The Ford Motor Company we know today, and the one connected to the famous assembly line for the Model T, was the third attempt[i] by Henry Ford to manufacture automobiles. His previous automobile company was reorganized by Henry Leland into Cadillac. Much less has been written about Leland, who had as interesting career as Ford.
(table in book of early production quantities for several auto makers.)
Leland’s industrial career started in the Springfield Armory, moving later to Colt’s, then he went to Brown and Sharpe who made the Wilcox & Gibbs sewing machines (they were eventually to become machine tool makers). Leland finally set up his own machine works which eventually made Dodge engines under contract for Olds. This set the stage for Leland to enter the automobile business. Prior to 1900, the cumulative leader in automobile production was the bicycle maker, Columbia. Ford’s early production figures ranked him third or fourth. Oldsmobile had the leading automobile, which was light and inexpensive; this was five years before Ford’s fabled Model T. In the early years while the shop was smaller, Henry Ford was reputed to know every workman by name. One would expect this to have been the time of the greatest improvements, but the facts tell a different story.
Enter Walter E. Flanders in 1906 and production figures jumped. This is an untold story of equal to the assembly line in 1913. The first thing Walter Flanders did after his arrival at Ford was to totally reorganize the shop floor. Henry's financial man, James Couzens, complained loudly of the costs being incurred. This reorganization improved production from 20 cars a day to 150 cars a day, while reducing workers headcount from 700 to 575. Imagine shutting down production, moving all of the machines and restarting in within three months. According to accounts, in this time period Flanders also made 1000 cars - the same number which would have been produced if not shut down. By the end of the year he exceeded the 10,000 car mark -- this was before the Model T (sales were primarily Model N and some Model Ks). In spite of his exceptional performance, Flanders left in early 1908. There are several theories as to why he left, and conjecture on what might have happened had he stayed. He did stay long enough to transfer enough knowledge and the possibilities to an eager group of young men, who in a few short years revolutionized the manufacturing and assembly processes.
According to Charles Sorenson[ii], Flanders was brought in by the other shareholders, not by Henry Ford, even though several Ford books attribute the hiring to Henry. Remember that just a few years earlier Henry had a run-in with the shareholders and lost his earlier company which Leland made a success[iii]. After Flanders arrived he did a cost study of the Model N and found that the company was loosing about $25 on each car. Some minor redesign (added running boards and fenders), and the car was re-priced to make a profit. Rumor has it that Henry had promised Flanders a $10,000 bonus (some put the figure at $25,000) if he could build 10,000 cars in one year. That bonus was never paid, just a raise. So the year after Flanders had made the Ford Model N a massive success, Henry replaced the Model N with the Model T. Flanders was upset, for he had put all of his effort into building up production. With this new system of dealers and suppliers, he was able to level production to have fairly even demand on a monthly basis. Henry Ford had also made sure that Sorensen excluded Flanders from the room where he was developing the Model T.
The story of the room where the development of the Model T was done is interesting in its own right. There are similarities to the development process used by Ford and his men in 1906-1906 to those used at the “Skunk Works[iv]” by Lockheed in their early days and to the current “new” idea being proposed as an innovative Japanese method for product development – Oobeya, which means “big room” in Japanese.
The story of the room where the development of the Model T was done is interesting in its own right. There are similarities to the development process used by Ford and his men in 1906-1906 to those used at the “Skunk Works[iv]” by Lockheed in their early days and to the current “new” idea being proposed as an innovative Japanese method for product development – Oobeya, which means “big room” in Japanese.
We came close to not getting the assembly line developed. Ford almost sold the Ford Motor Company in 1909 to William Durant (Buick - GM) for somewhere between $8 and $10 million. One of the lucky breaks for Ford was that Durant was short $2 million and couldn’t convince the bankers to lend the money. Ford got cold feet, demanded cash, and would not accept payment in stock and cash as other companies assembled by Durant had done.
Walter Flanders was not one to waste time. Flanders left Ford in the spring of 1908, by the summer he had a new company formed, EMF, with the first autos delivered in September! The first year’s production was 7,960 in 1909, jumping to 15,020 in 1910. It looked as if Ford had met his match. But one critical piece of Flanders strategy backfired. In his hurry to compete he brought Studebaker in for their extensive dealer network. As one of the largest wagon manufacturers, Studebaker brought their dealers into the new car company, thus reducing the time and cost required to build a distribution network. With success, a power struggle emerged. Flanders’ two partners sold their shares to Studebaker in 1909, and by 1910, with the help of JP Morgan, Studebaker bought Flanders out. The power struggle that stalled the commercial development of EMF, along with Durant’s financial difficulties which hobbled Buick, partially contributed to Ford’s ascendancy. There were no experienced competitors, only automobile companies run by financiers.
There is a little controversy surrounding the first assembly line. Walter Flanders recounted an experiment done one weekend several years prior to the 1913 official date and gave the explanation of having more pressing demands to pursue. Most discount this explanation, yet if you have worked in a factory during a model change or start-up situation, the story is plausible (they were introducing the Model T). The massive level of detail available on the experiments surrounding Ford’s production departments is too much to recount here. Fortunately Ford allowed access to his plant during these formative years; journalists detailed many of the experiments done during this transition period. Best known is a series of articles written for the American Machinist magazine. These were collected into book form about 1917, and reprinted - Ford Methods and the Ford Shops, by Horace Lucien Arnold and Fay Leone Faurote. Though much as has been written about the assembly line, Ford’s celebrated advantage of an assembly line was a short one, for GM adopted the assembly line only 10 months after Ford.[v]
A flurry of interest recently surrounded two books attributed to Ford, resulting in several people republishing them. A word of caution: consider the source and events surrounding Ford, when and how they were written. Samuel Crowther collaborated with Henry Ford to write My Life and Work, which was published in 1922. Today and Tomorrow was a follow- up book published in 1926. Sorenson remarked that Crowther had the access to nearly any part of the factory, yet only limited access to interview Ford. In today’s terms, these were primarily publicity items to spin the Ford mystique. If you want to read history and something a little less biased, there were a series of articles published in the American Machinist weekly magazine during the critical development time of Ford’s assembly line.
Ford’s Model T production peaked in 1923. The market had already begun to shift a few years earlier. Ford’s product had saturated the “non-consumption[1]” market. His car had been a “good-enough” product for someone who previously had walked or used a horse and wagon. But the Model T shifted into the “not-good-enough” product sector for those who had already owned a car. Ford totally missed this transition. The “Value Proposition” for a first-time buyer is different from the second-time buyer. Because of these factors and others, Ford’s creative streak peaked about 1918 when he shifted from enabling his employees’ creativity toward a cult of personality.
Ford’s first significant entry into Japan came in 1923 following a major earthquake that destroyed most of Tokyo. The City of Tokyo imported 800 Ford Model T trucks to serve as busses. By 1925, Ford had established a wholly owned subsidiary to assemble knock down kits of Model T cars in Yokohama. GM followed in 1927 with a plant in Osaka. The production in these plants were later capped by legislation past by the Diet. This paved the way for local companies to enter the market. Both Ford and GM abandoned the Japanese market just prior to WW2.
Please address any questions or comments to: Mark.Tesla2@gmail.com
Copyright 2008 - Mark Warren
[1] The term “non-consumption” used here has been used by economist and author, Clayton Christensen, in several books on innovation to describe a group of customers that are non-consumers that are excluded from the market primarily because of cost. This group of customers is often accessed with a product that may be marginally functional, yet “good-enough”. One characteristic of this customer is, over time, their expectations on what satisfies “good-enough” shifts. Thus making the original product “not-good-enough” for their next purchase.
[i] Detroit Automobile Company (1899-1900), The Henry Ford Company – renamed Cadillac (1901-1902)
[ii] My Forty Years with Ford, 1956. Charles E. Sorensen
[iii] In February 1908, three Model Ks from the 1907 Cadillac production were released from the stock of Frederick Stanley Bennett (UK agent for Cadillac automobiles) at the Heddon Street showroom in London (these were engines Nos. 23391, 24111 and 24118). The three cars, all registered in London under the numbers A2EO, A3EO and A4EO, were driven 25 miles to the Brooklands race track at Weybridge. There, the cars completed another 25 miles before being put under lock and key until Monday March 2, 1908 when they were released and disassembled completely. Their 721 component parts were scrambled in one heap. Eighty-nine parts requiring extreme accuracy were withdrawn from the heap, locked away at the Brooklands club house and replaced with new parts from the Mr. Bennett's showroom stock. A mechanic - Mr. E.O. Young - reassembled the cars with the help of his assistant - Mr. M.M. Gardner. Sometimes they had to work ankle-deep in water, using only wrenches and screwdrivers. The third car was re-assembled by Tuesday evening, March 10. By 2 p.m. on Friday March 13 the three cars had completed the mandatory 500-mile run with singular regularity. Only one point was lost owing to a broken cotter pin in the ignition lever (promptly replaced from stock). During the event, it was reported that one of the sheds where the parts were stored became partly flooded during a heavy storm and some parts became rusted. Only oily rags could be used to remove all traces of the immersion. On completion of the test, one of the cars was placed under lock and key where it remained until the start of the 2000-miles Reliability Trials, several months later. It came out the winner of the R.A.C. Trophy! Parts interchangeability could not have been demonstrated in any more convincing way. (Wikipedia)
[iv] For those involved with product development, the book Skunk Works: A Personal Memoir of My Years of Lockheed by Ben R. Rich and Leo Janos, should be required reading as well as Product Development for the Lean Enterprise: Why Toyota's System Is Four Times More Productive and How You Can Implement It by Michael N. Kennedy. Oobeya has limited information available, except on the web.
[v]The Deal Maker: How William C. Durant Made General Motors, Chapter 14
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