Alfred P. Sloan Quotes

First let us ask whether our wealth-creating agencies, particular that of industry, are to be based upon private enterprise of policy management. I can not see how any intelligent observer can have any possible faith in the capacity of political management to provide either stability or progress if it should set out to operate the agencies of wealth creation, particularly industry. It is my firm conviction that any form of 'Government Regulation of Business' is bound to result in an ever-increasing interference with the broad exercise of initiative - the very foundation of the American system. That is the natural evolution of bureaucracy. If that be so, might not the ultimate logical result be the necessity for the socialization of industry through the break down of the profit system induced by the accumulative effect of the ever-increasing political management. We do not need to go far afield to see definite evidences of that possibility

Let me deal here with what General Motors includes and with the responsibility that rests on its management.

The greatest real thrill that life offers is to create, to construct, to develop something useful. Too often we fail to recognize and pay tribute to the creative spirit. It is that spirit that creates our jobs. There has to be this pioneer, the individual who has the courage, the ambition to overcome the obstacles that always develop when one tries to do something worthwhile, especially when it is new and different.

You of course appreciate that this industry of ours the is today the greatest in the world. Three or four years ago it passed, in volume, steel and steel products, the next largest industry. This means, expressed otherwise, that upon its prosperity depends the prosperity of many millions of our citizens and the degree to which it has become stabilized in turn has a tremendous influence on the stabilization of industry as a whole, and therefore on the prosperity and happiness of still many more of our citizens. Directly and indirectly, this industry distributes hundreds of millions of dollars annually to those who are connected with it, in one way or another, as workers. It also distributes hundreds of millions of dollars in the aggregate to those who have invested in its securities. The purchasing power of this total aggregation, as you must appreciate, is tremendous.

The industry has not grown much during the past three or four years. It is practically stabilized at the present . What has taken place is a shift from one manufacturer to another.

By The middle of The 1920s General Motors had accomplished some things, but apart from survival and reorganization, they were more in the realm of the mind than of reality. We knew, as I have related, the strategy with which we proposed to approach the car business, how we proposed to manage the enterprise financially, and the relationships we wanted to establish among persons in different roles. But by the end of 1924 little of this was reflected in Our activities in the automobile market. That our volume of business had increased after the slump of 1921 — and especially in 1923 — could be attributed less to our own wits than to the improvement in the general economy and the rising demand for automobiles. While internally we had made much progress, externally we had marked time. But the time had come to act.

What has taken place is a shift of business from one manufacturer to another, and the announcements in the press as well as the general publicity of those manufacturers who have succeeded in increasing their business give, I think, the impression that this is true of the whole industry. If we could assume, for the sake of argument, that we will reach the point at which twenty-five million cars and trucks will be registered in the United States an assumption that from what we have accomplished so far is certainly perfectly reasonable then I think we could safely say that the replacement demand, plus the export demand which will increase for many years yet, plus the normal growth, would amount to something like four to four and one half million vehicles a year and would require the manufacture of a number of cars equal to or greater than has yet been produced in any year in the history of the industry...

Competition is the final price determinant and competitive prices may result in profits which force you to accept a rate of return less than you hoped for, or for that matter to accept temporary losses. And, in times of inflation, the rate-of-return concept comes up against the problem of assets undervalued in terms of replacement. Nevertheless, no other financial principle with which I am acquainted serves better than rate of return as an objective aid to business judgment. This principle had governed the thinking of the Finance Committee of General Motors since 1917.

Industry must further expand its horizon of thinking and action Industry must further expand its horizon of thinking and action. It must assume the role of an enlightened industrial statesmanship. To the extent that it accepts such broadened responsibilities, to that degree does it assure the maintenance of private enterprise, and with it the exercise of free initiative as the most efficient creator of wealth.

There was excitement for us all in the fact that I had a job in the mechanical field, so that my education would count.... Well, I am bound to admit the first sight of my opportunity was disappointing... Not far from a city dump on a weed-grown, marshy plain was an old weather-worn building, like an overgrown barn. In its indefinite yard there was a small mound of coal and a great mound of reddish-gray cinders and ashes; also a disorderly accumulation of discarded machinery ... Once the factory had been painted brown. Only one word describes it: "dirty." Smoke from the dump carried an acric odor. Eventually across the wall nearest the railroad track there was lettered in black this legend: HYATT ROLLER BEARING COMPANY

Having been connected with industry during my entire life, it seems eminently proper that I should turn back, in part, the proceeds of that activity with the hope of promoting a broader as well as a better understanding of the economic principles and national policies which have characterized American enterprise down through the years.

Get the facts. Recognize the equities of all concerned. Realize the necessity of doing a better job every day. Keep an open mind and work hard. The last is most important at all. There is no short cut.

Roll a ball under your hand on a table and roll a pencil in the same manner. What you feel are "point" and "line" bearings. But to understand what mechanics mean by a surface "bearing," grasp a pencil in your hand and use your other hand to make it turn as a piece of shafting. Now, the lower half of the shaft is supported everywhere by contact with your hand — the upper half is not supported, merely covered. The advantages of ball and roller bearings were obvious many years ago to mechanical people... Solid steel rollers, being inflexible, were not satisfactory at that stage, but a Hyatt flexible roller bearing was different. We had something. Our spirally wound tube roller had a springlike quality, yielded to irregularities caused by poor manufacture, thus making automatic adjustments between housing and bearing.

But as president of General Motors, I realized our thinking affected the lives of hundreds of thousands directly and influenced the economic welfare of many important communities, in some of which we were almost the sole provider. In some way, visible or invisible, as we expanded, the economic welfare of millions was becoming linked with the welfare of General Motors. Previously, when industry was smaller, the absorbing problems of industrial management were largely limited to the fields of engineering, production and distribution. Out of its endeavors in these fields had come a continuous stream of new products, providing new comforts and making possible better ways of living. 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.

The transformation of the automobile market was essentially complete in 1929. If Mr. Ford, in that pivotal year in the modern economy, still held stubbornly to his old concept in his new Model A, he was counterbalanced by Mr. Chrysler, who had come up from nowhere with tremendous vitality and with a market policy similar to General Motors'. The fact that Mr. Ford built nearly two million of the five million U.S.-produced cars and trucks sold that year was only incidental from the long-term point of view. it was a splurge, not the sign of a trend.