significant financial contributions are noted by several major institutions that bear his name: Memorial Sloan-Kettering Cancer Center and the Sloan School of Management at MIT, to name just two.)

There were several key elements that led to General Motors' early success. To begin with, the company countered Ford's reasonably-priced black "cookie cutter" car by introducing automobiles in a variety of makes, styles, colors, and an ever-changing choice of features. GM made buying a new car a status symbol--a portable, personal sign of wealth. For a look at some of the incredible designs, visit the General Motors Heritage Center online at http://www.gm.com/corporate/about/heritage/archive/index.jsp

But of course, people needed a little help paying for the more expensive GM cars. For that reason, General Motors created GMAC (General Motors Acceptance Corp) to provide installment plans for car buyers. This was to change American shopping habits from that time going forward. Today, time payment plans on everything from cars to credit card bills are the norm.

In 1953, then-GM president Charles Wilson, was asked to appear before Congress and his statement on behalf of his company was distilled by the press to be "What's good for General Motors is good for the country." At no other time than 2009 is it more important that this be true.

But on a "fast fact" note, let's say you just need one quick thing to add into a conversation about GM. You might throw in that it was the first company to create cars with fins--the 1948 Cadillac.

Hmmm....maybe the answer to their problems today is little fins on a hybrid?

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Comments

[KillTheMessenger]

You know all the nice things they say about the people on their dying beds and the dead... this is like one of them. But if we leave that aside and look at the devastation GM has left in its wake in the US, it's a whole different story.

[kmsbt]

On a tangent about Sloan's endowments, were he, Ford, Rockefeller and other "robber baron philanthropists" who created the big foundations and charities motivated by "giving back" and so "sharing the wealth" with humankind or were they, like Alfred Nobel, more frightened by or guilty about what their "inventions" could do to humanity? Or, like Dick Cheney, were they merely PR offensives to avoid prosecution, here or in an afterlife? Or were they simply forks in the road to guaranteed immortality? I.E., "I built all this business, I'll build my own damn afterlife."

[Kate Kelly - Huffpost Blogger]

Interesting point... I may poke around on that one. Thanks.

[rockwood]

good background... its interesting to cpmpare the growth and fall of big business like these to what may happen today to tech industries?

[kmsbt]

Not sure. Tech has certainly had its share of complacency but always had more volatile markets than American auto and Tech woke up to worldwide competition relatively much earlier. Many led the curve of "globalization," not just running to catch up, and, for better or worse depending upon where you sit, most never had unions but rather extremely mobile workforces. However, if the emerging Indian consulting firms get Indian government assistance in getting the best local candidates to the detriment of "offshore" firms or if Chinese manufacturing concerns receive similar government protection, just as the Japanese car makers did, they may be the next Hondas and Toyotas of IT.

Another potential lesson in the value of protectionism?

[KillTheMessenger]

Automobiles are not technology by any measure. Technology today compares to the rise of the Bell's and Dupont's in the 19th century. We would be in real trouble if our large chemical manufacturers would be in dire straits since they hold numerous key technologies. But they aren't.

People just forget because corporations like Dupont and Dow Chemical keep a much lower profile due to the fact that they sell the hard core of their technology to industrial buyers and not to the general public. Unless sued for environmental violations, of course...