My Years With General Motors

by Alfred P. Sloan Jr.

  5-1. Many years later the state of the art of the air-cooled engine improved to the point where application of its principles to automobiles became practicable. An ex- ample of such an engine made of aluminum is in the modern Corvair built by Chevrolet

  7-1. The inertia-type transmission did appear to have great possibilities technically, but in actual performance it did not prove to be sufficiently smooth or long-lived to warrant production.

  8-1. Mr. Brown put it this way: "A monopolistic industry, or an individual business under peculiar circumstances, might maintain high prices and enjoy a limited volume with very high rate of return on capital, indefinitely, at the sacrifice of wholesome expansion. Reduction of price might broaden the scope of demand, and afford an enlargement of volume highly beneficial, even though the rate of return on capital might be lower. The limiting considerations are the economic cost of capital, the ability to increase supply, and the extent to which demand will be stimulated by price reduction. "Thus it is apparent that the object of management is not necessarily the highest attainable rate of return on capital, but rather the highest return consistent with attainable volume, care being exercised to assure profit with each increment of volume that will at least equal the economic cost of additional capital required. Therefore the fundamental consideration is the economic cost of capital to the individual business." ("Pricing Policy in Relation to Financial Control," Management and Administration, February 1924.)

  9-1. The figures above are for passenger cars only. The full production of all vehicles, cars and trucks, for 1919 through 1929, was as follows: 1.9, 2.2, 1.6, 2.5, 4, 3.6, 4-3, 4-3, 3-4, 4-4, 5-3

  10-1. The Index of Industrial Production for 1920-29 is at the end of Chapter 9.

  10-2. General Motors Corporation organization charts for 1937 and 1963 are at the end of this chapter.

  10-3. The Engineering Policy Group consists of the chairman of the group, who is vice president for engineering; the chairman and chief executive officer of the corporation; the president of the corporation; the executive vice president for staff; the executive vice president for financial affairs; the executive vice president for the automotive and parts divisions; the executive vice president for the other operating divisions; the vice presidents for styling, distribution, research, and manufacturing and the vice presidents who are group executives for the car and truck group, the body and assembly divisions group, the accessory group, and the Dayton, household appliance, and engine group. Of the fifteen members of the Engineering Policy Group, eight are members of the Executive Committee and constitute that entire committee, and four are also members of the Finance Committee.

  11-1. Capital employed consists of funds invested in the business by security holders. These are derived from equity issues (common and preferred stocks), debt issues, additional capital paid in (capital surplus), and net income retained for use in the business (earned surplus). The capital employed is invested in two broad categories — working capital and fixed capital.

  11-2. Net working capital represents the excess of current assets (cash, short-term securities, receivables, and inventories) over current liabilities (accounts payable, taxes, payrolls, and sundry accrued items).

  12-1. General Motors' role in the Ethyl Corporation came to a close in 1962, when both General Motors and Standard Oil sold their interests in Ethyl to the Albemarle Paper Manufacturing Company of Richmond, Virginia. With this sale General Motors, in line with its policy, disposed of the last of its investments in partially-owned companies, and now carries on all of its operations through divisions or wholly owned subsidiaries.

  14-1. Charts of the staff organizations discussed here and elsewhere appear at the end of the book.

  14-2. This staff also has certain other responsibilities relating to real estate, industrial photography, production control, and procurement.

  14-3. Located at Milford, Michigan, forty-two miles northwest of Detroit.

  16-1. Today, General Motors passenger-car and truck dealers employ 275,000 mechanics, salesmen, and other personnel compared with 190,000 in 1941. Their facilities under roof, including salesrooms, office space, and parts and service areas, occupy 227 million square feet of space, compared to 117 million prewar. Not only have the facilities of many dealers been made larger but they have been modernized and otherwise improved to handle adequately the increasing mechanical complexity of our postwar cars and trucks. The great increase in car ownership since the war and the technological advances made in our products — such as automatic transmissions, higher-compression engines, power steering, power brakes, and air-conditioning — put a renewed emphasis on the need for well-trained mechanics. In 1953 we put into operation an important new policy of practical co-operation with our dealers when we established thirtv permanent Service Training Centers for dealer personnel in service and sales. The training centers, fully equipped and manned by specially trained instructors, have provided mechanics with the latest information on the repairing and servicing of our products. The maximum earning ability of mechanics has been increased and the quality of service has been improved to meet the new conditions. The centers provide training facilities also for sales personnel, and they are used for meeting with dealers. During 1962 more than 187,000 persons were given nearly 2.5 million man-hours of training in various technical subjects at the centers, and approximately 260,000 persons attended meetings on sales and other nontechnical subjects.

  19-1. In 1937 Winton's name was changed to Cleveland Diesel Engine Division and in 1962 its operations were consolidated with those of the Electro-Motive Division. In 1937, too, we set up the Detroit Diesel Engine Division to produce smaller diesel engines for marine and industrial use. Though there has been some overlapping in their products over the years, it has been generally true that the Detroit Diesel Engine Division has specialized in smaller engines.

  24-1. Ultimately this fact was recognized, and the price groupings reported by the statistical organizations covering the industry were modified so that such models are now included in the medium-price ranges.