Henry Ford - An Impact Felt

James Couzens was right when he proclaimed, on more than one occasion, that his business partner Henry Ford was a genius. Today there are many stories and examples that support that assertion by Mr. Couzens but it is important to understand the impact Mr. Ford’s genius and accomplishments have had on our lives. Without that understanding, we cannot appreciate Mr. Ford’s genius in the same way that people of his generation did.

From a young age Henry Ford was a tinkerer. He was always interested in how things worked and how he could make them work better. As a young man he repaired watches, first at a little workbench by the windowsill in his parent’s farmhouse, then a few years later while working evenings from the back room of a jeweler’s shop in Detroit.

Even in those days Henry envisioned producing a product that anyone could afford. His first concept was for a pocket watch that he hoped could sell for just 30 cents each. He figured he would have to produce about 2,000 watches each day, or over a half million a year, to meet this low price point. In the end he came to the conclusion that there was not enough demand to sustain that level of production. Even so, Henry’s dream of mass production and low prices would stay with him and the fruition of that vision would change the way we live today.

Henry Ford’s life spanned an era of dramatic change:

• From the Civil War to World War II.
• From candlelight to electric light.
• From farm to factory.
• From horses to automobiles.

Abraham Lincoln was president when he was born and Harry Truman was president when he died. America would be completely transformed during Henry Ford’s life time. Much of that change would come about as a result of what he did to bring his vision of mass production into being.

With that in mind, let us make this assertion: more than perhaps any single person of the last century, Henry Ford can take responsibility for creating the American consumer ethic and the American middle class. We can thank him or curse him for what he has done, but either way, we have to acknowledge the impact Henry Ford had on our society. When we think about it, we have to acknowledge the impact he has had on each of our individual lives.

You might know that Henry Ford did not start out as a successful producer of automobiles. After building his first car, the quadricycle, and working to improve his basic design in the prototypes that followed, Henry Ford, working with investors, began the process of trying to build an automobile in quantity for sale to the public.

In 1899 he formed the Detroit Automobile Company, which quickly failed after only a few vehicles were produced. Henry and some of his original investors regrouped and formed the Henry Ford Company which quickly ran into problems as well. In 1902 Henry was dismissed by his board of directors from the company that carried his name because of his inability to bring a car to production. The company was reorganized as the Cadillac Motor Car Company under the engineering leadership of Henry Leland.

In 1903 Henry Ford felt he was ready to market an automobile for the public and the Ford Motor Company was incorporated, this time with a mere $28,000 in cash put up by a new group of investors. That original $28,000 investment was spent down to less than $300 before the company’s first car was sold, but from that time on the company was on its way to success.

Ford worked his way through the alphabet, producing various cars from A to S. Some were large touring cars whose development was demanded by his stockholders. Some, like the Model N were small, simple, and practical cars meant to have a wider appeal.

In October of 1908 Henry Ford proclaimed “I will build a motor car for the great multitude,” He said this in announcing the birth of the Model T. In the 19 years of the Model T’s existence, Ford built more than 15 million of the durable little cars and they were sold around the world. In fact in their time Model T’s would come represent half of all the cars on the road worldwide. Imagine it today if in every parking lot across the land half of all the cars parked between the lines were Ford Fusions or Escapes! The Model T then had a tremendous impact on the way people live. It can be argued that the T was the chief instrument of one of the greatest and most rapid changes in the lives of common people in history, and it did this in less than two decades. For example, farmers were no longer isolated on remote farms. The Model T heralded an age of mechanization for the farm. Model T’s were used to transport the farmer’s family to town, but more importantly to transport his products to market. T’s were even used to power the implements of farm production. Soon Henry Ford was producing a small tractor, the Fordson, which continued the transition on the farm that the Model T had launched. As a result, the horse disappeared so rapidly that the transfer of acreage from hay to other crops caused an agricultural revolution. The cycle of innovation and change, one of ever increasing yields and better methods of modern power farming was born.

Farmers and city dwellers alike could afford a Model T because it was affordable. It was affordable because of the rate at which it was built. The remarkable birth rate of Model T Fords was made possible by the moving assembly line and by the thousands of people who toiled under harsh and demanding conditions:

• Standing in their place along that assembly line,
• Doing their repetitive task,
• Over and over again,
• Hour upon hour,
• Shift upon shift,
• Week in and month out.

Unskilled workers cost less. They were paid less than skilled tradesman, and they were easier to replace. On Henry Ford’s assembly line you kept up with the pace of production or you were gone. No one individual was so important that they were indispensable.

The miracle of production was that Ford was able to deliver parts, subassemblies, and assemblies with precise timing to a constantly moving main assembly line. This reduced the time to produce a complete chassis from over 12 hours to about an hour and a half. The subdivision of labor into small, easily repeated steps and the coordination of a multitude of operations produced huge gains in productivity. But that productivity came at a cost. The work was monotonous, hot, dirty, and often dangerous.

As the popularity of the Model T increased the factory went to two nine hour shifts, six days per week. You could have your place on Henry Ford’s assembly line for the princely sum of two dollars and thirty four cents per day. But be forewarned, when 108 hours of production per week could not keep up with demand, Henry and his supervisors would gradually speed up the line.

By 1913 daily absences along the line were such that with 13,000 workers toiling away at the various assembly operations, Henry Ford needed over 1,000 extra men just to fill in for those who did not turn up for work. Further, the labor turnover at the Highland Park Plant was an astounding 370%. This meant that for every position in the plant, Ford needed to hire 4 men hoping one would work out and stay in the job for more than a few weeks or months. Ford went through more than 52,000 men to keep a workforce of only 14,000 working full time.

In 1913 the majority of line workers were from eastern and southern Europe and their supervisors were American born. Language became a barrier to production. Drastic measures were necessary if Henry Ford was to keep up a rate of production that would meet the ever expanding demand for his Model T. When confronted with the problem by his managers, Henry Ford declared that the simply needed to make more men.

On January 12, 1914 the Ford Motor Company announced that it would pay eligible workers a minimum wage of $5 per day. For Ford workers it meant that their wage was going to more than double. Ford also announced that it was going to reduce the work day from nine hours to eight, giving each employee one more hour outside the factory each day. This would also permit the conversion of the factory from two daily shifts to a three-shift per day operation.

How could Henry Ford do this? The lower costs of production from the mass manufacturing of the Model T had created surplus income, estimated at over 10 million dollars. Ford felt this money should go back to his workers, in the hopes that they would be more willing to work under the harsh conditions of the assembly line. By paying higher wages, he felt he was also creating a whole new class of buyers for his product, his employees.

Henry Ford’s $5 – 8 hour day was transformative and the press carried the story to a startled the world. This was big news and newspapers from all over the world reported the story as an extraordinary gesture of goodwill. Overnight Mr. Henry Ford became a worldwide celebrity and as a result the $5 per day pay wage became a successful public-relations tactic as well. Henry Ford would come to call it the “the smartest cost-cutting move I ever made”. Ford’s plan to double typical wages sent shockwaves through other car companies and durable goods manufacturers. Critics thought Ford was insane and would soon go out of business. In the end, other manufacturers would have to follow suit and raise wages although it was a number of years before workers at the other car companies would be paid a wage similar to Ford workers.

To address the communication issue in the factory the Ford Motor Company established a school, with classrooms right in the factory that employees would attend either before or after their shift. The object of the school was to help the immigrant workers become “Americanized” or “Fordized” if you prefer, while learning to speak English. The classes were mandatory and the method of instruction was by practical example. Instructors would teach English and also provide instruction on all manner of modern industrial age living from washing their clothes and their bodies, to brushing their teeth, to keeping a clean home, to saving money in a bank to purchase that home. This was all part of Ford’s idealized notion that his workers should learn to live in industrial Detroit and prosper from the experience.

The $5 day also came with character requirements which were enforced by a new group at the Ford Motor Company, the Sociology Department. Employees in this department, called investigators, would visit the employees’ homes to ensure that they were living in a way that was acceptable to the company. Employees would have to open a savings account, preferably at the company bank, so that they could save for the down payment on a home. They would have to be able to show that they could manage their finances and not recklessly spend away their new found wealth on drink and high living.

Today Henry Ford’s job requirements would not be tolerated, but they did serve their purpose. They stabilized his workforce and helped them become prospering members of society. Working for Mr. Ford at the Highland Park plant was hard, dirty, noisy, and even dangerous work. In the end though, if you towed the company line and lived the company life, you could provide a good living for your family and a future for your children.

In the fall of 1908 a new Model T cost $850. Steadily improved and, because of the production efficiencies resulting from the moving assembly line and the $5 day, the price fell. The price dropped, was cut again, and fell again, to a low of $260 by 1927. Eventually a Model T left the factory every 24 seconds. Today at the Rouge Truck Plant by comparison, a new F-150 comes off the line about once every 60 seconds.

The payment of what we would call today a living wage to workers created a new class of customers for Henry Ford. His factory workers could afford the products they built. Other industries either followed in Ford’s footsteps or were brought along the same path by unionization. In time industrial workers around the country were raised above subsistence living and became potential customers for Henry’s Model T and the products they built in their own factories.

These innovations all worked together to change the very structure of society and created what we today call the middle class. The rapid expansion of the automobile, again with one of every two cars on the road being Model T’s, created jobs and a lifestyle we recognize today as the American way.

Just like horses, cars had to be fed and so we saw the development of gas stations everywhere and jobs were created. As Tin Lizzies bounced over the rutted tracks of the horse age, better roads were needed and jobs were created.

With better roads and readily available fuel Americans took to the road in their Model Ts. As they did, restaurants and motels began to dot the landscape and traveler destinations popped up wherever something thought to be interesting or unique was happening. The modern tourist industry was born, and jobs were created. In all of this Henry Ford put Americans to work, not just in his factories, but in supporting the products of his production and serving the people that used them.

Henry Ford continued to dream, scheme, plan, and create. What Ford dreamed of was not merely increased capacity but complete self-sufficiency. He called it vertical integration, and with it he could have control over all aspects of his supply chain. The plant he built along the River Rouge embodied his idea of an integrated operation by including elements of raw materials, production, assembly, and transportation all in a single place. To complete the vertical integration of his empire:

• He purchased a railroad,
• He acquired control of 16 coal mines
• Thousands of acres of timberland in Michigan’s upper peninsula came under his control,
• And he built a sawmill,
• He acquired a fleet of Great Lakes freighters to bring ore from his Lake Superior mines,
• And he even purchased and relocated a glassworks manufacturer,
• Finally he even experimented with rubber plantations in South America.

So you no longer had to be a factory line worker to work for Mr. Henry Ford. You could be:

• A railroad engineer or brakeman,
• A coal miner,
• A lumberjack, or a worker in a sawmill,
• A ship’s captain or deck hand.
• You could have labored with molten steel or glass,
• Or even been a native of the Amazon rain forest tapping rubber trees and living the American dream in a Ford built village complete with streets laid out in a grid, a school, company store, and Christian church.

Once the massive and complicated Rouge was well underway, Henry Ford established a series of small village factories. His original concept was that these small production facilities would be a place where farmers could supplement their income during the off season by producing components for Ford automobiles. Known today as the Village Industries, these facilities were also an opportunity for Ford to experiment with water power. In the end the Village Industries became an opportunity for Ford to experiment with various production methods and specialized workforces.

Employment opportunities were opened up for women, the blind, and physically disabled veterans. These groups were given employment opportunities through Ford’s programs that they would not have had elsewhere. The Village Industries thus became a model open employment as well as for the modern incubator or start up business.

Perhaps you may feel that we’ve overstated Henry Ford’s impact on modern America and his role in the creation of America’s middle class. Obviously he did not do it alone. Other corporations followed his lead and example otherwise his efforts would have remained only a workplace experiment. The unions played their part too. First they worked to bring the best of what Ford gave his workers to other industries; high wages and genuine concern for worker wellbeing became their goal. Second they fought to protect workers from undue control and harassment.

Over his lifetime, Henry Ford’s pride in his workmen degenerated into anti-unionism. His insistence on complete control led him to rule his vast domain with his bodyguard and close friend Harry Bennett. Walter Ruther and the UAW would come to reign in the worst of what Ford gave his workers through paternalism and control.

At the beginning of this article we stated that Henry Ford had a very large impact on the way we live today. As we said earlier for better or worse, The Henry Ford Heritage Association feels his stamp on our lives is real and significant. The consumer ethic and middle class lifestyle we live today are heralded around the world as the American way of life.

That lifestyle has its roots in Henry Ford. His desire to build a product everyone could use and afford resulted in a transformative seed change that was felt around the world. His desire to pay his workers a wage that could do more than sustain their existence brought a whole new economic class into being. His concern for worker’s wellbeing went beyond their pay envelope and that concern helped to define employer / employee relations and benefits which are with us to this day.

Yes, the impact of Henry Ford’s Model T, his moving assembly line, his $5 day, and his employee improvement programs transformed the lives of his workers.

We hope you will agree these things have had their impact on you today as well.