No Light Rail in Vancouver!

Today, many people think the Model T is one of the most important cars ever made because it brought mobility to the masses. Others, who apparently think the wealthy should be mobile but not the poor, think it was one of the worst cars for the same reason.

In fact, the Model T wasn’t what brought mobility to ordinary people. The car sold well in 1909, but sales didn’t really take off until Ford started making Model Ts on a moving assembly line. This allowed him to lower the price of his cars to $490 in 1914 (about $8,000 in today’s prices), and eventually to as low as $290 (less than $3,000 in today’s dollars). In every year from 1919 through 1925, Ford sold more cars than all other auto makers in the nation — and in some years, the world — combined.

At the same time, assembly line work proved so boring that Ford had a hard time keeping employees. So he doubled worker pay to $5 a day, at the same time shortening the work day from nine to eight hours). He called this “one of the finest cost-cutting moves we ever made” because it attracted and kept better workers.

A side effect of higher worker pay was that auto workers could, for the first time, afford to buy the cars they were making. Once they owned an automobile, they could also live in a single-family home rather than a crowded tenement within walking distance of their work. As workers moved to the suburbs, jobs did as well, because Ford’s moving assembly lines — which were quickly imitated by many other manufacturers — required lots of land. In short, the moving assembly line, not the Model T, is what revolutionized America.

Though Henry Ford started out as a tinkerer, he did not invent the internal combustion engine, the automobile, the low-priced car (there were several on the market in 1908 that cost a lot less than $825), or even the moving assembly line (credit for which is usually given to a Ford employee named William Klann). Although Ford idolized inventors such as Thomas Edison, he himself was an entrepreneur. Shortly before the turn of the 21st century, Fortune magazine named Ford “Businessman of the 20th Century.”

Ford’s claim to that title is based on his adoption of the moving assembly line, doubling worker pay, and the development of the vertically integrated River Rouge factory, which took raw materials in at one end and produced cars from the other. Ford even owned the railroad that brought the iron ore into the factory.

Yet Ford had lots of managerial flaws, not even counting his reputed anti-Semitism. Most important, his resistance to adapting to changing consumer tastes allowed General Motors to overtake Ford as the number one automaker using one simple idea: the changing model style year, which made older cars look obsolete. Ford believed in technogically improving his cars but didn’t worry about styles. While Volkswagon earned a cult following by reviving that idea in the 1950s, in the late 1920s most consumers showed they preferred style.

Ford finally broke down and replaced the Model T with the popular Model A. But Ford’s resistance to change hampered the company until he finally turned it over to his grandson, Henry Ford II. Nevertheless, the Model T certainly revolutionized the world.

Ford’s other ideas about running a company were hardly suited to a small business, much less one of the world’s greatest industrial enterprises. He did not believe in organizational hierarchies, would not give titles to his top managers, and fired anyone who tried to make an organizational chart describing who reported to whom. He did not believe in accounting; the company estimated its accounts payable by measuring the total thickness of all the bills it had yet to pay and multiplying by an estimated cost per inch. The company succeeded because his initial instincts about what the public wanted happened to be right; it nearly failed because his later instincts were wrong.

I’ve always had a fondness for Ford, probably because when I was young my family had a 39 Ford, a 49 Ford, and a 53 Ford in succession. I’ve always enjoyed reading stories of entrepreneurs like Henry Ford, so as I get a chance in the next few days, I plan to review several other entrepreneurs to see just what it is that makes entrepreneurship such a powerful idea in our society.

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Henry Ford, Entrepreneur

Oct 1

2008

Today (or maybe (last Saturday; sources differ) is the

100th anniversary of the assembly of the first Model T Ford. That first Model T cost $825 — about $14,000 in today’s dollars. It proved reliable, simple to drive, and easy to repair.

Reprinted from The Antiplanner