Tuesday, August 21, 2012

Henry Ford Built Affordable Comfort For America

By BUCKY FOX, INVESTOR'S BUSINESS DAILY
Posted 08/20/2012 02:21 PM ET
Ford with his Model T, which hit the road in 1908 and cornered two-thirds of the car market by the mid-1920s. Getty Images
Ford with his Model T, which hit the road in 1908 and cornered two-thirds of the car market by the mid-1920s. Getty Images View Enlarged Image
The ghost of Henry Ford drove into political traffic this summer.
A horn blared his way in the form of President Obama's "If you've got a business, you didn't build that."
To which Mitt Romney beeped, "To say that ... Henry Ford didn't build Ford Motors ... it's insulting to every entrepreneur, every innovator in America."
Ford the man has been dead 65 years, yet here he is rolling again after the president's blast.
"I'm sure he turned in his grave when he heard that," John Heitmann, a University of Dayton professor who helped research M.J. York's book "Henry Ford: Manufacturing Mogul," told IBD. "The main thing that concerned Henry Ford the most was how he controlled his life in business, whether it was dealing with lawyers, unions or partnerships in his early days. He believed above all in his automobile. For anyone to say success has nothing to do with your actions would've made him go crazy because that was the main thing with him. That success is what makes him create."
Chimed in Matt Anderson, curator of transportation at the Henry Ford Museum complex in Dearborn, Mich.: "I don't think Ford would've been pleased by 'you didn't build that.' He believed he built himself up by the bootstraps. He had help, but not at the start."
As for that Ford reaction at his Detroit grave site, said Anderson: "We should drive up and see if the earth looks turned."
What exactly did Ford build?

Ford's Keys

  • He let loose the assembly line on industry.
  • Overcame: Doubting financiers when it came to building an affordable car.
  • Lesson: Turn the ignition on great ideas.
  • "A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large."
• The Model T, America's first affordable car.
• The Fordson tractor, paving the way for easier farm life.
• The supermarket.
• The Ford Trimotor, giving lift to passenger air travel.
• The B-24, the No. 1 produced Allied bomber in World War II.
• Henry Ford Hospital in Detroit.
• The low cost of goods.
• The assembly line.
"He's up there with Edison as contributors to industries and modern life," said Anderson. "The closest analogy in modern times is Steve Jobs with his iPhone and how people build their life around it."
For The Masses
Said Heitmann: "He set the tone in the Machine Age. You name it — the vacuum cleaner, the toaster — if it was mass-produced, it came from his mass-production ideas. Even the Fordson tractor mass-produced by his company transformed agriculture. It took people off the land, and they didn't have to work so hard."
Henry Ford (1863-1947) worked hard enough to rank ninth among the richest of all time, with close to $200 billion in today's money, says CelebrityNetworth.com.
Ford Motor (F) went public a decade after his death and had its greatest stock ride just recently, pulling a 1,778% U-turn from November 2008 to January 2011. It's second to General Motors (GM) in American car sales.
Did someone mention build? Yes, Ford: "I will build a motor car for the great multitude . . . large enough for the family but small enough for the individual. . . . But it will be so low in price that no man making a good salary will be unable to own one — and enjoy with his family the blessing of hours of pleasure in God's great open spaces."
Ford built that — the Model T — and with it lapped rivals. As York noted in his book, "In 1908, selling 1,000 cars was considered a huge success. That year, Ford sold nearly 6,000 Model Ts. By 1916, he was selling 575,000 a year. In the mid-1920s, when this model was most popular, more than two-thirds of the cars in the United States were Model Ts. Between 1908 and 1927, approximately 15 million Model Ts were produced."
Ford had his foot on the gas, motoring toward 100,000 employees at his complex by the Rouge River in Dearborn by the 1930s. Along the road he doubled salaries to $5 a day in 1914 — worth $116 now — and downshifted the workweek from six days to five in 1922.
To feed this workforce, Ford engineered another revolution: stores that housed everything a worker and family hungered for. Fish, bread, cheese, the works lined shelves at company commissaries in Michigan, Georgia and Kentucky.
In his book "Wheels for the World," Douglas Brinkley points to a 1960 Michigan State University study titled "Henry Ford: Inventor of the Supermarket?" The paper "concluded that Ford Motor's commissary shops were the precursors to the Krogers, Winn-Dixies and Wal-Marts of the future, and that Ford had anticipated the new trend toward one-stop shopping a full decade before anyone else."
Said Anderson, "His commissaries were a follow-up to the $5 day. He saw how stores in the Dearborn area were boosting prices, and Ford didn't like what people were doing to take advantage of what he was doing."
Ford showed his mechanical side at a young age. While toiling on the family farm in Dearborn, he tinkered with devices. After his mother died when he was 13, he found his calling. He saw a vehicle moving on its own power (steam), so at 16 he went to Detroit — which thanks to him would become a short drive from his home.
His breakthrough came in 1896 with the Quadricyle. The gas-powered car sped along at 20 mph, a lot faster than his rise to that point.
"He was not a young guy with nothing to lose," said Anderson. "He already had a wife and child."
When he ignited Ford Motor in 1903, he was almost 40. Then came frays with financiers. In the run-up to the Model T, Ford had to overcome "small minds who did not see the opportunity that the market had for an inexpensive, reliable vehicle," said Heitmann.
More Cars, More Sales
Those investors, said Anderson, "wanted expensive cars; they could make more money with them. He wasn't interested in that. He wanted to build the affordable car and make up the profit in volume."
Did he ever. The volume came from demand for a Model T whose price in 1913 fell to $500, worth $11,700 now. This was in a market that sold cars for four times higher, according to YouAutomobile.com.
Also: This was way before the pavement of America. "Roads weren't there by any stretch of the imagination until after World WarI," said Heitmann. "Plus, the Model T with its high construction didn't need many paved roads. It just needed a path."
Said Anderson: "His cars really could be used by the common man despite the lack of roads. That's the beauty of the Model T. It sits high and can handle rough roads."
It was also light due to its frames made of vanadium steel. Ford discovered the alloy in 1905 while watching a French car crash in an American race. "He went over to the wreckage, picked up a piece of the steel, was amazed at how light it was, put it in his pocket and took it back to his Ford office for analysis," said Anderson. "He knew that the lighter the car, the easier to" navigate tough terrain.
That feel for steel gave Ford a higher aim: airplanes. In 1925 he started Ford Trimotor with its triple engine, building "the first passenger plane made by corrugated metal," said Anderson. "He helped the airline industry take off. Before that planes were made by wood."
War Production
By WWII, Ford was lifting America's bombing effort. His firm propelled 8,600 B-24s until Europe and Asia were liberated in 1945.
The production was stunning, wrote Don Mitchell in "Driven": "Each bomber contained 550,000 parts (not including 700,000 rivets), could fly 3,000 miles without refueling and could hold as much as four tons of bombs. The timely delivery of these complex aircraft was a testament to the success of Henry's assembly-line techniques."
With that assembly line, Ford's plant by 1914 was making a car in 1-1/2 hours, down from the handcrafted pace of 12-1/2 hours. He said of the process: "The man who places a part does not fasten it. . . . The man who puts in a bolt does not put on the nut; the man who puts on the nut does not tighten it."
Ford steered the same assembly force to his Fordson tractor, which went into mass production in 1917. Its price of $750 made it affordable to the average farmer.
"That went back to his farm roots," said Anderson. "He hated farm work. If there was any way he could help alleviate it, he would. He was always finding ways to save manual labor."
And redirecting. "Suddenly people could hop in their Model T and drive into town," said Anderson. "Farm life in those days was isolated. Now farmers could become more part of the larger society."
Ford's auto would bring "new architecture to the American landscape: service stations, dealerships for both new and used cars, parking lots, motels, shopping centers, and garages for business and private residences," wrote Mitchell.
So what came first? Ford or "somebody" who "invested in roads and bridges," a collective cheered by Obama?
"No one denies roads, national stability, border protection have a place in the nation-state and government," said Heitmann. "But what drives top people's inner strength and ego is desire. And Henry Ford had it. He enabled people on the margins to live comfortably."

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