Sloan, Alfred Pritchard, Jr.

views updated Jun 11 2018

SLOAN, ALFRED PRITCHARD, JR.

Alfred P. Sloan Jr. (1875–1966) was one of the most influential executives in twentieth century American manufacturing. As chief executive officer, president, and chairman of the board for the automaker General Motors (GM) over several important decades, Sloan was responsible for implementing strategies and practices that helped GM emerge as one of the most successful American companies of the century. In 1998, over thirty years after Sloan's death, GM still held the number one position in American business, leading Fortune magazine's list of the Top 500 American enterprises.

Sloan was born in New Haven, Connecticut in 1875, the son of Alfred P. Sloan Sr. and Katherine Mead Sloan. His father was a machinist with investments in a number of businesses, including a tea and coffee import company. When Alfred Jr. was five the family moved to Brooklyn, New York, where he excelled academically in its public schools. As a teen, he passed the entrance examination for Massachusetts Institute of Technology, but was denied admission because of his youth. He was allowed to enter at the age of seventeen and earned his degree in electrical engineering within three years.

Sloan married Irene Jackson and maintained a home on New York's Fifth Avenue. According to the profiles of him published during his lifetime in magazines like Time and Forbes, Sloan was the quintessential mid-century auto executive, with no interests or hobbies outside of the office. He and his wife had no children, but Sloan was close to a half-brother, Raymond, who was eighteen years his junior. When Raymond died in the 1940s, Sloan was deeply saddened, and increased the funding and time he gave to the Sloan-Kettering Institute for Cancer Research. His half-brother had been a hospital administrator and had drawn Sloan into medical philanthropy. Sloan was also known to be generous with his resources when he learned of a GM family in trouble; he once spent a Christmas holiday working toward finding the best medical care for the burned child of a plant manager, neither of whom he had ever met. He also refused to publish his autobiography, My Years with General Motors, until all of the people mentioned had passed away. Sloan himself died just two years later on February 17, 1966, and is buried in Cold Spring Harbor, New York.

Sloan's father was an investor in a New Jersey business called the Hyatt Roller Bearing Company, which made billiard balls. After Sloan Jr. received his degree from the Massachusetts Institute of Technology in 1895, he went to work at Hyatt as a draftsman. In just under a decade he had risen through the ranks to become its president. Part of the reason for both his and Hyatt's success came from Sloan's recognition of Hyatt's ability to expand its business by producing steel roller bearings for the auto industry. Through his sales to the executives who were usually the founders of their firms and pioneers in the auto industry, Sloan came to know many of the most important names in the business; Henry Ford (1863–1947) for example, was both a customer and a friend of Sloan's.

Hyatt Roller Bearing's success in making and marketing the anti-friction bearings used in the auto industry led to an investment involvement with one automaker, the United Motors Corporation. This company had originated a practice of linking to its parts suppliers in a mutually beneficial relationship. Sloan and Hyatt teamed with United in 1916 to become its only supplier of steel roller bearings. The investment of $13.5 million made Sloan a vice president when United Motors merged with General Motors two years later.

The General Motors Company had been founded in 1908 by William C. Durant (1861–1947), a promoter and salesman. Durant's erratic management style and his determination to expand the size of the company regardless of the business climate caused the company to go into receivership in 1910. A consortium of bankers ran the company until Durant regained control with financial backing from the chemical industry magnate, Pierre Du Pont. Durant hired Sloan as a vice president and director of the GM Corporation. Sloan's management style, in contrast to Durant, was methodical and organized. Sloan nearly quit in 1920. He was not the only member of GM's management who was frustrated with Durant. He encouraged his close friend Walter P. Chrysler (1875–1940), who was head of the Buick operations, to strike out on his own and launch what would become the number three auto maker, the Chrysler Corporation.

In 1920 Sloan went on a trip to Europe with his wife and returned prepared to resign only to learn that Pierre Du Pont had helped to ease Durant into retirement. Du Pont took over as Chief Executive Officer. During this period Sloan developed a critique of the amorphous management culture at GM. When he became head of the company in 1923 he helped moved GM in the direction of rational and predictable growth. During his first years as president in the 1920s, GM doubled its manufacturing output and broke sales records. It also absorbed much of its competition, and some of the smaller carmakers either folded or were merged into General Motors during this time. Its biggest competitor was another Detroit–run operation, the Ford Motor Company, and under Sloan's direction GM surpassed Ford in just a few years.

Sloan's talent for running a thriving financial enterprise is one of the most significant success stories in twentieth century American business. GM was so financially sound that it was barely affected by the Great Depression; despite the Wall Street crash of 1929, its stock continued to pay shareholder dividends. In 1937 Sloan was elected board chair, and continued as both chair and CEO until 1946; he remained chairman of the board of directors until 1956, when he officially retired.

Sloan's restructuring of GM earned him a reputation for excellence both as a practical manager and as a management theorist. Automobile management theory before Sloan was most strongly influenced by Henry Ford. "Fordism" was dedicated to the mass production of a single product. Ford was reported to have said that the customer could have any color Model T that he wanted, as long as it was black. "Sloanism," on the other hand, paid attention to the customer as a choice–maker. Sloan encouraged diversity in product choices. But diversity did not mean chaos. His management accomplishments involved shaping the company rather than allowing the separate automobile companies that GM owned to go off in their own directions, guided by their own autonomous decisions in design, engineering, and production. Thus, Sloan transformed GM from a conglomerate of different companies overlapping each other in price range, technology, and product into a company guided by a single intelligence applied to five separate but interlocked divisions, each producing and marketing cars aimed at a particular segment of the market. On the low end was the affordable Chevrolet. In the middle range were Pontiac, Oldsmobile, and Buick. On the high end were the elegant Cadillacs. The divisions were able to share development, production, and engineering costs among themselves, which added greater profit to the higherpriced luxury models. And the design feature of automobile manufacture became an important generator of car sales through the institution of annual model changes.

When Sloan became chair of GM's board of directors in 1937, he was the highest-paid executive in the country. The mammoth size and economic success of General Motors led to labor unrest and the founding of the United Auto Workers union. Sloan's refusal in 1936 to meet with its representatives to address grievances over job security, wages, and safety resulted in a sit-down strike at GM plants, and the eventual legal recognition of the United Auto Workers a year later, a significant moment in American labor history. Not surprisingly, Sloan was a staunch supporter of Republican politics.

Sloan would also be remembered as a great philanthropist. At the height of the Great Depression in 1934, he founded the Alfred P. Sloan Foundation. It gave grants primarily for research into science and technology; in 1996 it bestowed $53 million. The auto executive also endowed the Sloan School of Management at his alma mater, the Massachusetts Institute of Technology. At its founding in 1931, it was one of the first graduate programs of its kind for executives already established in their careers. He also endowed the Sloan-Kettering Institute for Cancer Research at New York City's Memorial Hospital.

See also: Walter P. Chrysler, Chrysler Corporation, Ford Motor Company, Henry Ford, General Motors, United Auto Workers

Alfred Pritchard Sloan Jr

views updated May 29 2018

Alfred Pritchard Sloan Jr.

The American automobile executive Alfred Pritchard Sloan, Jr. (1875-1966), pioneered in automotive innovation and built General Motors into one of the world's largest companies.

Alfred P. Sloan, Jr., was born on May 23, 1875, in New Haven, Conn., the son of a prosperous businessman. In New York City he attended the Brooklyn public schools and the Polytechnic Institute, where he passed the exams to enter the Massachusetts Institute of Technology, but he was refused admission because he was too young. At the age of 17 he did matriculate there and received a bachelor's degree in electrical engineering in 1895.

Sloan obtained a position as draftsman in the Hyatt Rolling Bearing Company at Harrison, N.J. By this time he had married Irene Jackson of Boston. At the age of 26 he became president and general manager of the rapidly failing firm when his father and one other man bought control. Sloan quickly resuscitated the firm by moving into the manufacture of steel roller bearings for the mushrooming automobile industry.

While Olds Motor Company was Sloan's first customer, Ford Motor Company became the largest. Hyatt profits ran as high as $4 million annually, but Sloan grew concerned with rumors that General Motors (GM) might produce its own bearings. Instead, William C. Durant, the energetic builder of GM, bought Sloan's firm for $13,500,000 and merged it as part of the United Motors Corporation, with Sloan as president. In 1918 he became a vice president and member of the GM executive committee.

Durant lost control of GM in 1920 to the Du Ponts, but Pierre Samuel du Pont, the new president, knew nothing about automobiles and made Sloan vice president in charge of operations. Three years later Sloan became president of GM and a director of the Du Pont Company. In 1920 GM held a 12 percent share of the market; by 1956, when Sloan retired, the market share stood at 52 percent. He accomplished this not only by innovations such as four-wheel drive, crankcase ventilation, and knee-action brakes but, more importantly, by adopting the staff principle of management. He centralized administration and decentralized production and put each product in its own division and eliminated intracompany competition.

Sloan made a great philanthropic contribution in 1937, when he endowed the Alfred P. Sloan Foundation with $10 million; to 1966, his gifts totaled over $305 million. Major recipients were the Sloan-Kettering Institute for Cancer Research and the Massachusetts Institute of Technology. He died Feb. 17, 1966, in New York City.