Prices go down, sales go up
| Lower prices resulting from lower manufacturing costs generated more sales. | ||
| Year | Touring car price | Model T sales |
| 1912 | $600 | 89,455 |
| 1913 | $550 | 189,088 |
| 1914 | $490 | 230,788 |
| 1915 | $440 | 394,788 |
| 1916 | $360 | 585,388 |
The first lean manufacturer
Henry Ford knew he must bring car prices within the reach of the entire world
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Henry Ford did it all a century ago.
His giant strides in production methods allowed Ford Motor Co. to dominate the world auto industry of his day. Ford's pre-World War I car factories revolutionized manufacturing and changed the way goods were made around the world. The company's quest to reduce the labor content of its cars, to eliminate waste from the production process and beat down the cost of each car established an industry pattern still followed a century later.
But there is one colossal difference.
Today, auto manufacturing bosses and "lean practices" directors essentially are smoothing the rough edges. Mass production has been perfected to the point that improving it is a matter of degrees: improving safety, reducing scrap, eliminating wasteful steps, getting four workers to do what six did a year earlier.
In 1908, Ford's workplace changes were revolutionary. The company moved a 19th century production paradigm to a 20th century one.
Consider the old way of assembling cars. The production model at Ford's Mack Avenue operation went like this:
First, a car frame was carried into a clear area of the production floor and rested on sawhorses. Two or three workers hovered over the stationary chassis, bolting on the car body when the chassis was completed.
In the years immediately following Ford's incorporation in 1903, such labor-intensive practices gave the factory at first only two or three completed cars a day and then a few dozen a day. To production bosses of the time, the only clear path to greater productivity was through labor: hiring more workers, providing more work space, pushing workers to move faster, and waiting for them to become faster through experience.
A bigger goal
As long as labor and floor space were cheap, output could grow. Theoretically, Ford could have built a dozen little factories, each building a few a day.
But Henry Ford had a bigger goal. He wanted to put the entire world behind his steering wheels. He recognized he must bring car prices within reach of the entire world. That meant not just building cars in larger numbers but building them at a much higher degree of productivity and plant efficiency. More cars at a lower production cost meant more cars at a lower selling cost.
In 1910, Ford opened a large plant in Highland Park that started the process. The factory quickened production by accelerating the movement of parts. The plant's tool-and-die shop was enormous to make more parts-making tools. Rather than centralizing parts production, the tools were positioned close to where the vehicles were assembled.
As Highland Park's output gained momentum, a group of production managers continued tinkering with the process in search of more productivity and less wasted effort, or muda, as Japanese efficiency engineers would call it several decades later. The Ford managers included Henry Ford's assistant, Charles Sorensen; one of Edsel Ford's schoolteachers, Clarence Avery; factory foreman William Klann; and a production supervisor named Walter Flanders.
The group nipped and poked at new ideas for plant efficiencies, but without any central strategy or direction. Over three years, the improvements - kaizens, in the vocabulary of today's manufacturing environment - evolved like this:
Clusters of vehicle production were lined up rows 60 meters long. Parts runners moved from cluster to cluster down the line delivering a single set of parts as assemblers needed them. The next runners were just behind them. Highland Park was the opposite of a moving line: The cars stood still, the workers moved.
The group visited other industrial operations in search of ideas. One of the best came from a Chicago slaughterhouse. Heavy sides of beef hung on hooks that rolled through the butchering process. It didn't immediately occur that such a conveyer system might work for an entire car. But the Ford team thought heavy engines might roll more easily on an overhead conveyer.
The Highland Park group then hit on the idea of moving the multipart Ford ignition system along a conveyer belt, where workers remained stationary and added specific parts as it passed. They added transmissions, then axles.
Productivity boomed, but mostly for the moving parts lines. The stationary final assemblers still had to bolt the parts onto the chassis and bodies that sat on sawhorses. The plant had worked its way up to about 100 cars a day, but the bottleneck between parts and cars was formidable.
The Ford tinkerers, though, could see the potential of moving metal rather than people.
In 1913, the group took up the idea of moving the cars as they were assembled. At first, the problem with the idea was perceptual: How do you gently move the heavy hulk of an iron and steel car chassis? Their answer was to try dragging it with a rope. But as workers experimented with the idea, the heaviest ropes repeatedly broke.
The idea eventually evolved into a chain-pull system that dragged multiple chassis along until their wheels could be affixed. Parts were positioned along the line as the cars passed.
The workplace transformed
By October 1913, Ford was able to pull the wraps off of a redesigned production system like no other. The growing list of changes would enable the Highland Park workers to spend less time on each car. The flow made production planning more predictable for the company and its suppliers. The relative steadiness of the flow enabled factory bosses to dissect what was taking place.
In short, the factory had begun a transformation. It would cease to be a den of craftsmen working at their own paces and become a clockwork of inter-related lines and schedules.
More important, Henry Ford got his wish of more cars at lower prices.
Within six months, Highland Park was building more than 1,000 Model Ts a day. Ford enhanced the floor design to accommodate four separate vehicle lines and jacked up production to 3,000 a day. That output level continued to climb. By the time Ford switched to the Model A in 1927, the company had produced 15 million Model Ts - priced as low as $260 each. The first Model T had been $850.
Creating the market
Ford did not invent the idea of mass production. Credit for that probably belongs to Samuel Colt and the US government. In the second half of the 1800s, the federal government had attempted to make its weaponry more durable by requesting gun makers such as Colt to make their guns out of interchangeable parts. Making interchangeable parts in large numbers made it possible - necessary, in fact - to produce them on calibrated, repeating machinery. As with car sales, gun sales would be stimulated by producing them in large enough volumes to reduce their production cost.
But Ford had taken the ideas of interchangeable parts, precision metalworking machinery, conveyer systems and time management and combined them under one roof. The Detroit that predated Ford's factories had prided itself on high-quality bicycle manufacturing and carriage making. The craftsmanship and tooling knowledge involved there found their way into Ford's mass production of cars.
But bicycles and carriages had not excited the young 20th century American mind the way the automobile did. Unbounded market demand had never whipped carriage production into an altered state. Henry Ford understood that Americans - or people anywhere, for that matter - would buy a car if only they could. With a $2,500 price tag, only a few would buy. With an $850 price tag, many more would buy. At $260, they would buy them by the millions.
You can reach Lindsay Chappell at lchappell@crain.com.
