an affordable car, paid high wages and helped create a middle class. Not bad
for an autocrat
Monday, Dec. 7, 1998
The only time I ever met Henry Ford, he looked at me and probably
wondered, "Who is this little s.o.b. fresh out of college?" He wasn't real
big on college graduates, and I was one of 50 in the Ford training course in
September 1946, working in a huge drafting room at the enormous River Rouge
plant near Detroit. One day there was a big commotion at one end of the
floor and in walked Henry Ford with Charles Lindbergh. They walked down my
aisle asking men what they were doing. I was working on a mechanical drawing
of a clutch spring (which drove me out of engineering forever), and I was
worried that they'd ask me a question because I didn't know what the hell I
was doing — I'd been there only 30 days. I was just awestruck by the fact
that there was Colonel Lindbergh with my new boss, coming to shake my hand.
The boss was a genius. He was an eccentric. He was no prince in his
social attitudes and his politics. But Henry Ford's mark in history is
almost unbelievable. In 1905, when there were 50 start-up companies a year
trying to get into the auto business, his backers at the new Ford Motor Co.
were insisting that the best way to maximize profits was to build a car for
But Ford was from modest, agrarian Michigan roots. And he thought that
the guys who made the cars ought to be able to afford one themselves so that
they too could go for a spin on a Sunday afternoon. In typical fashion,
instead of listening to his backers, Ford eventually bought them out.
And that proved to be only the first smart move in a crusade that would
make him the father of 20th century American industry. When the black Model
T rolled out in 1908, it was hailed as America's Everyman car — elegant in
its simplicity and a dream machine not just for engineers but for marketing
men as well. Ford instituted industrial mass production, but what really
mattered to him was mass consumption. 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.
Ford with a Model T in 1921. About one million Model T's were produced that
Almost half a century before Ray Kroc sold a single McDonald's hamburger,
Ford invented the dealer-franchise system to sell and service cars. In the
same way that all politics is local, he knew that business had to be local.
Ford's "road men" became a familiar part of the American landscape. By 1912
there were 7,000 Ford dealers across the country.
In much the same fashion, he worked on making sure that an automotive
infrastructure developed along with the cars. Just like horses, cars had to
be fed — so Ford pushed for gas stations everywhere. And as his tin lizzies
bounced over the rutted tracks of the horse age, he campaigned for better
roads, which eventually led to an interstate-highway system that is still
the envy of the world.
His vision would help create a middle class in the U.S., one marked by
urbanization, rising wages and some free time in which to spend them. When
Ford left the family farm at age 16 and walked eight miles to his first job
in a Detroit machine shop, only 2 out of 8 Americans lived in the cities. By
World War II that figure would double, and the affordable Model T was one
reason for it. People flocked to Detroit for jobs, and if they worked in one
of Henry's factories, they could afford one of his cars — it's a virtuous
circle, and he was the ringmaster. By the time production ceased for the
Model T in 1927, more than 15 million cars had been sold — or half the
Nobody was more of an inspiration to Ford than the great inventor Thomas
Alva Edison. At the turn of the century Edison had blessed Ford's pursuit of
an efficient, gas-powered car during a chance meeting at Detroit's Edison
Illuminating Co., where Ford was chief engineer. (Ford had already worked
for the company of Edison's fierce rival, George Westinghouse.)
After the Model T's enormous success, the two visionaries from rural
Michigan became friends and business partners. Ford asked Edison to develop
an electric storage battery for the car and funded the effort with $1.5
million. Ironically, despite all his other great inventions, Edison never
perfected the storage battery. Yet Ford immortalized his mentor's inventive
genius by building the Edison Institute in Dearborn.
Ford's great strength was the manufacturing process — not invention. Long
before he started a car company, he was an inveterate tinkerer, known for
picking up loose scraps of metal and wire and turning them into machines.
He'd been putting cars together since 1891. Although by no means the first
popular automobile, the Model T showed the world just how innovative Ford
was at combining technology and markets.
The company's assembly line alone threw America's Industrial Revolution
into overdrive. Instead of having workers put together the entire car,
Ford's cronies, who were great tool- and diemakers from Scotland, organized
teams that added parts to each Model T as it moved down a line. By the time
Ford's sprawling Highland Park plant was humming along in 1914, the world's
first automatic conveyor belt could churn out a car every 93 minutes.
The same year, Henry Ford shocked the world with what probably stands as
his greatest contribution ever: the $5-a-day minimum-wage scheme. The
average wage in the auto industry then was $2.34 for a 9-hr. shift. Ford not
only doubled that, he also shaved an hour off the workday. In those years it
was unthinkable that a guy could be paid that much for doing something that
didn't involve an awful lot of training or education. The Wall Street
Journal called the plan "an economic crime," and critics everywhere heaped "Fordism"
with equal scorn. But as the wage increased later to a daily $10, it proved
a critical component of Ford's quest to make the automobile accessible to
all. The critics were too stupid to comprehend that because Ford had lowered
his costs per car, the higher wages didn't matter — except for making it
feasible for more people to buy cars.
When Ford stumbled, it was because he wanted to do everything his way. By
the late 1920s the company had become so vertically integrated that it was
completely self-sufficient. Ford controlled rubber plantations in Brazil, a
fleet of ships, a railroad, 16 coal mines, and thousands of acres of
timberland and iron-ore mines in Michigan and Minnesota. All this was
combined at the gigantic River Rouge plant, a sprawling city of a place
where more than 100,000 men worked.
The problem was that for too long they worked on only one model. Although
people told him to diversify, Henry Ford had developed tunnel vision. He
basically started saying "to hell with the customer," who can have any color
as long as it's black. He didn't bring out a new design until the Model A in
'27, and by then GM was gaining.
In a sense Henry Ford became a prisoner of his own success. He turned on
some of his best and brightest when they launched design changes or plans he
had not approved. On one level you have to admire his paternalism. He was so
worried that his workers would go crazy with their five bucks a day that he
set up a "Sociological Department" to make sure that they didn't blow the
money on booze and vice. He banned smoking because he thought, correctly as
it turned out, that tobacco was unhealthy . "I want the whole organization
dominated by a just, generous and humane policy," he said.
Naturally, Ford, and only Ford, determined that policy. He was violently
opposed to labor organizers, whom he saw as "the worst thing that ever
struck the earth," and entirely unnecessary — who, after all, knew more
about taking care of his people than he? Only when he was faced with a
general strike in 1941 did he finally agree to let the United Auto Workers
organize a plant. By then Alfred P. Sloan had combined various car companies
into a powerful General Motors, with a variety of models and prices to suit
all tastes. He had also made labor peace. That left Ford in the dust, its
management in turmoil. And if World War II hadn't turned the company's
manufacturing prowess to the business of making B-24 bombers and jeeps, it
is entirely possible that the 1932 V-8 engine might have been Ford's last
In the prewar years there was no intelligent management at Ford. When I
arrived at the end of the war, the company was a monolithic dictatorship.
Its balance sheet was still being kept on the back of an envelope, and the
guys in purchasing had to weigh the invoices to count them. College kids,
managers, anyone with book learning was viewed with some kind of suspicion.
Ford had done so many screwy things — from terrorizing his own lieutenants
to canonizing Adolf Hitler — that the company's image was as low as it could
It was Henry Ford II who rescued the legacy. He played down his
grandfather's antics, and he made amends with the Jewish business community
that Henry Ford had alienated so much with the racist attacks that are now a
matter of historical record. Henry II encouraged the "whiz kids" like Robert
McNamara and Arjay Miller to modernize management, which put the company
back on track. Ford was the first company to get a car out after the war,
and it was the only company that had a real base overseas. In fact, one of
the reasons that Ford is so competitive today is that from the very
beginning, Henry Ford went anywhere there was a road — and usually a river.
He took the company to 33 countries at his peak. These days the automobile
business is going more global every day, and in that, as he was about so
many things, Ford was prescient.
Henry Ford died in his bed at his Fair Lane mansion seven months after I
met him, during a blackout caused by a storm in the spring of 1947. He was
83. The fact is, there probably couldn't be a Henry Ford in today's world.
Business is too collegial. One hundred years ago, business was done by
virtual dictators — men laden with riches and so much power they could take
over a country if they wanted to. That's not acceptable anymore. But if it
hadn't been for Henry Ford's drive to create a mass market for cars, America
wouldn't have a middle class today.
Lee Iacocca was president of Ford, later chairman of Chrysler, and
last year founded EV Global Motors
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