Construction Literary Magazine

January 2017 Writers Respond

How Henry Ford Revolutionized the Car Industry

How Henry Ford Revolutionized the Car Industry
Henry Ford

[quote]I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one.

Henry Ford [/quote]

When I conceived of this list last December, the first thing I did was sort about a hundred historical figures by profession. For the most part, each figure was easily placed under categories like statesmen, philosophers, scientists, and inventors.{{1}} When I came to Henry Ford, however, I hesitated.

Ford wasn’t exactly a scientist, nor can we say he lived his life as an inventor. He didn’t invent the car, nor did he invent the combustion engine, assembly line, mass production, or interchangeable parts. While he was a tinkerer, no single invention of his changed the world.

Henry Ford was an entrepreneur who changed the world by catapulting his United States into the lead of an industrial race that dated back decades. In the wake of this transformation was an American consumer culture that created the world’s largest economy. Due to the groundwork laid by Ford, the U.S. surpassed the other industrial nations, and it hasn’t looked back since.

The automobile, dubbed a “horseless carriage” by contemporaries, was invented in 1885 by German inventor Karl Benz.{{2}} By then, Henry Ford had lived 22 years in a slow-moving world. He grew up the son of a farmer, William Ford, who had hoped that Henry would someday take over their farm in Dearborn, Michigan. If that was his goal, then he erred when he gifted a 15-year-old Henry a pocket watch. The boy dismantled it and put it back together. After then doing the same to watches of friends and family, he knew his calling was as a machinist. He dropped out of school at 16, moved to Detroit, and worked as a machinist’s apprentice and a repairman. In 1896, at the age of 33, he designed his first car.{{3}} Two failed business ventures later, he was 40 years old and nowhere near influential.

But then he was visited by the American dream. He tried again. In 1903, with the help of Alexander Y. Malcomson, an old friend and Detroit coal dealer who was impressed by Ford’s latest automobile design—which racer Barney Oldfield had driven to a racing cup’s first place—he started the Ford Motor Company. Oldfield’s successes helped attract investors, and Ford redoubled his efforts on a new design.

Ford’s greatest gift at this early stage of his career was that of an analyst. He studied how cars were created, how they functioned, and, just as important, how their parts were created and functioned.{{4}} By 1908, he used the recent industrial trends of an assembly line and interchangeable parts in order to assemble a car more quickly than anyone had done before. In 45 steps, his workers could manufacture an automobile in just over 90 minutes, down from the nearly 13 hours it took earlier in the decade. Thus, just five years into Ford Motor Co., he was ready to unveil the car that would change the world.

What’s most fascinating about the original Model T is not its breakthrough affordable price; rather, it was how Ford was able to make its price so low and yet still make unprecedented profit. Two years into Ford Motor Co., Ford’s investors told him that the way to increase profits was to make a car that rich consumers felt compelled to buy. They, after all, had the money in a time where the Industrial Revolution excelled at suppressing the wages of expendable workers.

[pullquote_right]If a process could be simplified to save a second, Henry Ford ordered the modification. [/pullquote_right]

Ford, however, had something else in mind. He felt that the way to maximize profit wasn’t to appeal to the tiny American upper class of the early 1900s; it was by appealing to the millions of workers that kept the upper class afloat. Ford is so often associated with mass production, and rightly so, but what is often overlooked is his ability to drive mass consumption. He didn’t want to have the car loved by the rich; he wanted to have the car loved by everyone.

In order to make sure he could keep his cars affordable, he needed to cut every possible cost while still maintaining a safe and fluid environment that would otherwise slow down production. Therefore, in addition to interchangeable parts and the assembly line, he created a sharp division of labor. It was imperative not to waste a second of a worker’s time, for that slowed down the belt that needed constant motion to maximize production. Assembly line workers were not responsible for getting their own parts, materials, or tools. Another worker did that for them. Ford even reduced the time it took to get extra parts and materials to their proper locations. Instead of runners, intricate modes of slides and trolleys transported whatever was needed. The height of the belt itself was where he thought it would be easiest for workers to stand for extended periods of time. He eliminated time-consuming motions like bending over or reaching up to grab something. He tirelessly analyzed the process, micromanaging his plants as if his entire life depended on that day’s batch of Model Ts. If a process could be simplified to save a second, Henry Ford ordered the modification. The result was a worker who almost certainly had only one task to do throughout his or her day, and this task likely took little to no training. Ford confronted all possible time wasters and promptly reduced or eliminated them.

It should be noted that Ford invented none of these tactics. Eli Whitney had, a century earlier, popularized interchangeable parts, while Frederick Winslow Taylor had already preached this method of meticulous analysis, called scientific management. Still, no one before Ford had combined them so effectively and on such a scale.

Meanwhile, Ford unleashed yet another brilliant move that would help saturate the market with his cars. He gave his workers raises. As his production rate and sales climbed in the early 1910s, Ford could afford to pay his employees more. In 1914, he more than doubled their minimum wage to five dollars a day. Imagine getting your salary doubled now, and you can imagine what this wage hike did to their disposable income. His workers quickly joined the suddenly growing middle class, and with this extra income, they bought more cars.{{5}} This strategy also increased worker loyalty and decreased worker turnover, which kept the company stable and humming.

These policies epitomized two core tenants of welfare capitalism that later companies adopted. Ford and Chrysler legend Lee Iacocca nicely sums up Ford and his raises: “He figured that if he paid his factory workers a real living wage and produced more cars in less time for less money, everyone would buy them . . . It was a virtuous circle, and he was the ring master.”

Other factors contributed to Ford’s success. He understood advertising. He also branched out into the rubber and steel industries to further control his means of production. The Model T, therefore, was produced at the lowest possible cost, and part of this savings could be lopped off its retail price. In 1908, one could buy the earliest Model Ts for $825. Over the next five years, the price plummeted to $500. By 1916, it was $360, and by 1924, it bottomed out at $260. As the price dropped, sales did the opposite, sometimes doubling in a year. By 1918, ten years after the car’s debut, half the cars in the country were Model Ts. Henry Ford, the dropout son of a Dearborn farmer, was the richest man in America. The Ford Motor Co., ultimately sold 15 million Model Ts, a record for any car model that stood until the 1970s.

By the late 1920s, after the Model T’s inevitable slowing of sales, Ford came out with the Model A. Though successful, it was no Model T. The Model A marked the beginning of Ford’s slow decline from his two-decade long reign as America’s greatest businessman. The latter part of his life was marred by a failed Senate bid, an increasingly messy relationship with workers who wished to unionize, an upstart General Motors company that permanently passed Ford Motor Co. in sales in 1931, a failed airline, accusations of anti-Semitism, and decreased mental acuity. The pall of the Great Depression didn’t help either.

When his son and successor as Ford president, Edsel Ford, died in 1943, Henry, despite his 80 years and bouts with paranoia and cardiovascular problems, reassumed command of the company. It went on to lose 10 million dollars a month.{{6}} By 1945, Ford re-retired, left the company to his grandson Henry Ford II, and died two years later.

No, Henry Ford was not an inventor. He was an innovator. He didn’t invent the car; he reinvented it. By lowering costs as much as he did, he was able to sell it to the common American, his employees first and foremost.

This approach to packaging and compensation ultimately rippled across the United States, the West, and the world. The Industrial Revolution had already begun in America and Europe, but Ford threw industrialism into a higher gear.{{7}} He may have revolutionized transportation, but he brought other industries along for the ride.{{8}}

When his factories could produce a car every 90 minutes, other business sectors were simulated. By 1927, Ford Motor Co. was producing a car every 24 seconds. The collateral boons are incalculable. There are the obvious sectors of growth—car dealers and gas stations—but many other industries got caught up in this revolution. In 1929, nearly four million workers had the automobile to thank for their job. Car production catalyzed enormous growth in steel, rubber, glass, and petroleum industries. Billions of dollars were poured into highway construction. Ford had thrown the American economy into overdrive.{{9}}

Another important side effect was the rise of suburbia. Owning a car meant one could get out of the inner city and into the fresh air of a suburb. Real estate speculation benefited. The first shopping center popped up in 1924 in Kansas City. Its customers used their Model Ts to get there.

A sizeable middle class emerged. It was made up not only of Ford’s well-compensated workers but of individuals who could use the affordable automobile to get to work at the many growing industries. Auto sales in the U.S. totaled 1.5 million in 1921. By 1929, that number had quintupled. By 1930, there was nearly one car for every five Americans, and Americans owned 80 percent(!) of the world’s cars.

[pullquote_left]Perhaps more than any individual, Ford helped create this consumer culture.[/pullquote_left]

As wages rose during the 1920s, the middle class used its free time and excess income—both a product of the rigid and hourly wage system instituted by Ford and others—to stimulate other sectors of growth. AAA estimated that one-third of Americans—or about 45 million people—took vacations by car in 1929. Americans were no longer isolated from each other. They more freely left rural homes and met for social occasions, sporting events, concerts, and movies. These industries, in turn, experienced growth as well. Even if the 1930s sidetracked this economic revolution, the U.S. emerged on the other side of World War II as an industrialized nation on wheels.

Perhaps more than any individual, Ford helped create this consumer culture. With the rise of disposable income and freedom of mobility came a higher standard of living and desire to spend. More than anyone of the industrial era, it was Ford that created a clear middle class that has since been the pride of the American economy.

Relevantly, Ford did not keep his production methods a secret. He wrote about them. He showed them off. Seeing a chance for good publicity, he invited people into his factories. Other manufactures emulated his tactics, and “Fordism” eventually branched out into other companies and industries. The rest of the Western world quickly caught on, and, in the past few decades, we’ve seen other nations use similar methods to maximize production.{{10}} Consequently, prices fell for products in almost every industry, and more affordability meant more members of the middle class.

Ultimately, Ford represents so many things about the United States. There’s the rags-to-riches tale, but there’s also his gift of automobility; he gave freedom to the country that boasts to have founded it. Moreover, while Americans brag about being a freedom-loving people, almost as dear to their hearts is the innovation, individualism, and profit motive that drove Ford and the American economy to the top of the GDP rankings for the better part of a century. It’s been quite the ride, and Henry Ford has been behind the wheel the whole time.{{11}}

For his unmatched contribution to American industrialism and the numerous effects on production and consumerism, Henry Ford is the 20th most influential figure in Western history.

[[1]]The final breakdown, as revealed in December, included eleven political and military leaders, seven philosophers, six scientists, and four inventors.[[1]]

[[2]]The Germans, as always, had the far cooler name: motorwagen.[[2]]

[[3]]He called it the “Ford Quadricycle.” Yikes. I suppose we can’t all be German.[[3]]

[[4]]The tireless work ethic that bred his success has, for a century now, been pointed to as the epitome of the American dream—from farmer drop-out to richest man in America, all by working hard, innovating, and never giving up.[[4]]

[[5]]To say nothing of more everything. Talk about stimulating an economy.[[5]]

[[6]] President Roosevelt considered a government takeover so as to guarantee constant production during World War II.[[6]]

[[7]]Sorry.[[7]]

[[8]]Again, I’m really sorry. I really can’t help these puns. And there might be more coming. (So fasten your seatbelt.)[[8]]

[[9]]They’re just too easy.[[9]]

[[10]]If not compensation.[[10]]

[[11]]Last one. I promise.[[11]]