There are numerous keys to success in business with intelligence, instinct, timing, and perseverance topping the list. However, there is another that is, perhaps, even more important – the ability to recognize the pinnacle of success thus avoiding the long fall on the other side.
David Buick had the former but lacked the latter. When the Alex Manufacturing Company of Detroit went bankrupt in 1882, the shop supervisor, Buick, sensed opportunity. With a partner, William Sherwood, David Buick took control of the company reorganized it as Buick & Sherwood and soon a record number of cast iron toilet bowls were rolling from the factory.
His intelligence ensured the success of the company. Between 1881 and 1889, Buick received thirteen patents on a variety of plumbing related items including valves and even a lawn sprinkler. However, his crowning achievement was the development of a revolutionary process to affix porcelain to cast iron thus creating the cast iron bathtub.
The timing was perfect for his venture. Beginning in about 1890 a rapid urbanization of America began in earnest and with it came an explosion of indoor plumbing.
Though profits were climbing with the passing of each year Buick became convinced that greater fortunes awaited in the fledging automotive industry. In 1899, he convinced Sherwood to sell the company and then used his share of that sale to form Buick Auto-Vim & Power Company for the production of gasoline engines.
Within two years, the company had begun to show a shadow of a profit. With these profits and a highly advanced valve in head engine, he reorganized the company as the Buick Manufacturing Company in 1902.
The engine generated interest as well as orders. However, production delays and Buick’s insistence on refining the vehicle had nearly exhausted all financial reserves and assets of the company by the late summer of 1903.
Only one creditor offered what appeared to be a way out, Benjamin Briscoe the sheet metal tycoon of Detroit. In a complex stock transaction Buick signed over eighty percent of the company to Briscoe with the stipulation that once his debt was paid the company would be returned to his control. Until that time, Briscoe would make no effort to collect on the outstanding debt.
The marriage of convenience was short lived and in the fall of 1903 Briscoe found a way to recoup losses by selling his share of Buick with the same restrictions and stipulations to the owners of Flint Wagon Works who were chomping at the bit to get involved with automobile production. David Buick essentially was now an indentured servant to the company that bore his name.
For the Flint Wagon Works it soon became apparent that an automobile manufacturing company was an expensive proposition so Buick, the company, with Buick, the man, in tow was sold to William Durant of Durant & Dort, the second largest manufacturer of wagons and carriages in the country. Buick was given a token position as company secretary, one share of stock and a seat on the board of directors.
Within sixty days of assuming the helm, Durant had raised the capital stock of Buick from $75,000 to $1.5 million. Almost as rapidly Durant established a state of the art manufacturing center and initiated a franchise system for the extensive dealer network that had been marketing his carriages. Before Durant assumed control of the company, less than fifty Buicks had been built. By the end of 1906, two years after the acquisition by Durant, more than 2,000 cars had been sold and the company was building 250 a week.
David Buick, in 1908, left the company and his trademarked name with a mere $100,000, the same amount that he had sold his plumbing business for in 1899. The money did not last him long; another automotive company, a carburetor manufacturing company, Florida real estate, and dry oil wells left him broke in just five years. When he died in March of 1929, he was employed at the information desk of the Detroit School of Trades and his assets consisted of two suits, one pair of shoes, and a box of pictures.
Durant’s fall was even more tragic as his was from even greater heights. On September 1, 1908, he used Buick assets to form a new company – General Motors. Two months later, he bought the Olds Motor Works. In rapid succession, he added Oakland and Cadillac.
By the end of 1913, he had added 13 different automobile companies and almost a dozen auto parts companies to the GM stable. He had also overextended the company to such a point he needed more than $12 million to stay solvent. The banks that had financed his ventures panicked and agreed to rescue GM only if Durant would step aside.
The next seventeen years were a blur of Durant activities. He partnered with a Swiss born race car driver named Louis Chevrolet, formed a new automotive company, regained control of GM, lost control of GM and formed a smaller version of GM named Durant.
In 1933, Durant filed for bankruptcy listing $914,000 in debts and $250 worth of assets that included his clothes. Less than a year later a reporter located Durant, he was washing dishes and sweeping floors in a food market with corner hamburger restaurant in a converted former Durant showroom. Durant had leased the building and lived in an apartment above. Shortly before his death in 1944, he had expanded his holdings – he added a bowling alley to building.
photo courtesy of General Motors – click to enlarge
