CHARLES W. NASH
From B. C. Forbes and O. D. Foster, Automotive Giants of America: Men Who Are Making Our Motor Industry. New York: B. C. Forbes Publishing Co., 1926, pp. 211-224.
Unlike most American youths, this farm-boy knew what he wanted. He wanted, first, to become a mechanic. He became a mechanic, master mechanic, so skilled a mechanic and so skilled in business that he rose to be a president.
Again he knew what he wanted. He wanted to establish an enterprise of his own. He knew exactly what kind of product he wanted to produce and he knew exactly the kind of men he wanted to draw around him. He hung out his shingle in the Summer of 1916.
In nine years he sold $418,761,674 worth of his product.
The profits reached $56,769,233.
Each single share of the original common stock had attained a market value Of $2,250.
There were times when earnings far exceeded 100 per cent. in a year.
Before being split up, in 1925, the shares sold on the New York Stock Exchange far above those of any other concern in the industry.
The ex-farm-boy is not only one of the very largest income tax payers in the land, but has won a unique reputation for his managerial as well as mechanical ability. That, in brief, is the record of Charles W. Nash, motor manufacturer.
Says Mr. Nash: "There is only one sure recipe for success in any field of endeavor: Determination, close application to details, plus hard work and then more hard work.
"Years of experience have taught me that there are three highly important factors entering into the success of any large manufacturing organization, and these factors are machinery, methods, and men. And the last is, perhaps, the most important of all.
"It is obvious that no organization can become of higher caliber than the men who comprise it and direct its various activities. Therefore, when the Nash Motors Company was about to become a reality this problem of men was the most important I had to face. For I knew that, if I could surround myself with men of broad and successful experience, my success would be practically assured."
Experience has also taught Mr. Nash this: "Unproductive labor and waste are two things a manufacturer has to fight. It is not labor costs that cut into profits; it is the cost of unproductive labor – that and waste of material. These two things require constant attention."
You continually hear that the biggest problem in industry to-day is not production but selling. How has Mr. Nash achieved such success in selling his product that many times during the last few years orders have far exceeded productive capacity? Here is his answer, in eight words:
"Selling is 90 per cent. a production problem."
The plant designed by Nash embodied in a degree not excelled by even the Ford plant the principle of "straight-line" production; every material moved in a straight line from the point of delivery to the delivery of the finished product. Young Nash, at a very early age, mapped out a straight line course for himself. Born at DeKalb, Ill., on January 28, 1864, his family moved from their farm there to one near Flint, Michigan, when he was two. Although "bound out" on a farm at seven, he contrived to get a fair amount of schooling.
But as he had conceived a very definite vision of first becoming a mechanic and then setting up a business of his own, he began to qualify by supplementing his schooling by study at night. He had to exercise patience for several long, dragging years. They were, however, years of preparation and perseverance. He diligently studied things which he calculated would better equip him to form and run the manufacturing business of his dreams.
When twenty-eight he got a job as trimmer with the Flint Road Cart Company, later known as the Durant-Dort Carriage Company. His pay was a dollar a day. But his work quickly attracted the attention of J. Dallas Dort, and promotion followed promotion. The business was developed into the largest maker of horse-drawn vehicles in the world.
But it did not develop any more than young Nash developed. He became general manager and it was during his régime that the company enjoyed its most prosperous years.
The automobile, however, was making serious inroads on horse-drawn vehicles. Nash, always forward-looking, saw that he must make a bee-line for the motor manufacturing field.
The year 1910 harassed many companies and industries. Various automobile companies were hit. Bankers and boards of directors searched the countrv for the best managerial brains to rescue and rehabilitate their enterprises. Mr. Nash was the man picked to set the Buick Motor Company on its feet.
When he took up his duties as president and general manager, in 1910, he found an uncomfortably large inventory. Also, he discovered that the company was experiencing difficulty with a model which it had put on the market.
How did the new president meet the situation?
He developed a six-cylinder Buick – a six-cylinder, note. This car, combined with Nash's drastic reduction and subsequent rapid turnover of inventory, and his economical, skilful handling of the company's finances, proved the salvation of Buick. Within two years Nash had transformed a struggling concern into one of the foremost and most notably successful in the whole automobile industry.
This achievement, acknowledged and acclaimed throughout the automobile world, was rewarded by the elevation of Nash to the presidency and general managership of the General Motors Company, the parent organization, in 1912. This was recognized as the blue ribbon of the industry. Nash rose to the responsibility and further enhanced his reputation.
But the straight line he had mapped out for himself did not end here. His aim and end was to organize a manufacturing business of his own. Notwithstanding the power and the financial reward which went with the presidency of the towering General Motors Company, he decided to strike out.
In July, 1916, he organized the Nash Motors Company and took over the Thomas B. Jeffrey Company of Kenosha, Wisconsin.
In 1919, he sold more than $40,000,000 worth of cars at a net profit of more than $5,000,000, and in the following year sales exceeded $57,000,000 and profits $7,000,000, these earnings representing more than $91 a share and $120 a share.
How did he do it?
He had clear-cut ideas and from the start applied all his exhaustless energy to carrying them out. First, he was determined to build a car embodying honest worth He chose a price level which held out possibilities of a very wide market. Although four-cylinder cars were then the vogue among low-priced and medium-priced cars, Nash supplemented his four-cylinder line with a six-cylinder product.
He had originated a six-cylinder car to pull Buick out of its hole, and again he proved the merit of six cylinders. Even to this day Nash has refused to be carried away by the excursions of others into the field of multiple cylinders, although twelve cylinders were at one time hailed as the acme of perfection. He still pins his faith to six cylinders as standard.
To turn out the right product at the right price, Nash selected his associates with keen discernment. He announced that all through the works, wherever practicable, the men would be paid according to results. A minimum wage, guaranteeing the worker a living, was fixed, but as soon as the operative developed skill he was put on piece-work. Some 90 per cent. of Nash factory workers are on piece-work.
Somehow, Nash had evolved or assimilated very emphatic concepts concerning inventory and turnover. His record in this direction probably never has been matched.
It has not been unusual for Nash to turn over his stock of raw materials better than twelve times a year.
Says one of his factory lieutenants: "Just as rapid turnover of the goods on his shelves is sought by the retail merchant, so also is rapid turnover of stocks in his bins insisted upon by Mr. Nash. Long before the advent of the motor car, Mr. Nash grasped the value of a small inventory and quick turnover. This policy may have been mothered by necessity, but the fact remains that it has been one of the most potent factors in the outstanding success that has always attended the manufacturing plans of the president of Nash Motors.
"Ordinarily, Nash Motors never has on hand more than a full month's supply of materials. Certain items, of course, are bought well ahead, but others are scheduled so closely that they come in every week. As contracted with a plant where raw materials do not turn more often than once a year, there is a tremendous difference in the matter of floor space, interest charges and insurance, to say nothing of the hazard attendant upon the possibility of an abrupt change in business conditions."
Having come up through the ranks, Nash knew every minute operation entering into the making of a motor car. This knowledge he utilized to the full by spending a large part of his time moving from one end of the plant to the other. He scrutinized everything. Studiously eliminating waste motion, he rigidly checked the waste of material. He ceaselessly studied how to quicken the flow of production.
His theory was – and is – that raw materials on hand are a liability, rather than an asset, until they are fashioned into a finished product and turned into cash. Materials received at one end of the plant move forward after each operation in a straight line towards the center of the factory, here meeting in finished form those coming from the opposite end, body and chassis are assembled and, presto, the completed car rolls through the door.
Every brain in the plant, from foreman to president, meets every Monday afternoon at 5 o'clock to offer and hear suggestions for improving this process or that, to consider communications from owners and dealers offering comments or constructive criticism, to discuss conditions, sales plans, etc. Always when at home Mr. Nash presides over these sessions.
He pays particular attention to communications from the outside, for, as he frequently impresses upon his associates, "We don't pretend to know it all here at the factory." Also, he occasionally voices the reminder that, "The Nash product is the result of cooperation, extended by our partners in the business, the Nash dealers." He keeps the door to his office open always. Dealers, owners, the "boys in the factory," all are welcome to approach the boss.
Another factor has contributed to Nash's phenomenal success. His boyhood ambition, as already told, was to become a Manufacturer. Nash, the man, was not content to become a mere assembler of motor parts manufactured by others. He became a manufacturer in the real sense of that word. Almost the entire car is fashioned, processed, produced in Nash's own plant.
As part of his preconceived program, Nash in 1919 acquired a half-interest in the Seaman Body Corporation of Milwaukee, builders of high-grade closed bodies, and he promptly proceeded to build a new manufacturing plant for this branch of his enterprise. In 1922 Nash Motors acquired control of the Lafayette Motors Corporation plant, adjacent to the Nash plant at Milwaukee, and in 1924 Mr. Nash organized the Ajax motors Company, to take over the plant and property at Racine, Wisconsin, formerly belonging to the Mitchell Motors Company. The record of this new six-cylinder car will be watched with interest by the automobile world.
Even these acquisitions did not suffice to cope with the call for the cars sponsored by C. W. Nash. Extensive expansions were instituted towards the end of 1924 and these have since added 30 per cent. to productive capacity. The Nash plants entered 1926 with capacity to produce 100,000 Nash cars.
Like other large-volume manufacturers, Mr. Nash has devoted serious thought to the increasing congestion in cities and on highways arising from the rapid multiplying of motor vehicles. Mr. Nash sees one interesting tendency; namely, a wider demand for medium and small cars and a diminishing demand for very large cars. Consequently, be has fortified his position to take advantage of this trend.
"I believe that automobile owners are doing their part to ameliorate congestion by the readiness with which they have accepted the medium-priced and moderate-sized car," declares Mr. Nash. "Practically all the makers who formerly produced only large cars are now making a smaller and lighter type.
"The public now recognizes that in these lighter and medium-priced cars it is getting a vehicle which, with proper attention, will give the maximum of service for five to seven years, and records show that only a small percentage of motor owners go as long as that before getting a new car.
"The traffic congestion problems are turning the attention of the motor public to the feasibility, if not the actual necessity, of the moderate-sized car for travel, not only in city streets, but in the country.
"I have studied this traffic congestion problem by noting the types of cars in the endless stream of vehicles seen on all the main thoroughfares in the leading cities of our country, and I am firmly convinced that the traffic congestion problem is being relieved by the smaller wheel base car, as contrasted with the heavy and very long cars which were seen in a higher proportion half-a-dozen years ago than to-day.
"The great advantage of the smaller car is its easy handling and ability to turn in comparatively small space. I believe that the old type of extra luxurious, long wheel-base car will be virtually eliminated. The time is soon coming, I believe, when we will see on the roads scarcely any cars exceeding a chassis wheel base of 125 inches, and the majority of cars in use, I predict, will be 110 inches or less.
"There doubtless always will be a demand for a limited number of the larger cars, and the makers who have established a reputation for their product and maintain it will be able to keep their factories in production with very satisfactory returns. There will be a stable market for the big cars, as there is for the specially designed custom body, but compared with the 3,000,000 to 4,000,000 cars which may be made every year, the demand will be limited and supplied by a few makers."
What is to happen to the hundred and one concerns now turning out every conceivable variety of car?
"I feel," said Mr. Nash late in 1925, "that the automobile industry, like practically every other large industry, will ultimately gravitate to a few large organizations I look upon the present as a testing-time which will lead to the passing of the weak and the survival of the fittest.
"It is significant that, in 1924, representatives from fifty-seven manufacturers took part in the drawing for space at the annual automobile show in New York and that the 1925 drawing fell to forty-seven. I look for a still smaller number in future.
"Prices in the industry have been fairly well stabilized and are not likely to show very drastic changes. The truth is that the motor car buyer to-day gets greater value for his dollar, compared with the cost of things in 1914, than the purchaser of any other class of merchandise. The automobile is actually cheaper now than it was ten years ago, notwithstanding the tremendous rise in wages and the increased cost of materials - wages are up 100 per cent. or more and materials anywhere from 50 to 100 per cent. Mass production, of course, has made this possible, combined with greater experience and skill in management.
"In one direction we can look for far-reaching developments. The motor bus is only in its infancy. Regulation has not yet been standardized by the various states or by different municipalities; but this will be straightened out in due course."
Mr. Nash early foresaw the potentialities of selling cars on credit instead of demanding total payment in spot cash, as was the custom originally. As one of Mr. Nash's chief associates, Vice-President W. H. Alford, expressed it:
"The automobile financing corporation made possible a vast increase in motor car buying. It opened up a new market, the great middle-class. The salaried man and the wage earners were able for the first time to enjoy the pleasures of owning an automobile. The credit plan has become the very heart and foundation of the motor car business. That it is absolutely sound in principle is evidenced by the fact that over 90 per cent. of all car owners in the United States to-day have taken advantage of it. That it is enabling millions to enjoy the happiness and benefits of automobile ownership is manifested by the still more impressive fact that of America's total car owners 80 per cent. – or more than three-fourths – have incomes of less than $2,000 a year.
"There is grave danger, however, if in attempting to expand this service, the initial payment is reduced and the financing period extended to a point that the security is weakened and re-possessions bring disaster to the financing companies."
The expansion – and the profits – of Nash Motors have been the talk, not only of the automobile industry, but also of investors in securities. Mr. Nash's axiom, "Selling is 90 per cent. a production problem," has needed revision. With Nash, selling for a long time has been 100 per cent. a production problem. Month after month all the cars that could be produced were sold before they left the factory floor.
The company makes no distinction between union and non-union employees. All are treated with equal consideration The employees have formed a club or society, to which they contribute fifty cents a month. Twenty cents is used for social and athletic activities and thirty cents is placed in a fund for mutual aid in cases of sickness or misfortune. About 90 per cent. of the employees are members.
This club has its own orchestra, the company cooperates with it in maintaining a band, it has its own moving picture machines, and its own board of directors, composed of members.
On its part, the company maintains an athletic field, a tennis court, a club house and baseball field with a seating capacity of 6,000 The Nash Company boasts a semi-professional baseball team.
In addition to most modern hospital equipment and the like, the company manifests in a very practical way its interest in the happiness and well being of its people by making temporary loans when such assistance is helpful, by furnishing free legal advice, by examining property titles for employees contemplating buying a home, by lending money to homebuilders, by making necessary financial arrangements for employees who desire to buy stock in the company, etc., etc.
Mr. Nash gets more fun and satisfaction from his association with "the boys" in the organization than from "society." He is an enthusiastic baseball fan, he likes to hunt big game, he is fond of fishing in the Northern woods of Michigan or Wisconsin, and he indulges in an occasional game of golf.
"But," says one who knows him intimately, "if you would watch this manufacturer of motor cars enjoying the recreation which he likes best, you would not have to travel any farther than his home in Kenosha and see him in action with his four little grandchildren. He is even a greater success as a granddaddy than as a motor manufacturer."
This same associate remarks, also: "Mr. Nash's Office on the second floor of the administration building in Kenosha is typical of the man himself; it is well furnished but extremely modest; no rug adorns the floor, but the chairs are comfortable and the broad flat top desk at which Mr. Nash works cost less, perhaps, than the desk of many a chief clerk or office manager. And as any man in the Nash organization will testify, the door to that Office is always open.
"The candor and friendliness of this strong, quiet man, who is efficient, progressive and yet unassuming in manner, accounts in large measure for the success he has attained since that day more than thirty years ago when he took his first factory job."
If you pressed Mr. Nash to sum up in one word the quality or characteristic or equipment more vital than all things else for the attainment of success, he would reply, " Commonsense."
A man who, in the short space of nine years, has built up a business on which there is not a dollar of bonded indebtedness, whose stocks have a market value approximating $137,000,000, whose profits have exceeded $56,000,000, and whose bank balance tops $30,000,000, surely must be regarded as a very practical authority on what makes for success
B. C. F.