The big 3 history

[imbam]

I was wondering if I could get some information on how the big three became the big three. ( if that makes any sense)

[stexch]

Ford was started by Henry Ford. He spent years developing and selling cars (with very little success), until he developed the Model T. The success of the Model T was that it was affordable for farmers (the bulk of the population at that time), and that it had a simple, durable design. He used (but didn't invent) the concepts of interchangable parts and the moving assembly line to produce cars that could be sold for less than the handcrafted competition. Henry kept producing the Model T long after the competitors had come up with much more innovative products, and was reluctant to adopt new technologies like hydraulic brakes. Ford acquired Lincoln (a luxury car maker), and started Mercury to target the middle market (competitor of Buick, Olds, Pontiac). Along the way the Edsel and Merkur brands came and went (the Edsel due to negative public perception and shrinking target market, and the Merkur due to lack of skill of Lincoln dealers to sell a European style car, controversial styling, and lack of demand from the public). While Henry deserves credit for his ability to see the potential of selling cars to the masses, he was not perfect. He had a reputation of being autocratic and merciless to his employees. His anti-Semitism, as promoted in the newspaper he owned, is well-documented. He hated unions, and hired mobs of thugs to beat up picketers.

General Motors was started by Billy "Crapo" Durant. His claim to fame is his vision of acquiring car companies to provide a car for all markets:
The Little Car Company (which became Chevrolet);
The Oakland Motor Co. (whose spin-off Pontiac eventually eclipsed the parent Oakland);
Oldsmobile, of curved-dash fame (after Ransom E Olds moved on to REO);
Buick(founded by David Buick);
Cadillac(a luxury car maker).
Durant seemed to have a love-hate relationship with his board of directors, during which he was hired, fired, re-hired, and re-fired. After leaving GM, he made Durant automobiles.

Walter P Chrysler was brought in to help the Maxwell car company. He would eventually end up replacing the Maxwell brand name with his own. He acquired the Dodge Brothers company and founded the Plymouth brand as an entry-level car. Chryslers were known as the leaders in engineering, pioneering hydraulic brakes and many other technical innovations. Styling was not a priority in the early years, as the emphasis was on mechanical excellence. DeSoto was a strong seller for several decades. The Imperial line was a top-level luxury car in the '30's, and surviving examples today in excellent condition command six figures. Chrysler acquired American Motors primarily to get the Jeep brand, which turned out to be a big money-maker during the early years of the SUV craze. Chrysler very nearly went bankrupt during the '70's, when the Arab oil embargo killed sales of their gas guzzlers. With a federal government loan, Lee Iacoca successfully turned the company around with the economy K-car platform, and the Caravan/Voyager minivan. Lee also made the company pro-active in building cars that people would buy. They went from buidling what they wanted to build, (then being unable to sell them), to accurately accessing what people would buy and designing their product line accordingly. Chrysler was acquired by Mercedes Benz parent Daimler-Benz, to form Daimler-Chrysler, so it's no longer an American company.

Why did these three survive, while hundreds of others failed? They were able to meet customer wants and needs at a profit, while maintaining good (or at least reasonable) PR with the government, their dealers, their customers, their shareholders, and their employees. It's not enough to make a great product, as many excellent manufacturers fell by the way side. You have to be able to antcipate the needs of your target market far enough in advance that the products you have in development today will be what people what when you have them ready for market. Also, you have to get new products to market quickly, but not before all the bugs are worked out.

Perhaps the toughest area to manage is public perception. Regardless of how good your product really is, few will buy it if the emotion of the marketplace is negative toward your product.

Even if you did all of the above right, the expense of safety and emissions regulations that began in the 1960's made it uneconomical for small producers.

The wildcard in corporate survival is events that are beyond your control, e.g. the current spike in fuel prices. Companies do their best to plan for every contingency, but at some point you have to make a business decision about which contingencies are most likely, and invest your R&D dollars accordingly.

Sorry for the long post.

[MarkHutch]

Thanks, stexch. Very interesting read.

[stexch]

You're welcome. There is another powerful force in determining which manufacturers live and which ones die, and that is "critical mass". By this I mean an established network of dealers and parts distribution, and a good reputation for product and service. Many manufacturers struggled for years to gain enough volume to reach this point, but never made it. Some may have had products that were actually superior to those of the big three, but were just never able to reach the market volume necessary for long-term profitability. While a well-established company may eventually decline and fail, it will have more of a chance to correct mistakes than a less prominent company would.

[Stevusc]

good read