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Every Purse and Purpose: GM and the Automotive Business

John Wysner

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The earliest American auto makers were Ransom Olds, William Durant, max Grobowsky and Henry Leland. Durant was primarily a deal-maker, but he was unusual in that he recognized early that autos were a game-changer. Olds and Leland were partners in the first mass-production factory in Michigan. The cars were moved from station to staion for assembly, and they were the first to use interchangeable parts. When it burned down, only one car was saved - the prototype for the 'curved-dash' Olsmobile. Leland split off to run Cadillac.

The third major component of what was to become GM came out of Max Grobowsky's commercial truck co, Grabowsky Motor Co (which is where GMC comes from, not GM Corp, as many assume).

Durant incorporated GM in 1908, bringing together Olds, Buick, Cadillac and GMC. Reckless expansion got Durant pushed out twice. The first time he started a new company with Louis Chevrolet, and used that as a backdoor to regain control of GM. He was pushed out for good in 1920, and Alfred Sloan was installed as head. He remained president of GM until his death in 1966.

Sloan identified the 'price-to-income' shift in the early 1920's that led to Chevrolet overtaking Ford in 1927. HF stayed with the 'one-model-lowest-price' stategy for too long.

The other major development of thedecade was Walter Chrysler, who had run Buick for GM from 1910 to 1920, struck out on his own, buying and renaming the Maxwell Motor Company. He bought out the Dodge brothers and introduced the De Soto brand, which sold 80,000 units in its first year, a record which would stand for 30 years.

WW2 caused a surge in technolgical growth in engines, transmissions, suspension, steering and electrical systems. And a new breed of postwar managers who learned design and production strategies under the enormous wartime demands for equipment.

1946-70: the Golden Age of Excess. A time of low unemployment, low taxes, low inflation and cheap fuel. Quality, social or environmental issues were not part of the equation. people cared little about fuel economy, durability or safety. And makers didn't worry too much about wage demands, bc increased costs just got passed on to the customer.

The first sign that the bubble might break was the VW bug, which captured 10% of the market in 1959. But the big threat came from Japan, who started selling cars on the basis of high quality. ironically, their quality manufacturing methods were based on work by two Americans. W Edwards Denning and Joseph Juran were ignored in the US, but their ideas were adopted by Japanese car makers.

The 70's brought upheaval - govt mandate safety and economy rules, the Japanese invasion drove demand for high quality and market demand for smaller cars.

The Big Three chose different tactics to cope with new reality. GM jumped into (very expensive) plant automation + diversification into other industries. Ford didn't have the money to do that, so they focused on their people and developing a shorter product design cycle. They developed the medium-sized Taurus and the compact Escort. Chrysler had even less money than Ford, so they went for an emotional appeal led by Lee Iacocca. "Buy Chrysler" became de facto "Buy American", but Iacocca backed it up with reorg that delivered quality engineered product.

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