Jeffrey Kallister - How GM Expanded into an Automotive Leader

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Jeffrey Kallister leads S&K Buick GMC, providing quality new cars and service options to members of the Springfield, Illinois community. The story of the parent company General Motors (GM) is one of rapid early growth under William Crapo Durant. A speculative entrepreneur, he dropped out of high school as a youth and forged a self-made path in Flint, Michigan, then a bustling lumber town.

Having partnered in an insurance agency, Durant shifted to the vehicle business through acquiring a small horse-cart enterprise in 1886. Unlike Henry Ford, he was not hyper-focused on engineering efficiency on the manufacturing floor. Rather, he excelled in marketing, leveraging a single design patent and two completed carts into a blue ribbon at a country fair, which yielded orders of 600 additional carts. By the turn of the century, this had propelled the Durant-Dort Carriage Company from $2,000 in capitalization to $2 million in recurring business and status as the nation’s largest vehicle manufacturer.

Now in his 40s, Durant had no intrinsic interest in motorized cars, which he saw as dangerous, noisy, and frightening. That said, his entrepreneurial instinct said, “Give it a shot,” and he took a Buick horseless carriage out on the road for a couple of months, testing it in all sorts of conditions. This led Durant to reach out to Flint Wagon Works’ James Whiting for the acquisition of Buick.

In 1907, financier JP Morgan proposed a major automobile merger. While Durant, Ben Briscoe of Maxwell-Briscoe, and Ransom Olds of REO, were amenable to the deal, Henry Ford walked out of the negotiating room. He was insistent on gaining a substantial cash position for his company, not simply stock.

Despite the failed talks, Durant persisted, getting on a train to Lansing, Michigan, and rousing Olds from sleep to talk about ways of saving the flagship Oldsmobile brand. On September 16, 1908, the partners formally incorporated GM as a holding company, with Buick and Oldsmobile at its foundation. Durant excelled in acquiring and merging smaller automakers in a young, fast-consolidating industry that resembled the technology sector of the late 1990s in the sheer number and variety of ventures. Within 16 months, the car enterprise had a portfolio of 22 companies. Though many failed or were simply folded into existing brands, some, such as Cadillac, Oakland (Pontiac), GMC, and McLaughlin (GM Canada) continue to this day as corporate divisions.

Durant’s high-risk, high-reward approach found purchase with the public, but it kept investors’ nerves on edge, with board members twice firing him for what they described as “irresponsible business behavior.” Still, his approach positioned GM as a worldwide leader in a growing industry, underpinned by the famous maxim: “I haven’t a dollar, but I’m happy and I’m carrying on because I can’t stop. There’s much more to life than money.”

Starting in the 1920s, MIT graduate Alfred P. Sloan brought a sense of financial stability to the enterprise, applying the same types of innovations Durant had used in marketing to boost manufacturing efficiency. He also revamped corporate governance principles and set in place innovative finance packages and incentives that extended consumer credit and rapidly boosted sales volume. The company thrived through differentiation, as its multi-branded vehicles came in diverse hues and styles and featured models suitable for virtually any budget. While Ford was the clear market leader with its enduring Model T, by mid-century, GM, represented today by dealers such as Jeffrey Kallister, had become a major force in American automotive manufacturing.