Henry Ford and his car company hit a home run with the Model T – and he knew it (see Part One of this series). On January 1, 1910 he opened his new factory in Highland Park with the intention of producing one thousand Model T’s a day. His whole business model centered around making an inexpensive, affordable product for the masses. Machine parts could be made quickly but assembling cars was another story. Again, Henry Ford began to tinker.
One member of his team proposed an idea based on a conveyor system used in meat-packing plants. As the animal carcass moved along the conveyor throughout the plant, meat cutters cut pieces from the animal. They thought a sort of reverse conveyor process would work – put the machine on a conveyor and move it past people to place things on it. To test the theory his team tried it out in the flywheel magneto department. Instead of one person building one coil at a time, individual tasks were broken down – each person along the conveyor had a specific task to perform. Previously it had taken twenty minutes to assemble and with the new system it would drop to just over thirteen minutes.
It worked for magnetos, so why not transmissions, axles, engines, you name it? When they put the entire project of assembling a car through the conveyor system, productivity soared. Previously it had taken twelve hours and thirteen minutes to assemble one car – afterwards the time required plummeted to one hour and thirty-three minutes – a vast improvement. Ford hadn’t invented the assembly line but his first automobile assembly line, when perfected, was a stunning success, making the company’s goal of one thousand cars a day possible.
Historian Douglass Brinkley remarked, “Efficiency becomes a religion to Ford. Time is a product; you get the maximum you can out of every hour.” Efficient though it was, it was monotonous and exhausting work. Some workers only lasted a few days. To deal with the attrition rate, the company’s managers estimated that every time they needed to add one hundred new employees they would need to hire almost one thousand.
Any business person knows that turnover is not a good thing, especially since new people have to be trained. Henry Ford wanted to find a way to keep good employees and he decided to go bold. His workforce couldn’t believe his proposal, and his competitors and business analysts predicted the company’s demise because of it.
In early 1914, Henry Ford met secretly with his senior managers to discuss his plans. First, he scribbled a series of numbers on a blackboard. In one column, he wrote $26 million which was the company’s previous year’s profits. The next number he wrote was $2.34 which was the daily wage for assembly line workers. Next he wrote three dollars a day, four, four dollars and fifty cents and finally five dollars a day. His team was beginning to catch on – they were astonished and protested. Furthermore, he proposed reducing the work day from nine hours to eight.
Henry Ford, despite his senior team’s protestations, prevailed. His theory was that paying wages of five dollars a day would reduce turnover, and in turn increase business. In furtherance of his theory, he believed that raising his employees’ wages would allow them to become consumers themselves. If he had his way, every employee would be able to buy a new Ford someday.
His plan swiftly brought world-wide attention with headlines like:
Some companies had been considering profit-sharing plans, but they believed paying five dollars a day to unskilled workers was a huge economic mistake. Most automobile manufacturers expressed similar opinions – Henry Ford was indeed a rich man and he could certainly do with his money exactly as he pleased – but it was a mistake:
- J.J. Cole – We are not much concerned. If Ford wants to amuse himself all right. He can afford, it. Others can’t.
- C.W. Meers – Mr. Ford’s last statement showed he had $13,000,000 in cash. He is able therefore to indulge in any experiment he pleases. I believe the plan economically wrong.
- Otis O. Friend – Mr. Ford has made all the money he has any use for and he now wants others to have a chance. It is not a plan for other companies. (Indianapolis News, January 9, 1914)
Not only did his competitors and Wall Street react, but men lined up by the thousands to compete for jobs:
Ten thousand men lined up for the chance to join Henry Ford’s “army”. The line started at 3:00 a.m. on the morning of January 14, 1914. By 6:00 a.m. the crowd had grown to hundreds more men, shoving and jostling for a position in line before all of the four thousand available jobs were gone.
Henry Ford was firm in his beliefs – some called it his creed:
- Social justice begins at home.
- We want those who helped produce this institution to share our prosperity.
- We want our employees to have present profits and future prospects.
- Thrift, good service and sobriety will be encouraged and recognized.
- It is our hope to do still better by our employees.
- We believe in making 20,000 men prosperous and contented rather than in following the plan of making a few slavedrivers multimillionaires.
Henry Ford: Maker of Men
Even with all the attention garnered from his bold plan, as it turns out the five-dollar-a-day wage wasn’t guaranteed – there were strings attached. It was an incentive wage, especially for the hundreds of immigrant workers the company hired. Those immigrant workers, representing over fifty nationalities and more than one hundred different languages, were required to attend the company’s English Language School.
Not only did the workers learn to speak English by rote recitation, they also received lessons on practical daily living. After six months of study the workers participated in a graduation ceremony called “The Pageant of the Ford Melting Pot.” According to historian John Staudenmaier, the ceremony went something like this:
There’s a great big pot. The graduates, all dressed in native costumes, climbed a ladder up and jumped into the pot and disappeared. And then the teachers came out behind on a catwalk at the back side of the bucket, with big long spoons, and stuck them in the pot, and walked back and forth, a little choreography, stirring the pot, then the workers come out of the same pot, one by one, wearing a suit, a straw hat, and waving a little American flag.
Henry Ford wasn’t content to merely educate and “Americanize” his workers, however. The Ford Sociological Department was established to monitor employee social behavior as well. He sent out investigators who would question the family, friends and even landlords of his employees. Was their house clean? Did they drink? Were they legitimately married? It was a known fact that Ford was adamantly opposed to drinking.
If a worker didn’t pass muster, he was given a period of time in which to mend his ways while his additional wages were held back pending improvement. If a second failure occurred, the worker was fired.
Not long after the five-dollar-a-day announcement, Henry Ford established his own movie making department. He certainly wasn’t bashful about promoting himself. Its first production played in theaters that summer: How Henry Ford Makes One Thousand Cars a Day.
He garnered headlines like: “Henry Ford, Poor Farmer Boy, Who Earns $100 Every Minute of Day” and “Henry Ford, the Newest of Philanthropists.” He was lauded as a sort of folk hero who was changing the world, and it began to go to his head. No one should even consider challenging him.
One summer he had taken a trip to Europe, and while he was away his team built a prototype for a new car to succeed the Model T. When he returned, he walked around the car several times, opened the passenger door and ripped it off its hinges. He walked on the other side and ripped off the driver’s side door, then began demolishing the car. Henry Ford, alone, was in charge.
He also hated to deal with investors. When he wanted to build a new and massive plant, he met resistance from stockholders. They were complaining that dividends weren’t being fairly distributed based on the company’s soaring profits. It didn’t help matters either when Henry Ford discovered two of his original investors, John and Horace Dodge, were planning to use their dividends to start their own automobile company. After a legal battle, Ford was forced to pay out twenty million dollars, plus interest, to each of the seven minority stockholders.
Thereafter, he had a chance to rid himself of investors altogether. In late 1918 he declared that he, being “very much interested in the future … of the whole world,” was quitting the Ford Motor Company. Edsel, his twenty-five year-old son, would take over the company. Just two months later, Henry Ford declared that he was starting a rival company, producing a stripped-down version of the Model T and selling it for only three hundred dollars.
Ford’s investors were frantic. His plan all along was to scare his investors into selling their stock back to him. Being the master manipulator of the press that he was, he succeeded. It cost Ford $106 million, but in the aftermath Henry, Clara and Edsel Ford were the sole owners of the Ford Motor Company – when he heard the news, Henry danced a jig.
Just because Henry Ford was handing the reigns over to Edsel didn’t mean that he would no longer wield influence at the company he built. More about that, as well as his relationship with Edsel, and more about his social and (controversial) political views next week.
Have a GREAT day . . . someday it will be HISTORY!