There’s a Reason Why Sloan-Kettering Hospital is in Manhattan and Not Detroit

There is news, at least partially confirmed by General Motors, that the Cadillac brand may expand its operations in New York City, moving some business functions from the RenCen in Detroit. It's thought that moving some marketing, advertising and strategy functions to the Big Apple will add luster to GM's luxury brand by separating it from the city of Detroit's tarnished image, as well as make it easier to attract talent to those positions. Some people apparently have the notion that "Detroit" is this incredibly provincial and insular place and that the only way to thrive in the highly competitive global automobile industry is to leave the Motor City behind, both figuratively and literally. That attitude, though, is nothing new, either outside Detroit or in the region. Also, the idea that the domestic car companies have been operated in Detroit by Detroiters, insulated from the rest of the country (and world) is contrary to the historical record.

You've probably heard of Sloan-Kettering hospital in New York City, one of the world's best cancer treatment centers. This is car site so some of you may recognize those two names as being associated with a business headquartered not in New York but rather in Detroit. That firm is General Motors. Sloan was Alfred P. Sloan, who ran GM from 1923 to 1956 and Kettering was Charles Kettering, the prolific inventor who was GM's first chief engineer. As with the copper boom in Michigan's Upper Peninsula, more than a little bit of the money made by Detroit automakers made its way back east.

During GM's heyday, it's true that the individual divisions, what we today call GM's brands, were operated in many ways as completely different companies and most of the decisions of those companies were made somewhere near Detroit, but many of the overarching corporate decisions were made about 600 miles east of the Motor City.

Alfred Sloan was no stranger to New York. Though born in Connecticut and educated at MIT near Boston (MIT's school of business management was endowed by Sloan), he was raised in Brooklyn and he died in New York City at the age of 90. The financial community of New York and east coast investors had a major role in the way the GM was managed for much of the 20th century. GM is sort of notorious among car enthusiasts for giving the "bean counters", the accountants and financial folks supremacy over the product people, the engineers and designers. Where do you think those bean counters work and live? It's not southeastern Michigan. General Motors Treasurer's Office has long been located in New York City and it's long been recognized as holding a lot of power within the company.

GM's ties to major east coast investors goes back to Billy Durant's days of putting the company together, and then losing control to bankers. Starting up Chevrolet to compete with GM, Durant eventually got the backing of Pierre S. DuPont to retake control of GM. One of Durant's acquisitions for GM was the Hyatt Roller Bearing Company of New Jersey, whose president was a 26 year old Alfred Sloan. By 1918, Sloan was a GM vice president and member of the executive committee and when DuPont forced Durant out of GM for the final time, under the Delaware millionaire's influence Sloan became first operating vice president and then CEO. Sloan took Durant's haphazard corporation and reorganized it's structure and corporate governance along the lines of the then more than century old source of his patron's wealth, E.I. Dupont de Nemours & Co.

In the young General Motors, Pierre DuPont saw a great opportunity to make money at least a couple of ways: dividends on GM stock and profits from selling the automaker DuPont products.

After World War One, the DuPont company, which had started out making gunpowder on the banks of the Brandywine River in 1802, had large amounts of capacity for cellulose chemistry because of the manufacture of guncotton, nitrocellulose. Working with Kettering's team at GM, DuPont chemists developed Duco brand nitrocellulose lacquer, a quick drying paint available in a variety of colors.

Slow drying enamel paint that needed to be rubbed out because of all the dirt that collected as it dried, was a bottleneck in automobile production. Pierre DuPont had also moved the DuPont company into the young plastics industry through acquisitions and growing the company's own research team. DuPont Fabrikoid Rayntite brand synthetic leather was used for roofs in an era when few cars had full steel bodies.

While the DuPont family and company didn't own outright controlling interest in GM, for much of the automaker's early history DuPont interests owned about 40% of GM stock, enough for effective control of the automaker. The fact that those interests were making money owning GM stock and selling GM paint and plastics eventually caught the attention of the anti-trust division of Pres. Harry Truman's Dept. of Justice. After more than a decade of litigation, DuPont finally divested it's GM stock in the early 1960s.

The two companies, though, remained close. DuPont not long ago sold off it's automotive paint operations (now known as Axalta) because the profitable unit wasn't making quite enough profits, but until then DuPont was still supplying GM with hundreds of millions of dollars a year worth of top coats, the color and clear coatings that give modern cars their sheen. While they no longer sell paint to GM, DuPont is still a tier one, tier two and tier three supplier because of the polymers the company manufactures.

GM isn't the only "Detroit" automaker to have been, if not managed, influenced heavily by the financial industry centered in New York City. After Horace and John Dodge died within months of each other, their widows, Anna and Matilda, sold their stock in Dodge Brothers to New York bankers, making them perhaps the richest widows in the world. Control of the Dodge car company would eventually return to Detroit when Walter Chrysler bought it in 1928 as he put together the Chrysler Corp. Chrysler himself was also no stranger to New York and its financial industry, using some clever procedures to take control of Maxwell before he actually owned the company. Walter Chrysler, it should be noted, built the Chrysler Building, one of the more distinctive skyscrapers in New York City.

The influence of the Ford family has meant that Ford Motor Company has been run from Detroit (well, Dearborn) for its entire history. However, I'll note in passing that when FoMoCo managers mortgaged the entire company down to the blue oval logo to borrow the $23.5 billion or so they realized they'd need to both get past the upcoming rough times and revamp their product lines, they went to the New York financial community to borrow that money, not Les Gold's pawnshop near Eight Mile Road.

Besides the fact that at least GM and Chrysler have had pretty strong ties to New York City (and Wall Street held some serious paper on Ford as well recently), the idea that a car company has to break out of Detroit to get the pulse of the market is not exactly a new idea either. Not only does just about every car company in the world have some kind of design facility in southern California (that was once explained to me by a high ranking designer as "the talent likes to go to the beach and hang out with pretty girls too"), in 1998 Ford Motor Company made a big deal about the fact that the Lincoln brand was going to be headquartered near Los Angeles. The following year Lincoln was indeed moved out to southern California and made part of Ford's ill-fated Premier Automotive Group, headed by Wolfgang Reitzle, formerly of BMW. Mark Fields, FoMoCo's new CEO, was named head of PAG in 2002 and one of his first moves then was to shutter Lincoln's California "headquarters" and move those operations back to Dearborn.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can get a parallax view at Cars In Depth. If the 3D thing freaks you out, don't worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS

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