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Automotive Innovators: Henry Ford
These days, the historic achievements and importance of Ford Motor Company founder Henry Ford are taken for granted. But he was extraordinary and this post covers one chapter, or part of a chapter, in the great man’s legacy. In today’s American car market—nearly wrecked by government intervention—there is simply no match for Henry Ford.
The year was 1913, and, according to Ford business history, Henry Ford sought to improve his young company’s manufacturing to meet demand for a car called the Model T. His business model—ambitious production by workers who were paid a decent wage—became the business standard across America. He singularly changed manufacturing.
Mr. Ford’s well-known accomplishment, the moving assembly line, was introduced at the Highland Park, Michigan, plant, according to Ford Motor Company’s timeline. Working on the assembly line, the individual worker repeatedly performed the same tasks on passing vehicles while standing in place. The system proved efficient, catapulting Ford to market domination through fast, efficient production, affordable car products, and good pay. The following year, Mr. Ford, evaluating his success and boldly expanding what he thought was working, declared that Ford would pay its workers an uncommonly higher wage: $5 a day.
He said the increase would be accompanied by shorter work hours and the policy change more than doubled the average Ford employee’s compensation. Making money was making Ford rich and successful—and its profit motive was trickling down to workers and, essentially, by paying more and making cars affordable to a much wider segment of the U.S. population, creating America’s middle class.
Though the press wrongly reported Mr. Ford’s announcement as an act of altruism, it was the company’s bottom line—its ability to make money; or profit—an idea for which today’s businesses are routinely denounced, that powered Ford’s historic step toward greater productivity. That Ford Motor Company workers also benefitted was a byproduct, not an act of charity.
The results were profoundly influential. Thousands of people flocked to Ford, causing a massive population shift in the nation away from the historically racist Deep South and traditionalist European states to the American North—toward a city known as Detroit. Labor turnover at Ford ended and, by creating an eight-hour day, Ford improved productivity—which, in turn, boosted profits.
Henry Ford figured that, since his ideas made it profitable to build inexpensive cars in higher volume, more cars would sell if his workers could afford to buy them. By instituting the $5 workday, Henry Ford changed cars—including how to make them—and he changed the nation, which makes him America’s foremost automotive innovator.
More on Henry Ford in another post. Meanwhile, we'll take a look at the successful, and, for the present time being, still non-government-run Ford Motor Company's fascinating story in our next installment.
[Source: Ford Motor Company]
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