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Alfred P. Sloan

Cover of Time Magazine (December 27, 1926)
Born May 23, 1875(1875-05-23)
New Haven, Connecticut
Died February 17, 1966 (aged 90)
Education Massachusetts Institute of Technology
Known for President & CEO of General Motors

Alfred Pritchard Sloan, Jr. (May 23, 1875 – February 17, 1966) was a long-time president and chairman of General Motors.[1]

Contents

Biography

Sloan was born in New Haven, Connecticut. He studied electrical engineering and graduated from the Massachusetts Institute of Technology in 1895. While attending MIT he joined the Delta Upsilon fraternity.

He became president and owner of Hyatt Roller Bearing, a company that made roller and ball bearings, in 1899. For a brief period of time at the beginning of the 20th century, Ford Motor Company sourced bearings from Hyatt. In 1916 his company merged with United Motors Company 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—referred to as the ladder of success—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.

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.

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. Additional grants established a Sloan Institute of Hospital Administration Sloan Program in Health Administration in 1955 at Cornell University Cornell University-the first two year graduate program of its type in the US, a Sloan Fellows Program at Stanford Graduate School of Business in 1957, and at London Business School in 1965.[2] They became degree programmes in 1976, awarding the degree of Master of Science in Management. Sloan's name is also remembered in the Sloan-Kettering Institute and Cancer Center 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."

The Alfred P. Sloan Museum, showcasing the evolution of the automobile industry and traveling galleries, is located in Flint, MI.[3]

Sloan maintained an office in 30 Rockefeller Plaza in Rockefeller Center, now known as the GE Building.[5] He retired as GM chairman on April 2, 1956 and died in 1966.[1]

Mr. Sloan was inducted into the Junior Achievement U.S. Business Hall of Fame in 1975.

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Criticism

In 2005, Sloan's work at GM had come under criticism for creating a complicated accounting system that prevents the implementation of lean manufacturing methods. In a nutshell, 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. This system seems to have been widely adopted because of its significant advancement over previous methods.[4] However, carrying excessive inventory is detrimental to a company's operation and induces significant hidden costs. Sloan's system was implemented by other major companies, especially in the United States, and eventually undermined their ability to compete with companies that did not use it. (Waddell & Bodek 2005)

During Alfred P. Sloan's leadership of GM, many public transport systems of trams in the US were replaced by buses. Some critics, such as Edwin Black, claim that Sloan was also instrumental in the demise of public city transport throughout the United States [5] GM was found guilty of violating anti-trust laws, but the penalties imposed were nugatory, even for the time: a $5,000 fine for the company and $1 fines for each convicted executive.

Sloan Scrutinized for Alleged Nazi Collaboration

Nazi armaments chief Albert Speer told a congressional investigator that Germany could not have attempted its September 1939 Blitzkrieg of Poland without the performance-boosting additive technology provided by Alfred P. Sloan and General Motors.[6][7]

Edwin Black writes in his article, "Hitler's Carmaker: The Inside Story of How General Motors Helped Mobilize the Third Reich"[8], about Sloan's support for Nazi Germany:

"For Sloan, motorizing the fascist regime that was expected to wage a bloody war in Europe was the next big thing and a spigot of limitless profits for GM. But unlike many commercial collaborators with the Nazis who were driven strictly by the icy quest for profits, Sloan also harbored a political motivation. Sloan despised the emerging American way of life being crafted by President Franklin Delano Roosevelt. Sloan hated Roosevelt´s New Deal, and admired the strength, irrepressible determination and sheer magnitude of Hitler´s vision."

Charles Levinson, formerly deputy director of the European office of the CIO, alleged in his book "Vodka-Cola",[9]

"Alfred Sloan, James D. Mooney, John T. Smith and Graeme K. Howard remained on the General Motors-Opel board . . . in flagrant violation of existing legislation, information, contacts, transfers and trade continued [throughout the war] to flow between the firm's Detroit headquarters and its subsidiaries both in Allied countries and in territories controlled by the Axis powers. The financial records of Opel Russelsheim revealed that between 1942 and 1945 production and sales strategy were planned in close coordination with General Motors factories throughout the world.... In 1943, while its American manufacturers were equipping the United States Air Force, the German group were developing, manufacturing and assembling motors for the Messerschmitt 262, the first jet fighter in the world. This innovation gave the Nazis a basic technological advantage. With speeds up to 540 miles per hour, this aircraft could fly 100 miles per hour faster than its American rival, the piston-powered Mustang P51."

David Farber, author of Sloan Rules: Alfred P. Sloan and the Triumph of General Motors (2002) stated that;[10]

GM destroyed Sloan’s files to protect itself from lawsuits regarding antitrust issues, the neglect of automobile safety and its investments in Nazi Germany.

Philanthropy

According to Edwin Black, Sloan was one of the central, behind-the-scenes founders of the American Liberty League, a racist, anti-Semitic, pro-big business group that pretended to rally votes away from Roosevelt. In turn, the League would finance other groups with openly more extreme agendas. One such group was the Sentinels of the Republic to which Sloan himself made a $1000 check. After a Congressional investigation into this group went public in 1936, Sloan issued a statement pledging not to further support the Sentinels.

Also according to Black, the GM chief continued to personally fund and organize fund-raising for the National Association of Manufacturers, which was critical of the New Deal. [11]

The Alfred P. Sloan Foundation is a philanthropic non-profit organization established by Sloan in 1934. The Foundation's programs and interests fall into the areas of science and technology, standard of living, economic performance, and education and careers in science and technology. The total assets of the Sloan Foundation have a market value of about $1.8 billion.

The Sloan Foundation bankrolled the 1956 Warner Bros. cartoon Yankee Dood It, which promotes mass production.

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
  • "Technological progress-and it is a pity more do not appreciate it-is the one sound approach to increased employment and higher wages. There is no other way." (Sloan 1941, p. 10)
  • "General Motors was becoming large through a process of evolution, but only because it was rendering a service to community. As its volume of business expanded it became able to do more for workers, stockholders and customers." (Sloan 1941, p 144)
  • “Scientific management means a constant search for the facts, the true actualities, and their intelligent, unprejudiced analysis. Thus, and in no other way, policies and their administration are determined. I keep saying to the General Motors organization that we are prepared to spend any proper amount of money to get the facts. Only by increased knowledge can we progress, perhaps I had better say survive.” (Sloan 1941)

See also

References

  1. ^ a b "Alfred P. Sloan Jr. Dead at 90; G.M. Leader and Philanthropist; Alfred P. Sloan Jr., Leader of General Motors, Is Dead at 90". New York Times. February 18, 1966. "Alfred P. Sloan Jr., who shaped the General Motors Corporation into one of the world's largest manufacturing enterprises, died of a heart attack yesterday afternoon at Memorial Sloan-Kettering Center here. He was 90 years old."  
  2. ^ [1]
  3. ^ [2]
  4. ^ Sloan, Alfred P., (1965). My Years With General Motors
  5. ^ http://www.internalcombustionbook.com see also General Motors streetcar conspiracy and Nazi Nexus for details.
  6. ^ http://www.washingtonpost.com/wp-srv/national/daily/nov98/nazicars30.htm
  7. ^ http://www.internalcombustionbook.com/archive/offsite/jweekly/JWeeklyGMandtheNazis.html
  8. ^ Hitler's Carmaker: The Inside Story of How General Motors Helped Mobilize the Third Reich
  9. ^ [3]
  10. ^ [4]
  11. ^ [Nazi Nexus, America's Corporate Connections to Hitler's Holocaust]

Further reading

External links

Business positions
Preceded by
Lammot du Pont II
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

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