HARVEY S. FIRESTONE meanwhile had had some second thoughts about Will O Neil. In August 1915 he sent word that he would appreciate meeting with his former dealer. When O Neil went to see him Firestone told him he was establishing Firestone of Canada. To run it he wanted a first class salesman with ambition. To get such a man he was prepared to name him president of the new organization pay him an enormous salary plus a percentage of the profits and to give him a free hand. He asked O’Neil if he wanted the job. O’Neil was too far along with the formation of General Tire (it was to be officially incorporated the next Mondi) to accept. It’s interesting to consider what would have happened had Firestone made the offer before O’Neil went to Akron to try to get backing from his father.
Nine hundred thousand new motor vehicles were built in the United States during 1915 bringing the total number of vehicles on the roads to more than 2000000. And it was predicted that more than a million vehicles would be built during 1916. It was clear that whoever caught the attention and earned the respect of the tire buying public was going to make a lot of money. The maximum mileage anyone could expect from a tire was about 4000 miles.
That meant since people were driving a little more than 4.0 miles a year in those days (it’s up to about 10.0 miles per year now) that each of the three million vehicles on the road would require at least four and probably more tires each year. That meant a minimum market of 8000000 replacement tires plus a minimum of another 5000000 tires (four on the ground and at least one spare) for the million vehicles to be built in 1916. For 1917 the replacement tire demand would be 12000000 with at least 5000000and probably many more for auto production seemed to be jumping each year tires required for new car original equipment.
O’Neil not only wanted a share of this enormous and growing market he wanted a special share. One more manufacturer of tires not very much different than anyone else’s tires wasn’t going to do very well he realized particularly if the new manufacturer was a small one that no one had ever heard of. He was up against Firestone and Goodyear and Goodrich and U. S. Rubber and they were household words.
And while Will O’Neil was sure of his ability as a salesman merchandiser and administrator he was equally aware that he really knew very little about making tires. He set about finding people who not only knew a great deal about that skill but who would be willing to invest some money. Not so much that he needed the money but rather because an employee who had a real stake in the future of the company was going to work a little harder people being people than someone who just held a job. The first man so recruited was Harold P. Pushee who is probably more accurately described as a volunteer than a recruit. A Massachusetts Yankee out of Woburn and the Massachusetts Institute of Technology Pushee had already learned that no matter what he turned up for his employers he was going to be regarded as that “nice young man’’ until he grew much older than his present twenty five years. He sought out Will O’Neil when he heard of the pending formation of a new tire company impressed him and went on the payroll September 4 1915 three weeks before the company was officially in business.
O’Neil had gone to school with a boy named Charley Jahant. They had stayed in touch over the years. Jahant had taken a degree at Buchtel College (now the University of Akron) and in 1909 had gone to work for Harvey Firestone starting off at fifteen cents an hour on an eleven hour night shift. By 1915 Charles J. Jahant was superintendent of Firestone’s Tire Division in Akron.
Will O’Neil got together with Charley exchanged warm memories of the good nuns and the good fathers at good old St. Vincent’s Parochial School and then O’Neil suggested to his old’ buddy that he should give up a high paying responsible job with a major manufacturer with whom his future was secure to take a job with a brand new company yet to make its first tire and put in his life’s savings to boot. Salesman O’Neil pulled off a coup. Not only did Jahant leave Firestone for General but he sold $2000 worth of Firestone stock he had acquired as a bonus and threw the money into the general pot.
Jahant’s assistant superintendent at Firestone was Robert Irdell a chemical engineer (Pennsylvania 11) from a prominent Akron family. His grandfather had been Akron’s first mayor. Irdell reasoned that if the boss thought his future was going to be better with General the obvious thing for him to do was go along himself. He brought with him $5000 and a wealth of experience.
No record has come through the years about what if anything Harvey Firestone had to say about this recruitment of his key personnel but it’s fairly safe to assume that he wasn’t beside himself with joy.
And then Will O’Neil and his coworkers set about making a better tire than anyone else was making. It took them about ten months until September 1916 to come up with something which satisfied O’Neil.
The rim dimensions were the same as other tires then on the market but the body of the carcass was wider considerably wider in cross section than other tires. It was designed to be inflated to a lower pressure than standard tires so that the tire itself would absorb some road shock.
Standard tires inflated to as high a pressure as possible were hard and served no shock absorbing function at all. The first General tire had a new tread design too. Down the center of the tread was a continuous rib intended to provide a smooth ride. On either side of the rib were the anti skid markings. The tire carcass held a wide pearl gray sidewall unlike anything else on the market.
Satisfied that he had the tire he wanted O’Neil now turned his attention to selling it. To sell it he would need a nationwide organization of dealerships stores selling General Tires either exclusively (O’Neil was realistic to know this would be some time in the coming) or primarily.
General Tire stores in other words instead of tire stores which might happen to stock General Tires in addition to other lines.
The way to attract dealers was through National Advertising. In 1916 advertising meant newspapers and magazines, Newspapers were out O Neil decided because they were local. And among magazines one stood out the Saturday Evening Post. In those days the Post had the prestige of all the television networks of today put together.
A full page ad in the Saturday Evening Post cost $5000 and Will O Neil thought that he was going to need at least five of them or $25000. He also knew that his father who was maintaining a rigid control on the purse strings would go right through the roof the moment that Will O’Neil proposed that a company with total assets of $200000 spend $25000 on advertising.
He put that problem aside while he worried about what kind of an ad he would run. The two advertising agencies in Akron tried and tried again to come up with something to satisfy the cocksure young O’Neil and failed. He had heard that the advertising agencies in New York were better than anywhere else and went to New York where he was again less than pleased with what was proposed to him.
He set out for home again and found himself seated in the club car of the train over a friendly glass with a live wire about his own age blessed with an awesome name: J. Ferdinand Oberwinder.
By the time the train had gotten halfway through Pennsylvania it was Will and Ferd and by the time Will O’Neil got off the train in Akron he and Ferd Oberwinder had set a date to get together to prepare the General Tire advertising campaign. Oberwinder was an account executive with the D’Arcy Advertising Agency of St. Louis among whose accounts were Coca Cola and Budweiser beer. D’Arcy had prepared the then current Coca Cola campaign selling a common product (one soft drink among several hundred different soft drinks) in a much smaller container than the competition for the same price on the basis of quality. Similarly Budweiser beer was at least a nickel more a bottle than its competition and again the extra price was successfully justified on the basis of quality. This was just what Will O’Neil was looking for.
Once the ads were written there came the problem of getting father O’Neil to sign the contract with the Post.
Will O’Neil always felt that his younger brother Tom like most young brothers was the apple of Michael O’Neil’s eye. Tom O’Neil found himself appointed Director of Advertising for General Tire Company. His first assignment as such he was told would be to have the treasurer that is his father sign the advertising contract.
“How much money is involved?” Tom asked.
“Five thousand dollars” Will O’Neil replied leaving the muddy impression that the five thousand could be the total price for all the advertising. By the time Tom O’Neil had left his father’s office there was no question in his mind that the five thousand paid for everything. Mr. O’Neil had made it plain that he thought it was simply outrageous that $5000 should be spent for advertising; it might even be sinful. Why that was 2V2 per cent of the gross value of the General Tire Company! Since only a fool according to their father would spend that much money it was obvious that he had been confused about Will wanting five ads each costing $5000. Will did not think it diplomatic to correct the erroneous impressions of his brother and his father at that time; there would be plenty of time for explanation when the Saturday Evening Post sent its bill.
If advertising wasn’t in its infancy in 1917 neither was it far out of diapers. Until very recently “responsible” advertising had simply been a matter of putting up the name of the product or a picture of it where people could see it. (The word comes from the Latin advert-ere to turn toward. ) Reputable manufacturers were leery of announcing that their product was anything special a reaction to patent medicine advertising which blatantly announced that this or that brand of snake oil would positively cure any disease known to medical science or to other ads of this type.
Any ad which suggested that its product was in any way vastly superior to any other similar product was suspect. The ad that J. Ferdinand Oberwinder came up with and which ran in the Saturday Evening Post January 27 1917 landed in the middle between the dignified “We Make Tires” advertisements then being run and the snake oil ads.
First it took a not very genteel poke at established tire manufacturers: “We had no old methods [of tire manufacture] to cling to through sentiment stubbornness or economy. We had no old machinery or equipment that we had to get along with. We had no past of our own to handicap us and we did have the pasts and presents of others to warn us of the pitfalls in tire making.” So much for Goodyear Firestone Goodrich and the rest of them doomed to making tires on old machinery and equipment handicapped by their past and by sentiment stubbornness and economy.
Then the ad went on: “In Akron we built a factory equipped with the very last word in tire making and perfecting equipment. As you know Akron is the center of the tire making brains of the world. We located the best of the tire brains in Akron and the world and put them to work in carrying out our ideals.
“That’s the whole reason for the success of the General Tire un-varying quality produced by building into it the best of Akron and the best of ourselves. Now after reading this you are expecting the General to be a high priced tire. Just ask the dealer and be surprised at how moderate the price is. And as to cost in service the General costs less per guaranteed mile.”
The ad was written with a dual purpose. It not only wanted to attract customers but dealers as well. It succeeded in attracting the type of dealer it wanted someone who wanted to take on a prestige product and push it rather than just add one more brand name to his stock; someone in other words who understood that many people would buy a General tire because they believed it was the best available and that price didn’t really matter. General Tires and everybody else are sold well.
In 1917 General’s profits were $110877. The next year profits were up to $152510 and in 1919 this figure more than doubled to $376132 nearly twice as much profit as there had been investment ($200000) three years before.
When January of 1920 came around there were more than 10000000 vehicles on America s roads 8500000 cars and 1500000 trucks and buses. This meant a replacement tire market of at least 40000000 tires plus another 10000000 tires to be put on the estimated two million vehicles to be built during that year. (The estimate wasn’t far off; 1.9 million vehicles were actually built.) But there was the shadow of a problem. High quality long staple cotton used in vast amounts to make tire bodies had cost one dollar a pound in January. That was a high price and expected to go down. But instead of going down it went to $1.50 a pound then $2.00 and by midyear to $2.50.
The sale of General Tires had grown each month and there was no reason to suppose (since the automobile manufacturers kept turning out more and more cars) that sales would decline. The business question was what to do about stock piling cotton for tire fabric? Should General hold off buying in the hope that cotton would return to its previous reasonable price level which would save them money; or should General stock pile cotton large quantities of it in the belief that it made sense to buy cotton at $2.50 now because in six months it might be worth $4.00 or even more?
The problem didn’t bother Harvey S. Firestone. Since he was the baron of the Tire Industry he thought it would be entirely appropriate to see how a real baron lived. He rented a huge baronial estate in England and took his family there for a three month vacation starting in July.
Firestone believed that the price of cotton was going to go even higher and that the price of rubber too would rise above its present level. Firestone bought what cotton and rubber it could at the prevailing price.
O’Neil not knowing what to believe decided to ask around. He went to his old Friend Frank Seiberling president of Goodyear and asked him. Seiberling disagreed with Firestone’s evaluation of the market. He told O’Neil not to buy cotton that it was coming down for sure, after some thought O’Neil decided to follow Seiberling’s advice rather than Firestone’s example. It was a good guess.
Harvey Firestone had barely had time to unpack in the rented mansion when a series of cablegrams from his office put him aboard the first fast steamer to New York. Not only had the cotton market collapsed but the price of rubber had dropped from fifty five cents a pound to sixteen.
The Firestone inventory of raw material dropped in a matter of weeks more than $35 million in value. At this point the banks let Firestone know they would not be in a mood to extend loans totaling $43 million about to come due. Firestone in other words was in deep financial trouble. What his company needed was cash and there was one sure way to get that. Firestone using the most lavish advertising campaign to date announced that the prices of all Firestone tires were cut effective immediately by 25 per cent.
Since Firestone tires were always of a good reputation the result was that a good many people suddenly switched to Firestone enough to provide the company with $18000000 in cash in two months. This was more than enough to keep the bankers off his back although the 25 per cent price reduction cut deeply into his profits.
Seiberling’s Goodyear however didn’t fare so well. Not only did Firestone’s massive sales campaign hurt their income badly but (apparently and ironically unknown to Seiberling) Goodyear purchasing agents had bought vast quantities of cotton at the inflated price. This meant that even if Goodyear could fight back with a sales campaign of its own the extra cost of then tires because of the price they’d paid for cotton and rubber would keep them from making a profit.
There is an old saw that the boss may not always be right but he’s always the boss. Although it has subsequently been learned that Seiberling not only did not know of the large cotton purchases and had indeed given his purchasing agent the advice he’d given Will O’Neil not to buy cotton at high prices the purchasing agents had bought the cotton. Since he was the boss the ultimate responsibility was his and President Seiberling of the Goodyear Tire & Rubber Company was “retired.” (This was unfair but he was hardly tossed out on the street with nothing but the clothes on his back. He owned large amounts of Goodyear stock was never in danger of missing a meal and he hardly left in disgrace. Today Goodyear still manufactures a Seiberling tire. )
General Tire too was deeply in debt but being deeply in debt is a problem only if there’s no way to get out of debt. Among other debts General owed $2.8 million to a Chicago brokerage house. But general had a good cash position money was coming in all the time and now that the price of rubber and cotton was back where it should have been all along General could see no insurmountable problems in the future.
The Chicago financiers when Will O’Neil went to see them were pleased with both General’s books and with the future as O’Neil pictured it. They told him not to worry about the $2.8 million to pay it off at his convenience. With that major problem out of the way and in connection with other business he had in New York O’Neil stopped by the National City Bank of New York to talk about delaying the repayment of $250000 General owed them.
He took with him to New York Sam Poor General’s general sales manager. Then as now Cadillac was a prestige automobile and Poor went uptown to see the president of the appropriately named Upper cue Cadillac Company while O’Neil went downtown to see the bankers at National City.
Poor’s intention was to get Upper cue Cadillac involved in the General Changeover Plan where the original equipment tires on new Cadillac’s would be exchanged for General Tires a suitable product for a quality automobile.
At National City O’Neil was ushered into the office of Vice President William S. Lambie who was in charge of the General Tire Company Loan. To O’Neil’s utter astonishment Lambie with a banker’s courtesy told him what bankers always say under such circumstances that the money market was tight that certain unfortunate rumors were in the air and that while there was certainly nothing personal or anything intended to reflect anything but the highest regard for everyone involved the bank was going to have to insist that the loan when due be paid in full.
O’Neil didn’t say a word at first. Then he reached into his pocket took out a checkbook and wrote one for the full amount. After handing it to Mr. Lambie he expressed his opinion of New York in general and the National City Bank of New York and its officers in particular with that peculiar blend of wit and acid available only to an angry Irishman who considers that his masculinity good name and credit rating have been impugned. And then he stormed out of the office.
Three minutes later banker Lambie’s telephone rang. It was the president of Upper cue Cadillac who banked with National City. There was a gentleman in his office the car dealer said who had a rather interesting proposition to make. The company was located in some impossible place in the Great American West (most New Yorkers are convinced that the Wild West begins somewhere in the middle of New Jersey) and despite a rather grandiose name he had never heard of the company. What could the National City Bank tell him about General Tire & Rubber and in particular about its credit rating?
Banker Lambie rose to the occasion and by replying “Their credit is AAA and more than that they’re obviously going places” began a lifelong friendship with Will O’Neil which continued on a personal basis long after Lambie retired as senior vice president of the bank.
The 1920 disaster during which many tire companies without the foresight and good luck of General or the financial stability of Firestone went out of business saw the rubber and tire industries gathered into the hands of a small number of large companies.
This is not to suggest a monopoly for if there is one general statement to be made about the tire industry it is that competition reigns supreme and there is no joy in a Board Room to compare to that when one tire manufacturer has really cut down a competitor.
The consumer profits from this. A dozen multimillion dollar corporations (including several billion dollar corporations) are actively engaged in extensive research to produce a safer tire a better tire one that will last longer and one that they can sell for a price that will get the consumer to buy their product and not their competitors.
The evolution of the tire has been gradual. One improvement in construction or material or design has followed another. Each manufacturer guards its new innovation like a jealous mother and platoons of expensive patent attorneys are always ready to jump into court at the slightest suspicion that somebody is infringing on a patent. Since copying someone else’s idea is out of the question the result has been millions of hours of engineering time to develop a second (or a fifth or a fifteenth) means to accomplish the same end, and the consumer profits.
The first tire was rubberized fabric inflated by air: that description fits the latest tire off an assembly line. The improvements have come in the fabric and the tread. Balloon tires were an early innovation larger carcasses carrying less air pressure for a softer ride. This technique was improved upon as simultaneously chemists and engineers developed even better material for the tread as well as new tread designs. Eventually (made possible by the use of steel rims) the inner tube could be discarded with the carcass itself maintaining pressure. The early Type E Duck fabric has gradually evolved into cloth and other fabrics which long outlast the tread itself. One of the first uses for nylon was in tire fabric (General characteristically saw no point in advertising Mr. DuPont’s nylon so it dipped its nylon in one more chemical bath and came up with “Nygen” [Nylon General] which according to General is better than nylon in every possible way) and the most recent significant development which rather deeply hurt American tire makers’ pride was the French Italian development of a woven steel fabric placed radials inside the tread.
American tire manufacturers are now of course offering steel belted radial tires of their own and it’s safe to say that American tire engineers are at their work with a determination that the next major advance will be American not foreign.