The automotive industry is immensely complicated today, but consider the scene in the early 1900s, when the success of hundreds of manufacturers was contingent on the availability of quality parts (the Japanese didn’t invent just-in-time delivery, after all). As Alfred P. Sloan Jr., the revered former chairman of General Motors Corp., recounted in his 1940 book, Adventures of a White-Collar Man, it didn’t take much to sell a car in those days. Rather, the real challenge was finding reliable suppliers (in some cases, blacksmiths) among the thousands of mill towns and farming communities across the United States.
“If any manufacturer engaged in supplying parts failed to make a delivery according to schedule and thus held up [the] assembly line … everyone would know it,” wrote Sloan, recounting his days as an engineer for Hyatt Roller Bearing Co., which was eventually bought by GM. “No excuse was any good if you failed to deliver.” Sloan also cited further complications. “Often in the caboose of a freight train that carried a carload of Hyatt roller bearings, you might find a Hyatt man who would cajole, bribe, or fight, as the occasion demanded, to keep our bearings moving toward their destination.”
History, it seems, does repeat itself. Building an automobile today is no easy task, and is often taken for granted. As GM marches to its 100th anniversary, it’s amazing how many people, especially Wall Street analysts and media pundits, have written them off. But don’t bet against the company just yet. There will be a few more rough roads to traverse, but they’ll be around.
Consider GM has spent decades making inroads into China, India, Russia, and Brazil in search of new markets and low-cost parts suppliers. Those markets will continue to grow for the foreseeable future, and GM, as it did in the beginning, will build up the necessary supplier markets to propel their growth.
In turn, the number of global cars and trucks on the road could multiply by four, to 3 billion by 2035, according to Global Insight, a Boston-based consulting and forecasting firm. GM should have no problem taking advantage of growing markets across the globe, but the United States is another matter as the automaker struggles to meld its product offerings with consumer demand for fuel-efficient vehicles that are safe, reliable, and affordable (as well as fun to drive).
But GM could help itself. At one time, the company was run by mechanics with a flair for the dramatic. Dozens of products came out of the research labs, and they made it a practice to finance outside inventors. One such product the company supported was the Frigidaire, which produced enormous profits.
There were numerous other success stories, but when the accountants began to run things, the company lost its entrepreneurial edge. But that’s changing as the automaker strives to stay ahead of demand for hybrid vehicles with the upcoming Chevrolet Volt. Still, more revolutionary products are needed. So what’s good for General Motors? It needs to replicate its successful roots and tell the world about it in an exciting and dramatic fashion.
R.J. King
rjking@dbusinessmag.com
