The Nash in GM's past

The Nash in GM's past

Feature Article from Hemmings Classic Car

June, 2008 - Pat Foster

This year we celebrate a very significant occasion in U.S. industrial history--the 100th anniversary of America's greatest company, General Motors. And whether you know it or not, Nash played a big part in helping GM reach this exalted anniversary. In fact, it may be a fair statement to say that without Nash, there might not be a General Motors today.

Many people, including a great many in the industry, are unaware that Charles W. Nash, the man who founded the Nash Motors Company, was at one time the president of General Motors. It's true. Nash became president when GM had been in existence for less than five years, and there was concern about whether or not it would be around for another five. Charlie Nash, at the time in charge of the Buick Motor Division, was elevated to the GM presidency by a group of bankers who felt he could turn around the struggling automaker.

William C. Durant created General Motors in 1908 and built it up by buying up a number of automobile, truck and component producers. Among these companies were some tremendously valuable firms, like Buick, Oldsmobile, Cadillac, Delco and Hyatt Roller Bearing. Unfortunately, also included in Durant's mix were some not-so-good companies, such as Elmore, Cartercar, Reliance Motor Truck, Welch Motor Car and others. As Durant continued to snap up companies left and right, General Motors quickly became a large competitor in the auto industry.

But Durant often bought companies without proper consideration of how they could mesh into the overall product portfolio, how the acquisition would benefit the corporation, or even whether or not the products they made were any good. Before long, GM found itself saddled with a jumble of marginal, money-losing acquisitions that left the company financially overextended.

The frantic pace of acquisitions had required a continuing supply of cash, much of it provided by Buick. One reason for Buick's profitability was its general manager, Charles Nash, a longtime associate and friend of Billy Durant. Nash's executive qualifications were good--previously, he had been in charge of production at a successful carriage manufacturing company owned by Durant. Nash managed to work his way up from cushion stuffer to plant manager.

Durant had great regard for Nash's abilities and brought him into GM to straighten things out at Buick. Charlie went to work sorting out production bottlenecks and getting a handle on the division's costs, but because his experience was almost entirely with wood-bodied horse-drawn carriages, he soon realized he needed someone familiar with the types of machinery and processes involved in producing axles, frames, steel bodies, etc. He hired a railroad man by the name of Walter P. Chrysler as works manager. That was, by the way, Chrysler's first job in the auto industry; if Charlie Nash hadn't hired him and allowed him a fairly free hand as he sorted out Buick's production system, who knows if there ever would have been a Chrysler Corporation? Chrysler left a high-paying job running a locomotive manufacturer and took a huge pay cut to come to GM because he felt the auto business offered better long-term prospects.

Imagine for a moment what might have happened if Charlie Nash had turned Chrysler away, or soured him on the automobile industry--today the Big Three might be GM, Ford and Maxwell-Briscoe.

In any event, under the direction of Nash and Chrysler, Buick's business took off and the division earned enormous sums of money. Former GM chairman Alfred P. Sloan, one of the greatest business leaders of all time, later explained why Buick was so successful: "It had a management of stars," he said.

Meanwhile, Durant's continued expansions exacted a toll on the corporation. GM sales for 1911 fell seven million dollars--still a lot today, and a huge amount back then--and profits were down by two-thirds from the prior year. And the 1912 model year brought no improvement. When the bankers and investors involved with GM finally came to the conclusion that Billy Durant was playing too fast and loose with the firm's capital, they decided to push him aside. In November 1912, they installed Charlie Nash as president of the corporation. Durant stayed with GM, but in a position with little power or influence.

Nash found himself president of a struggling firm. He exercised tight control of inventories and cash, and instituted changes designed to get the most production possible out of each plant. GM's profitability improved dramatically. Under Nash's direction, 1914 profits came in at $7.2 million and for 1915 they doubled. In 1916 they doubled again, with the corporation earning nearly $29 million.

But then there came some surprising news. Toward the end of 1916, Durant engineered his return to GM. Although Nash liked Durant, and probably felt a certain debt of gratitude, too, he realized their financial policies were completely opposed. Where Nash was frugal, thrifty and disliked debt, in matters of business Durant was a daring swashbuckler. Despite Durant's offer of a million-dollar annual salary, Charlie Nash went off to start his own company.

If Nash hadn't been there to save General Motors in its time of crisis, would the company exist today? Perhaps; perhaps not. But it's doubtful anyone else could have done as good a job. Nash left GM rolling in cash. Before his departure, the company announced the largest cash dividend in Wall Street history to that point; this from a company that just five years earlier had been on a respirator. GM went on to become the biggest automaker in the world.

By the way, when Nash formed his own company, Alfred P. Sloan decided to buy some stock in it. "It was very profitable," he recalled.


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