All of these factors came together in our decision during the slump of 1921 to continue with Frigidaire. It was clear that we had at Dayton the research background and an organization to back up the Frigidaire development. Delco-Light had available a fine sales force spread over large areas of the country, and some unused manufacturing capacity which could be made suitable for the production of refrigerators. So we moved Frigidaire to Dayton, combined its operations with those of Delco-Light, and started on a new course in the refrigerator industry on a larger scale than thereto- fore.
The decision proved to be a sound one. Frigidaire's heavy losses in 1921 were reduced steadily in the next two years, and in 1924 the operation showed a profit for the first time. Meanwhile, production rose rapidly. Only a few more than a thousand units had been produced in 1921 at the Northway plant; about 2100 were sold in 1922, the first full year of operations at Dayton. The figure rose to 4700 in 1923, 20,200 in 1924, and 63,500 in 1925. By the last year, Frigidaire was established as a leading factor in the new refrigerator industry; it represented, I believe, more than half of the market. By 1927 it was apparent that Frigidaire was becoming much too big to be operated within Delco-Light, and in January 1928 it was removed from that company. Part of its operations had already been moved to nearby Moraine, Ohio, where we had a plant available. Frigidaire became a division of General Motors in December 1933.
Once we had decided to build up Frigidaire we made a number of major ground-breaking advances in the design and manufacture of the machine. Without these contributions, it is safe to say, popular acceptance of the refrigerator would have been delayed for a considerable period of time.
As I have indicated, the Guardian organization originally had no real research staff outside of Mr. Mellowes himself. Even in 1921, when Frigidaire was moved into Delco-Light, there were only twenty-odd engineers, model makers, testers, and the like engaged in this work. We realized that the whole future of Frigidaire depended on our ability to crack several research problems, and to produce a machine that would operate safely, economically, and dependably; hence we placed great emphasis on research. We soon managed to get rid of the space-consuming brine tank and water-cooled compressor used on the original Guardian machine; these devices, which were major sources of refrigerator breakdowns, were replaced by a direct-expansion coil and a two-cylinder, air-cooled compressor. In the early machines, food was sometimes contaminated when moisture leaked into the refrigerator; we overcame this problem by introducing asphalt-and-cork sealing. We reduced the weight of the machine and considerably improved its appearance when we introduced the all-porcelain cabinet in 1927. All of these improvements were instrumental in the great expansion of the Frigidaire market during the 1920s. Another major cause of this expansion was our ability to get prices down. The 1922 B-9 wood refrigerator with brine tank and water-cooled compressors had a net weight of 834 pounds and sold for $714. In contrast, the M-9 Frigidaire model of 1926, a steel cabinet fitted with an air-cooled compressor and direct-cooling coils, had a net weight of 362 pounds and sold for $468.
During the 1919-26 period no other manufacturer or organization made any appreciable contribution to the refrigeration business in research, engineering development, mass-production methods, or distribution and servicing techniques. Our biggest research problem in Frigidaire, and the corporation's great ultimate contribution, concerned the refrigerant itself. The fact was, during the 1920s, that the refrigerants used by Frigidaire, and by all its leading competitors, had some health hazards; fumes from the refrigerating agents were toxic and in a few cases had actually caused the death of persons who breathed them. Because of the health hazard, these early refrigerators were sometimes kept on the back porch rather than in the kitchen; hospitals generally could not use them at all. We believed that sulphur dioxide, the agent first used in our refrigerators, was the least dangerous of the known refrigerants—principally because its distinctly irritating odor served as a warning to anyone breathing it. Nevertheless, it was clear that, ultimately, something better had to be found.
In 1928 Mr. Kettering, who was then director of General Motors Research Laboratories, initiated a major assault on the whole problem of the refrigerating agent. He commissioned one of his former associates in General Motors, Thomas Midgley, Jr.—the man who had developed tetraethyl lead—to find a new agent. After a series of conferences between Mr. Midgley, Mr. Kettering, and Frigidaire executives, they agreed that the refrigerant they were looking for should meet certain requirements. These were:
Of primary importance:
(1) To have a suitable boiling point.
(2) To be nonpoisonous.
(3) To be nonflammable.
(4) To have a distinct but not unpleasant odor.
Of secondary importance:
(5) To be immiscible with lubricating oils.
(6) To be relatively inexpensive.
These "secondary" requirements, it was understood, would be met so long as they did not conflict with the primary requirements. But there was agreement that all of the first four specifications had to be met before the electric refrigerator could be regarded as a complete success. A study of all existing literature was made at the Research Laboratories, under Mr. Kettering's direction, for compounds winch might meet these specifications. This study pointed out the possibility of using fluorinated hydrocarbons. All through 1928 Mr. Midgley and some associates, especially Dr. A. L. Henne, worked in a private laboratory in Dayton in an effort to find a suitable refrigerant. They soon came to believe that some of the chlorofluoro derivatives of methane might do the job. By the end of the year Mr. Midgley had determined that dichloro-difluoro-methane, called Freon-12, would meet all four of the primary requirements agreed upon. It would not meet either of the two secondary requirements, but since it was clearly the best refrigerant available, Mr. Midgley and his associates began working on the development of processes for manufacturing the compound. A pilot plant was designed and put in operation at Dayton during the fall and winter of 1929-30.
In the fall of 1929 we knew as much about the Freon-12 refrigerant as we had to know. Frigidaire chemists had made exhaustive studies of the compound's physical properties. They had determined the corrosion effects of Freon-12 on high and low-carbon steels, aluminum, copper, monel metal, tin, zinc, tin-lead solders, and other metals and alloys used in refrigerating systems. They had examined the effect of Freon-12 on different foods, and on flowers and furs. The tests were satisfactory to us. At the 1930 meeting of the American Chemical Society, Mr. Midgley read a paper on Freon-12 and publicly demonstrated that it was nonflammable; he proved that it was nontoxic by inhaling some of it himself.
As I have indicated, Freon-12 did not meet either of Mr. Midgley's two secondary requirements. It was quite expensive, in fact. Whereas sulphur dioxide had cost six cents a pound, the initial price of Freon-12 was sixty-one cents in 1931. Even now it costs more than sulphur dioxide did then—but health-department codes do not allow the use of the latter.
Since we regarded our new compound as the safest refrigerant available, we offered it to our competitors from the beginning, and by the mid-1930s Freon-12 was used almost universally in electric refrigerators. Even today, no better refrigerant has been found.
By 1932 or thereabouts it was unmistakably clear to us that in Frigidaire we had a property of vast growth potential. In 1929 we had manufactured our one-millionth Frigidaire, and three years later we had manufactured 2,250,000. Our success in developing Freon-12 removed the last roadblock standing in the way of the refrigerator industry. But while it was clear that Frigidaire and the industry would expand, it was also clear that Frigidaire's share of this great market must inevitably decline somewhat. Several companies would begin making refrigerators toward the end of the 1920s. Kelvinator was, of course, a pioneer. The original Kelvinator Corporation entered the electric-refrigerator field in 1914 and was the first enterprise to manufacture mechanical refrigerators for household use on a commercial scale. G
eneral Electric and Norge entered the field in 1927, Westinghouse in 1930. By 1940, the last prewar year of unregulated commercial production, Frigidaire's share of the refrigerator market—which had been above 50 per cent in the 1920s—was down to 20 to 25 per cent. But our smaller percentage represented a larger volume. Shipment of our refrigerators rose from some 300,000 in 1929 to 620,000 in 1940.
During the years 1926-36 a number of Frigidaire's competitors gained an advantage over us in the marketing area. They began to make and sell radios, electric ranges, washers, ironers, and dishwashers, while Frigidaire concentrated on refrigerators. In 1937 we added electric kitchen ranges to the Frigidaire line, and a few years later, window-type room air-conditioners. But these did little to overcome Frigidaire's competitive disadvantage. Obviously, families and home builders who wanted to purchase a full complement of household appliances would buy from one of the manufacturers who offered a complete line.
We failed to expand the Frigidaire line in the years before the war. As early as 1935, for example, Mr. Pratt had suggested that Frigidaire get more actively into air-conditioning; but his suggestion did not register on us, and the proposal was not then adopted.
During the war we made a review of Frigidaire's prospects and concluded that it would no longer be feasible to operate in the appliance field on a limited basis. A survey of Frigidaire dealers conducted prior to the end of the war served to fortify this conviction. In response to the survey question, "Should Frigidaire manufacture additional appliance products?" 99 per cent of the dealers who were polled replied, "Yes." The dealers indicated that, principally, they wanted automatic washing machines, refrigerator-freezer combinations, conventional washing machines, food freezers, gas ranges, and ironing machines—in that order.
Most of these appliances and several others were added by Frigidaire in the postwar years. The following list shows the years in which we introduced new household appliances:
Home food freezers 1947
Automatic washers 1947
Dryers 1947
Automatic ice-cube makers 1950
Dishwashers 1955
Wall ovens 1955
Fold-back cooking units 1955
Built-in cooking units 1956
Meanwhile, our original product—the refrigerator—has been enlarged and improved little by little to such an extent that it has become almost a new appliance. The typical refrigerator sold in the early 1930s was a five-cubic-foot model, styled rather drearily, and depressingly bulky in relation to its actual refrigeration space. Refrigerators sold today have, as a rule, from ten to nineteen cubic feet of storage space. They are beautifully styled, require no defrosting, and have considerable freezer space. There is no question that the modern refrigerator is a much better buy than its early counterpart. I am indebted to a study by Professor M. L. Burstein of Northwestern University for some detailed data bearing on this point. He has calculated that "the real price of refrigeration services in 1955 was but 23 per cent of that in 1931." That comes pretty close to the essential meaning of progress.
Aviation
General Motors has been involved in the aviation industry in several different ways. The bulk of our aviation business has been military, of course, and has consisted of work done under contract for the federal government—most of it during World War II and in the ensuing years of the cold war. But that is not the whole story.
It will, I suspect, come as a surprise to many readers that General Motors long ago made a major effort to enter the commercial aviation field. Bendix Corporation, North American Aviation, Trans World Airlines, and Eastern Air Lines, all owe something of their present identities to the activities of General Motors.
Our venture into commercial aviation was made in 1929. In that year we made two large investments and one small one in aviation. We purchased a 24 per cent interest in the newly formed Bendix Aviation Corporation and a 40 per cent interest in the Fokker Aircraft Corporation of America. Together, these investments cost us some $23 million. In addition, we purchased the entire capital stock of the Allison Engineering Company. This investment cost only $592,000, and did not play an important part in the plans we had then to enter the aviation industry.
Our 1929 decision to get into aviation has an interesting background. I should mention that General Motors was not entirely a stranger to the aviation industry at that time. During World War I, Buick and Cadillac had combined to manufacture the famous Liberty aircraft engine for the government, along with Ford, Packard, Lincoln, and Marmon. More than 2500 of these engines were actually produced by us, and orders for over 10,000 more were on our books at the time of the 1918 armistice. From an engineering standpoint, there was not a great deal of difference in those days between an airplane engine and an automobile engine, and we were able, in consequence, to make good use of our automotive experience in compiling an outstanding production record. In addition, General Motors acquired in 1919 the Dayton Wright Airplane Company, which had produced a total of 3300 airplanes during the war period. Fisher Body also—before its purchase by General Motors—was an important manufacturer of military airplanes.
During the 1920s it became steadily clearer that aviation was to be one of the great American growth industries; and especially after Lindbergh's dramatic flight in 1927 there was a vast public enthusiasm for aviation and a widespread conviction, which we shared, that it would soon accomplish many more "miracles." As automobile producers, we were especially concerned about one possible use of the airplane. There was in the late 1920s a great deal of talk about developing a "flivver" plane—that is, a small plane for everyday family use. We knew, of course, that any such plane would have to be much safer than existing models and also much cheaper. But as one aviation miracle succeeded another, our conviction grew that the flivver plane was at least a possibility. The development of such a plane would have large, unforeseeable consequences for the automobile industry, and we felt that we had to gain some protection by "declaring ourselves in" the aviation industry. In 1929 we did not plan to operate either Bendix or Fokker as a division of General Motors; our investments were made as a means of maintaining a direct and continuing contact with developments in aviation. Our 1929 annual report to shareholders summed up our thinking on the matter as follows:
. . . General Motors, in forming this association [with the aviation industry], felt that, in view of the more or less close relationship in an engineering way between the airplane and the motor car, its operating organization, technical and otherwise, should be placed in a position where it would have an opportunity to [come into] contact with the specific problems involved in transportation by air. What the future of the airplane may be no one can positively state at this time. Through this association General Motors will be able to evaluate the development of the industry and determine its future policies with a more definite knowledge of the facts.
As these words suggest, the engineering techniques of the automobile and aircraft industries were still quite similar in 1929—much more similar than they are today. Thus in acquiring our interests in the aviation companies we also gained access to some valuable technical information that was directly relevant to our own automobile operations. Bendix, especially, owned or controlled some important patents for devices applicable to the automobile industry. Indeed, its accessory lines included some automobile components— for example, brakes, carburetors, and starting drives for engines. The company had a superb technical staff—a fact winch made our investment all the more attractive. Our principal contributions to both Bendix and Fokker, after we had made our investment in these companies, were in the realm of corporate organization and management.
Our 40 per cent interest in Fokker cost us $7,782,000. This company had two small, leased plants at the time we made our investment: one in Hasbrouck Heights, New Jersey, and one in Glendale, West Virginia. Anthony H. G. Fokker, a brilliant Dutch aircraft builder, had formed the company some time
earlier to exploit the American manufacturing rights to his work. His aircraft had figured prominently in the pioneer days of aviation; they had been involved in such historic events as the first nonstop flight across the United States, Byrd's flight over the North Pole, and the first flight from the United States to Hawaii. When we bought into Fokker, the company was engaged primarily in aircraft manufacture for the United States government and, to a lesser extent, for commercial air-transport operators. Soon after our investment, the company incurred some serious operating losses. We felt that these losses reflected weakness in the company's management, and we conveyed our views to Mr. Fokker. He did not agree with us, but after a series of exchanges he withdrew from the company and returned to Holland. We then embarked upon a course of action which completely transformed the character of the organization.
The following interrelationships are complex, and I see no way to simplify the description of them. First of all, we changed the name of the Fokker Aircraft Corporation of America to General Aviation Manufacturing Corporation and consolidated the operations in a leased plant in Dundalk, Maryland. In April 1933 we took another important step. We combined General Aviation and North American Aviation; all of General Aviation's assets were exchanged for approximately 1,500,000 shares of North American common stock. General Aviation was subsequently liquidated, and its holdings in North American stock distributed to the shareholders. As a result of this distribution, and of open-market purchases for our own account, General Motors' equity in North American amounted to nearly 30 per cent of that company's outstanding stock by the end of 1933.
My Years With General Motors Page 44
