Henry Ford, Entrepreneur

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.

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.
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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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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

32 Responses to Henry Ford, Entrepreneur

  1. D4P says:

    When I read the following,

    The Model T — whose mass production technique was the work of engineer William C. Klann, who had visited a slaughterhouse’s “disassembly line” — conferred to Americans the notion of automobility as something akin to natural law, a right endowed by our Creator. A century later, the consequences of putting every living soul on gas-powered wheels are piling up, from the air over our cities to the sand under our soldiers’ boots.

    the Antiplanner’s conclusion

    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.

    comes across as a non sequitur. The first passage makes no distinction between wealthy and poor: it applies equally to both.

  2. the highwayman says:

    Henry Ford also electrified part of the Detroit, Toledo & Ironton Railroad.

    There wasn’t any thing wrong with the Model T, in some ways it better than cars today.

    The big problem with Henry Ford was that he was a bigot and sent money to Hitler.

    For that matter automobiles were around before electric streetcars. The problem is that people don’t really pay to drive.

  3. C. P. Zilliacus says:

    The Antiplanner wrote:

    > 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.

    Right on both counts!

    > Yet Ford had lots of managerial flaws, not even counting his reputed anti-Semitism.

    That was one, as was his apparent affection for Adolph Hitler.

    > 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.

    As Henry Ford supposedly once said, you can have the Model T in any color you like,
    as long as that color is black
    !

    > 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.

    Me too, but not because of influence from my Dad. I have always been especially
    partial to Ford’s pickup trucks and SUVs (and have owned four in a row, dating back to
    1981).

  4. C. P. Zilliacus says:

    Speaking of Henry Ford, I visited the Henry Ford Museum (http://www.thehenryford.org/) in Dearborn, Michigan recently.

    I highly recommend it to anyone interested in the history of private automobiles, transportation or the evolution of North America since about 1900.

    Yes, they have several Model T’s there.

  5. Francis King says:

    Antiplanner wrote:

    “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.”

    Giving people mobility is a good thing, but now there are too many cars. Alas, nobody planned for the future number of cars, but assumed that it would be alright. So no efforts were made to provide an alternative, and the car took over the community.

    As an interesting aside, I seem to remember that Henry Ford was, by trade, a bicycle mechanic. Even to this day, the bicycle heritage of a car is just beneath the skin – shaft drive, pneumatic tyres, and differential drive, to name just three.

    C. P. Zilliacus wrote:

    “That was one, as was his apparent affection for Adolph Hitler.”

    The given name for this gentleman was ‘Adolf’. It is short for Adlen Wolf, or Noble Wolf. My great aunts were also admirers, and met him at a garden party in Germany before the war.

    Hitler started his new Volkswagen concept before the Second World War as a response to Ford. Unfortunately, the Second World War intervened and all the deposits were spent on tanks. After the war, the British were entitled to reparations, and we could choose between Volkswagen and a new kind of motorbike. Guess which one we chose. Doh!

  6. Close Observer says:

    How do you “plan” for the right number of cars? Given that minorities don’t own autos to the same proportion as whites, I’d say we don’t have enough cars.

  7. the highwayman says:

    Close Observer, that’s a very interesting observation, I’d also say we don’t have enough fire arms too.

  8. bennett says:

    “How do you “plan” for the right number of cars? Given that minorities don’t own autos to the same proportion as whites, I’d say we don’t have enough cars.”

    And I’d say that we don’t have enough modal options for different income levels. C.O I hope your comment was something of a comical quip or a sarcastic take, because it seems a bit short sided if not ignorant.

  9. the highwayman says:

    Bennett, this blog’s funding base is from willful ignorance.

  10. craig says:

    Used cars are cheap and if it allows you to get to your job faster than transit it saves you time and improves your life.

    Cars = freedom and many of the posters on this blog are oppose to people making their own choice.

  11. Dan says:

    many of the posters on this blog are oppose to people making their own choice.

    I call BS.

    Evidenceless assertion. Strawman fallacy. Argument from ignorance.

    DS

  12. Francis King says:

    Close Observer wrote:

    “How do you “plan” for the right number of cars? Given that minorities don’t own autos to the same proportion as whites, I’d say we don’t have enough cars.”

    Or, alternatively, the minorities have the right number of cars and whites have too many cars…

    How can you plan the correct number of cars? – very roughly. If you provide a certain number of traffic lanes, they will carry a certain level of trips. The trip rate will be so much per house, and is dependent on the share of journeys made by car. Multiply it all out, and then we can work out roughly how many cars can be accommodated. It doesn’t need a computer, the calculations can be done by hand.

    No-one could be bothered. The UK suffered very badly with rationing, which continued through the 1940s, and indeed got worse after the Second World War. By the 1950s, no politician would dare to tell consumers that they couldn’t have what they wanted. When there were very few cars on the roads, it didn’t seem like a problem to add some more. This approach reached its pinnacle with Margaret Thatcher, with her talk of a ‘car-owning democracy’ and how if you were still using the bus by the age of 26 then you were a failure in life (thanks!) Cars, and the roads to drive them on, were seen as an unalloyed good.

    It is only quite recently that people have started to wonder if we have too many cars. Unfortunately, their heartfelt response is usually to bully car drivers out of their cars.

    What the UK and the USA both need is a choice of realistic and attractive replacements for the car. Not necessarily the same choices of course, given the differences in distance and climate. At the moment it’s very largely a choice between cars or cars or cars or a hair shirt. Most people who can afford a car, get a car.

  13. the highwayman says:

    Though Craig, cars can be real money pits & this is always a question of trade offs.

    A friend of mine sold his car a few years ago(it was a Buick, the year model I don’t know), any ways now he gets around mostly by walking, by bike, by bus & train. The good news is that he has saved a lot of money and he has lost a lot of weight. He looks ten years younger than he did ten years ago.

    It’s very simple if you don’t own a car, you can keep more money in your bank account.

    So if any thing the best kind of a car is a taxi.

  14. Kevyn Miller says:

    Highwayman, For once I wholeheartedly agree with your economic argument. The potential savings on plastic surgery and beauty treatments must be huge in the USA.

    Include rental cars with taxis to take care of those occassional fishing, hunting or romantic weekends.

    Using taxis is also a guaranteed way to prevent inadvertent low-level intoxicated driving.

  15. the highwayman says:

    A lot of people think I’m anti-auto, but I’m not. I’m just against double standards. That it, that’s all.

  16. craig says:

    I lived the bike and transit life for 2 years when I was younger and had lots of time. It was ok at first but being trapped by transit schedules and the limits of a bike I would never be without a car again.

    I prefer the freedom of owning a car. I just sold a car that I drove for nearly 30 years and cost only 1200.00 to buy and the most I ever had to dump into it in one year was maybe $300.00.

    I choose the freedom of a car over being trapped by the limits of bikes and transit.

    I love my bikes for fun

  17. the highwayman says:

    Craig that’s fine & that’s your choice. I’m a conservative, not a libertarian/liberal. I want people to have options in their lives.

  18. Kevyn Miller says:

    Highwayman, I genuinely agree with you. Renting instead of owning has become hugely popular in Japan because parking costs are proportional to urban land prices.

    I suspect that many two income families spend most of their second income on the second car they need to own in order to earn a second income.

  19. craig says:

    I suspect that many two income families spend most of their second income on taxes to subsidize smart growth programs and transit and alternative transportation projects, along with other unsustainable programs.

  20. Dan says:

    I suspect that many two income families spend most of their second income on taxes to subsidize smart growth programs and transit and alternative transportation projects, along with other unsustainable programs.

    Smart Growth projects are far more sustainable than, say, far-flung SFD. So that assertion is bullsh!t.

    Kinda makes the rest of the “argument” teeter. Especially since taxes are so variable across space.

    DS

  21. the highwayman says:

    Sorry Craig, but Dan is right. You can’t get some thing for nothing, even if we do call them FREEways.

  22. craig says:

    In Portland Smart growth neighborhoods

    Property Tax: $146.74
    Asking price: $1,975,000.00

    Property Tax: $146.74
    Market Value: $841,890.00

    Two of many examples of smart growth subsidies that make smart growth not sustainable in Portland.

    If you need a tax break, subsidy, abatement or urban renewal to make it work, it is welfare and it is not sustainable.

  23. the highwayman says:

    Craig, I guess you don’t understand the nature of American capitalism.

  24. craig says:

    But I do understand that In Portland you have to hang a pork chop around the kid to get the dog play with with him.

    The same way transit and Smart growth can’t seem to attract riders and buyers with out subsidies, abatement tax breaks and pork.

  25. Dan says:

    I wonder if anyone here can drag up an analysis or study that details tax breaks for, say, a SG neighborhood – please, no conflating TOD with all Smart Growth. Better would be an analysis for an average of, say, 10 SG neighborhoods compared to the average of incentives for typical cookie-cutter neighborhoods (including subsidies for roads).

    You’d think with all these egregious subsidies and abatements some here talk about that Cato or Heritage or CEI or some other right-wing think tank would be all over this issue and have done an “analysis” by now.

    DS

  26. craig says:

    I’m for ending all subsidies

  27. the highwayman says:

    Then Craig I suggest you become a hermit.

  28. the highwayman says:

    Though Dan, groups like Reason, Cato & the CEI get their funding through political pork.

  29. Dan says:

    Still waiting for those studies that show SG neighborhoods are the teat-sucking pigs that vacuum up abatements and subsidies. Surely there are many of them produced by outraged right-wing think tanks.

    DS

  30. craig says:

    TOD tax breaks in Portland
    http://tinyurl.com/3p27mu

    CORE AREA MULTI-UNIT
    http://tinyurl.com/4p2s7n

    Most of downtown Portland is in a special taxiing district
    http://tinyurl.com/5ul6ua

    Most of these are next to Light rail in a transit corridor or a smart growth project.

  31. Dan says:

    As I said in 25, no conflating TOD with SG (why? They are different. Look it up to learn if you don’t know why.).

    Try again. Thanks!

    DS

  32. the highwayman says:

    Dan, they don’t care.

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