Alfred P. Sloan Jr. 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 30 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 young age. He was allowed to enter at the age of 17, and earned his degree in electrical engineering in 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 18 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, 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 suppliers in a mutually beneficial relationship, thus 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. By 1923, he became president of GM when Pierre DuPont, a major shareholder, retired after three years on the job and became board chair.
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.
Social and Economic Impact
Sloan's autobiography, My Years with General Motors, was published in 1964 and it remains required reading in most business school graduate programs. It was one of the first corporate-focused biographies ever written by a leading executive, and it remained on the bestseller lists for weeks. Sloan's coauthor was John McDonald, a senior writer at Fortune.
In his memoirs, Sloan recounts how GM came to be the biggest manufacturing operation in the world, second only to the conglomeration known as U.S. Steel. Sloan was responsible for giving GM, its operations, and its innovative management style, his own personal stamp—one that endured decades beyond his retirement. 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 folded into General Motors during this time. Its biggest competitor was another Detroit-run operation, the Ford Motor Company, and during Sloan's tenure GM succeeded in surpassing Ford's industry lead in just a few short years. Sloan's encouragement of a close friend and head of his Buick operations, Walter P. Chrysler, to strike out on his own led to the launch of what would become the number three automaker, the Chrysler Corp.
The way in which Sloan structured GM, which is detailed in his book, revealed him as one of the first theorists of management as a discipline in modern American business. Sloan was responsible for structuring GM into five separate divisions, each producing and marketing cars aimed at a particular segment of the market, from affordable Chevrolets to elegant Cadillacs. In this way the divisions were able to share development and engineering costs among themselves, which added greater profit to the higher-priced luxury models. Such a strategy was later adopted by the Japanese automakers in the 1980s when they launched their upscale divisions such as Acura and Lexus. Sloan also put into place a decentralized management structure with centralized financial operations at GM, which was later widely copied by other American companies in the years after World War II.
When Sloan became chair of GM's board of directors in 1937, he was the highest-paid executive in the country. The economic success of General Motors, however, did lead to labor unrest and the beginnings 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 launched a sitdown strike at GM plants, and led to the eventual formation and 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.