It appears that he did not understand then that the copper-cooled Chevrolets had been withdrawn. Four days later, upon his learning of tins decision, Mr. Kettering wrote to me again and proposed to resign from the corporation:
I have definitely made up my mind to leave the Corporation unless some method can be arranged to prevent the fundamental work done here from being thrown out and discredited through no fault of the apparatus . . .
I am perfectly sure that we can take any proposition and make out of it a 100% success, provided we do not have to overcome an organized resistance within the Corporation. This is impossible unless the Executive Committee can take it upon themselves to force through an Executive order when they know it is going to be of value to the Corporation.
I regret very much that this situation has developed. I have been extremely unhappy and know that I have made you and Mr. du Pont equally unhappy by my frequently discussing this matter with you. I am not temperamentally constituted where I can sit down and do nothing. I have never failed in any proposition that I have undertaken yet. The work here at the Laboratory, I realize, has been almost 100% failure, but not because of the fundamental principles involved. Enough may have come out of the Laboratories to have paid for their existence but no one will care to continue in Research activities as the situation now stands.
My only regret, in severing my connection with the Corporation, would be the wonderful association I have had with yourself, Mr. du Pont, Mr. Mott and others. There are many possibilities for work of the kind which I can do in industries where the problems which exist in getting new things over, are not quite as difficult as in the motor industry. Therefore, I hope, after reading this, that you can formulate some definite plan whereby either the situation within the Corporation can be cleared up or I can be relieved of my present duties. I would like to have some definite conclusion reached on this as soon as possible, as I would like to formulate definite plans.
Mr. Kettering was always very frank. In our forty years of friendship and association, he always spoke his mind clearly to me and I spoke the same way to him. I think that this was our worst moment. His biographer T. A. Boyd, has written: ". . . the discontinuance of the copper-cooled Chevrolet in the summer of 1923 was a staggering blow to him. It was then that his spirits reached the lowest point in his research career." I knew that. But I was as certain of the position I felt I had to take as he was of his, and of course we had different responsibilities. Management involves more than technical problems. I could not, as I saw it, in the face of an expanding market hold up the programs of the corporation for an uncertain development. If I had done so I do not believe there would be a General Motors today; we would have missed the boat. Furthermore, however sound the engine might have been in principle, it was not my policy then or at any time afterward to force on the divisions a thing of this kind against their judgment. On this question (though not on any other) there had unfortunately opened a wide gap in the corporation, with Mr. Kettering, his laboratories, and Mr. du Pont on one side, and myself and the divisions on the other. I was anxious to close it.
My problem was to reconcile Mr. Kettering's natural reactions and enthusiasm for his new idea with the realities in the case. The copper-cooled car had failed to meet the test of validity. It had failed at Oakland. It had been adjudged as needing further development by a joint study made by the chief engineers of Buick, Chevrolet, and Northway—a highly competent group. Sample cars produced by Chevrolet and sent into the field had been withdrawn because of various defects. The problem was complicated by the uncertainties of a new chassis as well as a new engine. We had to recognize that research engineers had little experience, relatively speaking, in chassis design as compared with the engineering staffs of the operating divisions. I had of necessity to respect all these facts and circumstances.
On July 2, 1923, I wrote Mr. Kettering a letter, from which I quote the following:
1. You say that you learned the day before yesterday that all Chevrolet cars were to be taken off the market. Now, you recollect in Mr. du Pont's office in Detroit it was agreed that the copper cooled Chevrolet car would be discontinued so far as further assembly is concerned and go assembly would not be started again until Messrs. Knudsen, Hunt and yourself reported to us that it was satisfactory to do this. You were a party to this you recollect, and it seemed after a very lengthy discussion in which many technicalities were brought up, that this was the right thing to do. At the same conference it was agreed that for the sales year beginning August 1st the copper cooled car would be continued and Mr. Campbell was authorized to write contracts both ways. You recollect that. Therefore, as a matter of fact, the Chevrolet position as agreed to at that conference is; first, that they would sell both cars during the sales year of 1923-4 and second, that no copper cooled would be assembled until it was further authorized. Therefore, you can see that they are in a rather embarrassing position. They are told that there will be two cars and yet they can only produce one. I just mention this so that there will be no misunderstanding.
2. It was called to my attention recently that there were 143 copper cooled cars out in the territory and it appeared to be desirable to withdraw them and reassemble them. In other words, it was thought desirable, in view of the fact that there were more or less complaints, not dealing with the engine particularly but dealing with the whole car, that they should be taken in and an adjustment made. There was nothing said that it was due to engine trouble or anything else. It simply seemed, all things considered, to be the desirable thing to do. You must appreciate that when these things are done the policy has to be worked out in detail and it is sometimes impossible to get all of the many people that have to carry out the thing to thoroughly understand and properly present the real reasons behind the policy.
I pass over matters which are not essential here and go on to the conclusion of my letter:
7. I do not agree with you that the situation is in any sense hopeless. I have great confidence in our organization, speaking of it as a whole. I think they are entitled to the credit that is due them and they are also entitled to the discredit of their shortcomings, if I might put it so. The great trouble is that there is an apparent lack of confidence in this copper cooled car and notwithstanding that the executives of the Corporation and the Executive Committee have tried to do their best to get it across, the fact that our Divisions have not believed in it so far has made it practically an impossible problem. That, as I see it, is the real problem before us. It is not the merits of the case and days and weeks spent over it will not alter the situation. What we have got to do is to make our people see the thing as you see it and with that accomplished then there will be nothing more to the problem. I do not think that forcing the issue, is going to get us anywhere. We have tried that and we have failed. We have got to go at it in a different manner if we are going to succeed.
I have quoted from this letter at some length because of the various matters it brings up, most of which are self-evident, at least as to what my position was.
In an effort to relieve the tension I proposed a new development program for the copper-cooled car.
It appeared clear that one basic mistake was a divided responsibility. The Executive Committee, the operating divisions, and the Research Corporation, all with different viewpoints both within themselves and with each other, were trying to do an administrative job. It was clear that we now must get back to sound principles, concentrate the responsibility in a single place, and support that effort. My plan was to create an independent pilot operation under the sole jurisdiction of Mr. Kettering, a kind of copper-cooled-car division. Mr. Kettering would designate his own chief engineer and his production staff to solve the technical problems of manufacture, and his organization would market the copper-cooled cars. They would make a few, or many, as the circumstances dictated. Such a program would provide Mr. Kettering a free hand, without interference, to demonstrate successfully the validity of the concept in which he had s
o much confidence.
To appraise the new approach I called a meeting of Fred Fisher, Stewart Mott, and myself. We all were sympathetic to this proposed solution of the problem. I quote from a memorandum I sent to Mr. du Pont on July 6, 1923:
Mr. Fisher, Mr. Mott and myself had a long talk yesterday regarding a policy that would be more constructive and more fundamental than the one we have been pursuing heretofore. We feel that in forcing the Divisions to take something they do not believe in and in which there are certain argumentative points yet to be demonstrated, is not getting us anywhere and with the divided responsibility between the Chief Engineer and Mr. Kettering we are not going to get anywhere unless the responsibility is positively assured in the hands of one or the other party. We are most anxious to practically demonstrate the commercial value of the proposition and believe that the solution, practically determined upon subject to your approval, is the only way out.
We have discussed the matter with Mr. Kettering at some length this morning and he agrees with us absolutely on every point we make. He appears to receive the suggestion very enthusiastically and has every confidence that it can be put across along these lines. The plan is based upon the following principles:—
1. That as we stand today our efforts to commercially develop the copper cooled have resulted in a total loss and we feel that we are worse off than we were two years ago on account of the resistance which has been set up on account of our repeated failures.
2. That the engineering responsibility for putting the job across must be definitely centralized in one man.
3. That we feel that the only way to get the desired result is to establish an independent Operation with the sole purpose of commercially demonstrating the copper cooled idea.
4. Therefore, we have decided to set up a new Division at Dayton using a part of the Research Plant, especially that part which is being vacated by the Aeroplane Division, and we will set up an organization there which will be more or less of an assembly proposition. Mr. Kettering will have complete charge of the engineering side of it, operating through a Chief Engineer whom he will appoint.
5. The new Operation will take over the four cylinder copper cooled engine and probably the six cylinder Olds and will market these two copper cooled jobs under their own name, starting with five or ten a day and building up as the demand increases.
6. All tool equipment and inventory already developed will be available except so far as Mr. Kettering may determine to make changes.
7. The Operation will be of a specialty nature, putting an extra long price on the job on account of the comparatively small production and special nature of the power plant, adding attractive features to the body which we feel sure will get the job across.
Mr. Fisher, Mr. Mott and myself feel that this is the only way out and place the responsibility where it belongs and eliminate all confusion with the other Divisions who can go ahead about their business in their own way as they have very big problems to work out to maintain their present position for the future. I believe that it is useless to attempt to establish an agreement between Mr. Kettering and Mr. Hunt or Mr. Kettering and anyone else on these various technical points involved in the copper cooled development. They never will agree and one or the other must be required to work the thing out largely in his own way along lines that commend itself to his judgment.
Mr. du Pont did not approve of this plan to segregate the copper-cooled development from the divisions and their large sales organizations, but in the end he accepted it. With the burden of the copper-cooled development placed in Dayton under Mr. Kettering's jurisdiction, and the car divisions cleared to proceed on standard water-cooled programs, I wrote on July 25, 1923, a memo of review to the members of the Executive Committee, from which I quote the following:
Two and a half years have elapsed since the reconstruction of General Motors commenced and in that time, due to the jam we have got into on account of the copper cooled, the position of our Chevrolet car has not made the progress that I think it should have made. Certainly every step that has been taken has been carefully considered and many reasons could be ascribed to this result and probably there would be some difference of opinion as to what really has contributed to the cause, but nevertheless the fact remains, and the object of this memorandum is to simply point out certain advantages that would accrue had we an intensively developed model at this time or what we can expect to gain by getting such a model at the earliest possible moment. Undoubtedly all these advantages, or certainly the most important ones would be available if the power plant was copper cooled as well as water cooled because I do not think that the real difference between the two designs would be material other than that the copper cooled would eliminate water which, if all other conditions were the same, would undoubtedly be a step in advance.
This memorandum was not a mere expression of regret for lost time but a preamble to a new program of advance with new designs for the water-cooled Chevrolet that would be put into competition in the low-price, high-volume market in accordance with the product plan of 1921.
The copper-cooled car never came up again in a big way. It just died out, I don't know why. (Note 5-1.) The great boom was on and meeting the demand for cars and meeting the competition with improved water-cooled car designs absorbed our attention and energies.
Mr. Kettering and his staff went on to their great achievements in creating and developing tetraethyl lead, high-compression engines, nontoxic refrigerants, the two-cycle diesel engine which was to enable General Motors to revolutionize the railroads, and innumerable other inventions, refinements, and developments which are everywhere to be found in automobiles, locomotives, airplanes, and appliances.
The significant influence of the copper-cooled engine was in what it taught us about the value of organized co-operation and coordination in engineering and other matters. It showed the need to make an effective distinction between divisional and corporate functions in engineering, and also between advanced product engineering and long-range research. The copper-cooled-engine episode proved emphatically that management needed to subscribe to, and live with, just the kind of firm policies of organization and business that we had been working on. Altogether, the experience was to have important consequences in the future organization of the corporation.
Chapter 6 - Stabilization
The change in the presidency of General Motors in the spring of 1923, when Pierre S. du Pont resigned and I succeeded him, marked the end of the first period of the modern corporation. Despite the delay in the product program, the corporation in this period achieved general stability, which at that time represented its greatest need. This, in part, was made possible by the passing of the slump of 1920-21, but the foundation of the achievement itself belongs to Mr. du Pont. To him more than to any other individual must be assigned the credit for rescuing the corporation in its time of need and guiding it into a broad position of strength. It was when he recognized that the management of the corporation was again able to continue on its own feet that he made his own decision to turn the operating leadership over to the automobile men. He took this action in the following way.
An annual meeting of the shareholders took place on April 18, 1923, and elected a board of directors to hold office for the ensuing year. The next day, April 19, the directors held an organization meeting and re-elected the same officers, including Mr. du Pont as president, and the standing committees, to serve for another term. Almost all members of the board thought that we were set for a year. I certainly did. But it was not so.
On May 10, after a regular meeting, Mr. du Pont called a special meeting of the board and after asking Mr. Mott to act as chairman, presented his resignation as president of the corporation. Thereupon the board adopted unanimously the following resolution:
On motion duly made and unanimously carried, it was
RESOLVED, that the resignation of Mr. Pierre S. du Pont as President be accepted, and it was further
RESOLV
ED, that in accepting Mr. du Pont's resignation as President the Directors wish to place on record their appreciation of the invaluable services that he has rendered the Corporation during the past two and one-half years, and also to recognize the sacrifices that he made in taking over the duties of the presidency. During his incumbency of this office the affairs of the Corporation have been brought to a high state of prosperity and the Directors wish to express deep regret that he has decided to retire from this office. They are gratified to know that he is not in any way to disassociate himself from the Corporation, but is to continue active participation in the direction of its affairs as Chairman of its Board of Directors.
The meeting then proceeded to the election of a president to fill the vacancy. Mr. du Pont nominated me and I was elected. Subsequently, I was also elected chairman of the Executive Committee. Although Mr. du Pont's resignation at that time was not expected, it had been understood when he took office that it would be for a limited time, and that during his term he would transfer many of his operating duties to vice presidents. He had in fact done so.
No one can appraise Mr. du Pont's conspicuous service to General Motors in the critical period in which he served as intimately as I can. I was very close to him throughout his entire presidency; we traveled together, we attended meetings together, and we counseled together on all the problems that arose. Mr. du Pont had come out of retirement to become head of a complex enterprise which was in financial difficulties, and one in which he had little practical experience. The enterprise was decimated by resignations, its market position was declining, and its management's faith in itself and the future of its opportunities was shaken. Yet the mere fact that Mr. du Pont was there at the head of the enterprise changed the psychology of the whole situation, so to speak. The banks were reassured; the organization's faith in its future was renewed; the shareholders were encouraged; all of us in the corporation determined not only to carry on but to capitalize the vast opportunity inherent in the very nature of our business, and in this we were inspired by our faith in the new and distinguished leadership of Mr. du Pont.
My Years With General Motors Page 12
