Alfred P. Sloan, Jr.

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Cover of Time Magazine (December 27, 1926)

Alfred Pritchard Sloan, Jr. (May 23, 1875 – February 17, 1966) was a long-time president and chairman of General Motors.

Biography

Sloan was born in New Haven, Connecticut. He studied electrical engineering and graduated from the Massachusetts Institute of Technology in 1892. While attending MIT he joined the Delta Upsilon Fraternity.

He became president of a Hyatt Roller Bearing a company that made roller and ball bearings in 1899. In 1916 his company merged with United Motors Corporation which eventually became part of General Motors Corporation. He became Vice-President, then President (1923), and finally Chairman of the Board (1937) of GM. In 1934, he established the philanthropic, nonprofit Alfred P. Sloan Foundation. GM under Sloan became famous for managing diverse operations with financial statistics such as return on investment; these measures were introduced to GM by Donaldson Brown, a protege of GM vice-president John J. Raskob who was in turn the protege of Pierre du Pont — the DuPont corporation owned 43% of GM.

Sloan is credited with establishing annual styling changes, from which came the concept of planned obsolescence. He also established a pricing structure in which (from lowest to highest priced) Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac did not compete with each other, and buyers could be kept in the GM "family" as their buying power and preferences changed as they aged. These concepts, along with Ford's resistance to the change in the 1920s, propelled GM to industry sales leadership by the early 1930s, a position it retained for over 70 years. Under Sloan's direction, GM became the largest and most successful and profitable industrial enterprise the world had ever known.

During Alfred P. Sloan's leadership of GM, many public transport systems of trams in the US were replaced by buses. There are some who believe that this conversion was orchestrated by General Motors, Firestone Tire Corp., Standard Oil of California, and the Mack Truck Co. in order to increase automobile sales; see General Motors streetcar conspiracy for details.

In the 1930s GM, long hostile to unionization, confronted its workforce, newly organized and ready for labor rights, in an extended contest for control. Sloan was averse to violence of the sort associated with Henry Ford. He preferred the subtle use of spying and had built up the best undercover apparatus the business community had ever seen up to that time. When the workers organized a massive sitdown strike in 1936, Sloan found that espionage had little value in the face of such open tactics.

Under Sloan's direction as CEO, General Motors is known to have made large profits off of the rearmament of the Third Reich. General Motors Overseas Corporation was led by director James Mooney, who held various business visits with Adolph Hitler, along with senior executives of GM's German division Adam Opel A.G. GM and Opel were eager, willing and indispensable cogs in the Third Reich's rearmament juggernaut, a rearmament that, as many feared during the 1930s would enable Hitler to conquer Europe and destroy millions of lives. For GM's part, it has steadfastly denied for decades, even in the halls of Congress, that it actively assisted the Nazi war effort.[1]

The world's first university-based executive education program — the Sloan Fellows — was created in 1931 at MIT under the sponsorship of Sloan. A Sloan Foundation grant established the MIT School of Industrial Management in 1952 with the charge of educating the "ideal manager", and the school was renamed in Sloan's honor as the Alfred P. Sloan School of Management, one of the world's premier business schools. A second grant established a Sloan Fellows Program at Stanford Graduate School of Business in 1957. The program became the Stanford Sloan Master's Program in 1976, awarding the degree of Master of Science in Management. Sloan's name is also remembered in the Sloan-Kettering Institute and Cancer Centre in New York. In 1951, Sloan received The Hundred Year Association of New York's Gold Medal Award "in recognition of outstanding contributions to the City of New York."

Sloan maintained an office in 30 Rockefeller Plaza in Rockefeller Center, now known as the GE Building.[2] He retired as GM chairman on April 2, 1956 and died in 1966.

Preceded by: Lammot du Pont	Chairman General Motors 1937 – 1956	Succeeded by: Albert Bradley
Preceded by: (none)	CEO General Motors 1923 – 1946	Succeeded by: Charles Erwin Wilson
Preceded by: Pierre S. du Pont	President General Motors 1923 – 1937	Succeeded by: William S. Knudsen

Criticism

Recently, Sloan's work at GM has come under fire for causing a complicated accounting system to be placed upon American manufacturers that prevents the implementation of lean manufacturing methods thus leading to companies which cannot compete effectively with non-Sloan companies such as Toyota. In a nutshell, the thrust of the criticism is that by using Sloan's methods a company will value inventory just the same as cash and thus there is no penalty for building up inventory. However, carrying excessive inventory in the long run is detrimental to a company's operation and induces many hidden costs. (Waddell & Bodek 2005)

Another factor in the criticism is that Sloan considered people on the shop floor to be totally expendable as a variable cost item to manufacturing. This view is the opposite of how Toyota views employees. Toyota looks to shop floor employees as their main source of cost savings and productivity improvements. (Waddell & Bodek 2005)

Sloan was also instrumental in the demise of public city transport throughout the United States. He formed a company called National City Lines which quietly bought up public city transport companies and intentionally allowed these "daughters" to go bankrupt, by changing schedules, doubling or tripling fares and neglecting maintenance. In this way he ensured that city dwellers had to buy cars.

Quotes

"The business of business is business."
“A car for every purse and purpose.” (Sloan 1963, p. 438)
"I am sure we all realize that this struggle that is going on though the World is really nothing more or less than a conflict between two opposing technocracies manifesting itself to the capitalization of economic resources and products and all that sort of thing." - May 1941
"It seems clear that the Allies are outclassed on mechanical equipment, and it is foolish to talk about modernizing their Armies in times like these, they ought to have thought of that five years ago. There is no excuse for them not thinking of that except for the unintelligent, in fact, stupid, narrow-minded and selfish leadership which the democracies of the world are cursed with… But when some other system develops stronger leadership, works hard and long, and intelligently and aggressively - which are good traits - and, superimposed upon that, develops the instinct of a racketeer, there is nothing for the democracies to do but fold up. And that is about what it looks as if they are going to do." - June 1940

Further reading

• McDonald, John. A Ghost’s Memoir: The Making of Alfred P. Sloan’s 'My Years with General Motors'. MIT Press, 2003, ISBN 0262632853 online review; McDonald was the ghost-writer and Alfred D. Chandler was the researcher
• Christopher D.McKenna, "Writing the ghost-writer back in: Alfred Sloan, Alfred Chandler, John McDonald and the intellectual origins of corporate strategy" Management and Organizational History 2006, Vol 1(2): 107–126
• Pelfrey, William. Billy, Alfred and General Motors. Amacom Publishing, 2006.
• Waddell, William H. and Bodek, Norman [2005]. Rebirth of American Industry - A Study of Lean Management. ISBN 0-9712436-3-8. 
• Dobbs, Michael. "Ford and GM Scrutinized for Alleged Nazi Collaboration." Washington Post. November 30, 1998.[3]
• Black, Edwin. "Hitler's carmaker". Jerusalem Post. Dec. 6, 2006. [4]
• Sloan, Alfred P. "My Years at General Motors" New York: Doubleday, 1964.

See also

• The Alfred P. Sloan Prize. Given to films dealing with science and technology by the Alfred P. Sloan Foundation each year at the Sundance Film Festival
• Sloan was a leading member of The Crusaders, an organization that promoted the repeal of National Prohibition of alcohol in the US.

External links

• Alfred P. Sloan Foundation, whose total assets had a market value of over $1.5 billion in 2005
• Review of Klein and Olson's film Taken for a Ride
• Contribution of Alfred P. Sloan to changes in rapid transit systems
• Extract from Bradford C. Snell, American Ground Transport: A Proposal for Restructuring the Automobile, Truck, Bus and Rail Industries. Report presented to the Committee of the Judiciary, Subcommittee on Antitrust and Monopoly, United States Senate, February 26, 1974, United States Government Printing Office, Washington, 1974, pp. 16-24.
• Hitler's Carmaker: The inside story of how General Motors helped mobilize the Third Reich

References

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