Ford's global expansion ensured a long life
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He had seen two Model A's at the Cordingley Automobile Show in Islington, England, in March 1904. The manufacturer was an unknown outfit called Ford Motor Co., which had been established in the United States less than 10 months earlier. Still, he was impressed enough to order a dozen cars, set up a sales agency and lease a showroom in London's Long Acre district.
With persistence, he eventually sold them all - after a year.
Like Blakiston, individuals in other countries had faith in the new American manufacturer. With their help, Ford spread rapidly over oceans and across continents, bringing the era of the automobile everywhere.
As Ford spread, it had to grapple with the complexity of managing a far-flung enterprise, customizing its products for local tastes and deciding when to enter into partnerships with local manufacturers - sometimes to meet a local government's protectionist policies.
Ford sometimes lost money on overseas ventures, but other times it made enough money to carry the entire Ford enterprise when the U.S. operations were stumbling.
Those issues were far in the future when Henry Ford considered expansion beyond the United States. That expansion started almost as soon as the company began building cars.
Factories sprout
In 1905, just two years after Ford Motor Co. came into existence, Model C's were being assembled in Canada, and a Model B was sold in Japan. By 1907, Ford had distributors in Germany, Belgium, Spain, Holland, Italy, Denmark, Sweden, Austria, Poland and Russia. Ford opened a sales branch in Buenos Aires in 1913.
In 1911, car assembly began in England at a converted tram factory. Auto assembly spread to Bordeaux, France, in 1913; to Argentina in 1916; and to Denmark in 1919.
The Denmark plant, in Copenhagen, was the first European plant to assemble the Model T, which was introduced in 1908. A true "world car" sold in essentially the same form in all markets, Ford's unglamorous but hardy Model T was perfectly suited to a world eager to rebuild from the devastation of World War I.
Suddenly Ford assembly plants were sprouting like mushrooms. By 1939, workers were assembling Fords in Australia, Belgium, Brazil, Chile, Germany, Holland, India, Ireland, Italy, Japan, Malaya, Mexico, New Zealand, Romania, South Africa, Spain, Turkey and Uruguay.
Many of those were what today would be called screwdriver factories, assembling cars from imported kits. In the early age of the automobile, final assembly often was done locally, in part because wooden bodies and glass windows did not survive transport well.
Ford's innovative manufacturing techniques enabled semiskilled workers, not just craftsmen, to assemble cars. In 1914, Europe's first moving production line was installed at Ford's plant in Manchester, England.
A workhorse suited for every continent
The manufacturing revolution led by Henry Ford, promoted and sometimes denounced as "Fordism," inspired awe - and rivals - around the world.
Consider Japan. In its Nov. 11, 1929, edition, the Nagoya Shimbun newspaper reported: "The Ford Koyasu Plant has joined the Imperial Theater House and Mitsukoshi (department store) as one of the famous places to see between Tokyo and Yokohama."
Among those early sightseers: Kiichiro Toyoda, the founder of Toyota Motor Corp.
Ford's enormously practical designs made the Model T a workhorse suited for every continent. By making cars for the common man rather than luxurious conveyances for the rich, Ford could sell in any country in which a car might replace a horse, mule, water buffalo or llama.
The Model T was such a global success that its production run lasted until Dec. 31, 1928, when the last Model T assembled on the planet was built in Cork, Ireland. Almost 16 million were built.
The company was determined to exploit its advantages in every market possible. In 1908, Ford set up a branch in Paris to supervise its European operations.
For the first two decades, key parts for local assembly came from Ford's U.S. headquarters. That would change with the building of a factory in Dagenham, England, that would supply components to plants across Europe under what became known as the 1928 Plan.
By the time the first vehicle drove off the Dagenham line on Oct. 1, 1931, the European operations faced a crisis. The Great Depression was ravaging sales, and the new Model A bore an expensive tax burden across Europe. In its first three months of production, Dagenham sold just five Model A's. Trucks kept the operation going, but losses mounted.
By 1932, it was clear the A was a colossal flop; Europeans were shunning the car. As sales plummeted and revenue dried up, Ford of England was pushed to the brink of bankruptcy by the A's huge startup costs. That year, the British company was forced to borrow $1.5 million from its Belgian subsidiary to stay afloat.
Dearborn approved a so-called baby Ford early in 1932.
 Ford's fully integrated assembly operation in Dagenham, England, made Dagenham the Dearborn of Europe. |
The new car returned Ford's British operations to the black and gave Ford 54 percent of the British market for cars of 8 hp or less. It marked the start of crafting of cars for local markets and was the first in a long line of light English Fords that in coming years would be found everywhere in the world.
Protectionist pressures
The 1928 Plan failed to foresee the protectionism that came with the Great Depression. Even though Ford had been assembling cars in some markets longer than some indigenous makers, Ford was denounced as an American intruder.
Japan's government passed laws in 1936 that required Japanese ownership of at least 50 percent. Ford and the companies that later became Toyota and Nissan briefly discussed a three-way alliance, with Ford holding 40 percent and each of the others holding 30 percent. But the talks fizzled, and Ford halted its Japan operations in 1940.
After World War II, protectionism took a different form. Hungary transferred ownership of Ford Motor RT to the Soviet Union in 1946, and Romania nationalized the Bucharest Ford plant in 1948.
Pre-war protectionism was not the only source of alliances. As a global leader, Ford drew requests for partnerships from, and sought ties with, a number of other concerns. Some came to fruition. The pairings and rejections make an intriguing list of "what was" and "what ifs."
Sir Herbert Austin proposed a joint venture for the British market to Ford in 1926. Ford passed. In 1987, though, Ford bought Aston Martin Lagonda, followed by Jaguar in 1989, Volvo Cars in 1999 and Land Rover in 2000.
A 1963 deal to buy Ferrari was called off by Enzo Ferrari just before the contract was to be signed. In 1979, Ford bought 25 percent of Mazda, later raising that to 33.4 percent. It bought, then sold, a 15 percent stake in Korea's Kia Motors Ltd.
In Brazil, where the Ford empire once owned a rubber plantation, Ford hooked up with Germany's Volkswagen AG to form Autolatina from 1987 to 1995, with Ford holding 49 percent to VW's 51 percent.
Ford's overseas operations have had their ups and downs in terms of profits. In 1971, for example, the United States and Canada accounted for 96 percent, or $632 million, of the company's total net income of
$657 million. In 1975, though, profits in the United States and Canada were just $67 million, or 29 percent of the total of $228 million.
The situation was even more dramatic in 1979. Ford had a net loss in the United States of $199 million, and a net loss of $9 million in Canada. The company might have faced bankruptcy if not for the profits earned abroad. Fortunately, other markets turned a combined net profit of $1.38 billion, to keep the entire operation in the black by $1.17 billion.
In 2002, overseas operations again helped, but it wasn't enough. Ford's automotive operations lost
$539 million. Of that, North America lost $559 million, while all other markets, led by the Asia-Pacific region, earned $20 million.
Ford's continued existence is the result of the global vision of Henry Ford and of marketers such as Aubrey Blakiston.
You can reach James B. Treece at jtreece@crain.com.
