Ford: not the first, but definitely one of the best

Henry Ford, the renowned entrepreneur, engineer and businessman, was born in Michigan in 1863. After receiving only an elementary education, he became a technician in the Detroit industry. As soon as the Germans Daimler and Benz started to release the first automobiles to the market -circa 1885- Ford became interested in the invention and began to build his own prototypes. However, he failed at his first attempts.

Ford Motor Company HQ_patrick dwyer
Image courtesy of chrisphoto at Flickr.com

He was not successful until his third business venture, launched in 1903: the Ford Motor Company. The factory produced simple, affordable automobiles for the American middle class. Until then, the automobile had been an artisanally fabricated object and its cost was prohibitive, meant for a very limited audience. With his Model T, introduced in 1905, Ford made the automobile affordable enough to middle class American families, introducing them into an age of mass consumption. It altered drastically the way of life and work and physiognomy of the cities, thus starting the “automobile civilization” of the 20th century.

Ford’s key to success was his process to reduce manufacturing costs: serial production, also known as Fordism. Said method, inspired by the work mode of the slaughterhouses in Detroit, was simply the setup of an assembly line with belts and slideways that would automatically move the car’s chassis to different spots, where successive groups of operators would perform different tasks on it until the car was assembled.

This exchangeable parts system, which had been tested long ago in factories of weapons and clocks, would lower the production costs and repairs via product standardization.

The manufacturing chain with which Ford revolutionized the automobile industry was a risky bet, since it would only be viable if it found a demand capable of absorbing its massive production. The size of the American market offered a suitable scenario, though Ford also studied correctly the purchasing power of the average American man, as the gates of the consumer society were opening.

Museo Henry Ford_patrick dwyer_financial titans
Image courtesy of Roberto Molero at Flickr.com

As long as that demand existed, the production line would contribute to avoid time losses, since the workers did not have to move from one side of the factory to another. Each operation was compartmentalized in a succession of mechanical and repetitive tasks, with which the technical or artisanal qualifications of the workers were no longer valuable. The industry could then take advantage of the unskilled labor from the immigrants that arrived en masse to the United States every year.

The cost of training the workforces decreased, as the skilling of the workforce eliminated the uncomfortable protest activities of worker unions, based on the professional qualifications of its members, which were the only unions with a considerable strength in the United States at that time.

At the same time, the top executives of the company would enforce a strict control over the workers’ pace, regulated by the speed with which the supply chain would function. In the meantime, the reduction of costs allowed Ford to raise the salaries of his workers, way above what was normal in the North American industry back then. With his famous $5 a day wage he ensured a satisfied and peaceful workforce, to which he could impose strict behavioral rules inside and outside of the factory, surveying their private lives through a “sociology department”. The workers of the Ford Company managed to get, thanks to their high salaries, onto the threshold of the middle classes, thus becoming potential consumers of products like the automobiles that Ford sold. A complete social transformation would appear and operate in the United States with the adoption of these entrepreneurial methods.

1923 Model T Ford_financial titans_patrick dwyer
Image courtesy of Liz at Flickr.com

The success, in sales, of the Ford T -which sold about 15 million units total- turned its inventor into one of the wealthiest men in the world, and the Ford Motor Company into one of the biggest industrial corporations of our time. Faithful to his ideas about competition and free market, he did not try to monopolize his findings regarding corporate organization. Instead he tried to make them as public as possible. As a consequence, it was not long before competition surged within the automobile industry, and soon his innovative manufacturing processes extended to other sectors and countries, therefore opening up a new age in industrial history.

Henry Ford, on the contrary, reoriented his efforts towards other causes, in which he was less successful. First he failed in his pacifist efforts against the First World War, and later on he organized less noble campaigns like the anti-semitic propaganda that he spread in the 1920s or the fight against organized unions in the 1930s. Ford passed away in 1947.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s