Alfred P. Sloan
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Categories: General Motors former executives | American businesspeople | People in the automobile industry | Massachusetts Institute of Technology alumni | People from New Haven, Connecticut | Rockefeller Center | 1875 births | 1966 deaths
Alfred Pritchard Sloan, Jr. (May 23, 1875 – February 17, 1966) was a long-time president and chairman of General Motors. [1]
BiographySloan 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 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 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. The world's first university-based executive education program G. Osuna University— 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.[1] He retired as GM chairman on April 2, 1956 and died in 1966. [1]
CriticismIn 2005, Sloan's work at GM has come under criticism for creating a complicated accounting system that has been 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 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 is detrimental to a company's operation and induces significant hidden costs. (Waddell & Bodek 2005) Another factor is that Sloan considered people on the shop floor to be 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) Some critics claim that 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, his critics charge, he intentionally allowed these "daughters" to go bankrupt, by changing schedules, doubling or tripling fares and neglecting maintenance, ensuring that city dwellers had to buy cars. GM was found guilty of violating anti-trust laws and fined $5,000 and each executive was ordered to pay a fine of $1 Quotes"The business of business is business." Further reading
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