Henry ford and his leadership style
Innovators change things. They take new ideas, sometimes their own, sometimes other people’s, and develop and promote those ideas until they become an accepted part of daily life. Innovation requires self-confidence, a taste for taking risks, leadership ability and a vision of what the future should be. Henry Ford had all these characteristics, but it took him many years to develop all of them fully. Henry Ford did not invent the automobile. He didn’t even invent the assembly line. But more than any other single individual, he was responsible for transforming the automobile from an invention of unknown utility into an innovation that profoundly shaped the 20th century and continues to affect our lives today.
1. Early life
The oldest of six children, Henry Ford was born on July 30, 1863, on a prosperous farm near Dearborn, Michigan. He attended school until the age of fifteen, at which time he developed a dislike of farm life and a fascination for machinery. He had little interest in school and was a poor student. He never learned to spell or to read well. Ford would write using only the simplest of sentences. He instead preferred to work with mechanical objects, particularly watches. He repaired his first watch when he was thirteen years old, and would continue to repair watches for enjoyment throughout his life. Although he did not like working on the farm, he did learn that there was great value in working hard and being responsible.
In 1879 Ford left for Detroit, Michigan, to become an apprentice (a person who works for another to learn a specific skill or trade) at a machine shop. He then moved to the Detroit Drydock Company. During his apprenticeship he received $2.50 a week, but room and board cost $3.50 so he labored nights repairing clocks and watches. He later worked for Westinghouse, locating and repairing road engines. Ford’s father wanted him to be a farmer and offered him forty acres of timberland, provided he give up machinery. Ford accepted the proposal, then built a first-class machinist’s workshop on the property. His father was disappointed, but Ford did use the two years on the farm to win a bride, Clara Bryant. 2. Ford’s first car
Ford began to spend more and more time in Detroit working for the Edison Illuminating Company, which later became the Detroit Edison Company. By 1891 he had left the farm permanently. Four years later he became chief engineer. While at the Edison Illuminating Company he met Thomas A. Edison (1847–1931), who eventually became one of his closest friends. Ford devoted his spare time to building an automobile with an internal combustion engine, a type of engine in which a combination of fuel and air is burned inside of the engine to produce mechanical energy to perform useful work. His first car, finished in 1896, followed the attempts, some successful, of many other innovators. His was a small car driven by a two-cylinder, four-cycle motor and by far the lightest (500 pounds) of the early American vehicles.
The car was mounted on bicycle wheels and had no reverse gear. In 1899 the Detroit Edison Company forced Ford to choose between automobiles and his job. Ford chose cars and that year formed the Detroit Automobile Company, which collapsed after he disagreed with his financial backers. His next venture was the unsuccessful Henry Ford Automobile Company. Ford did gain some status through the building of racing cars, which resulted in the “999,” driven by the famous Barney Oldfield (1878–1946). 3. Ford Motor Company
By this time Ford had conceived the idea of a low-priced car for the masses, but this notion flew in the face of popular thought, which considered cars as only for the rich. After the “999” victories, Alex Y. Malcomson, a Detroit coal dealer, offered to aid Ford in a new company. The result was the Ford Motor Company, founded in 1903, with its small, $28,000 financing supplied mostly by Malcomson. However, exchanges of stock were made to obtain a small plant, motors, and transmissions. Ford’s stock was in return for his services. Much of the firm’s success can be credited to Ford’s assistants—James S. Couzens, C. H. Wills, and John and Horace Dodge. By 1903 over fifteen hundred firms had attempted to enter the new and struggling automobile industry, but only a few, such as Ransom Eli Olds (1864–1950), had become firmly established. Ford began production of a Model A, which imitated the Oldsmobile, and followed with other models, to the letter S.
The public responded, and the company flourished. By 1907 profits exceeded $1,100,000, and the net worth of the company stood at $1,038,822. Ford also defeated the Selden patent (the legal rights given to a company or person for the sole use, sale, or production of an item for a limited period of time), which had been granted on a “road engine” in 1895. Rather than challenge the patent’s legal soundness, manufacturers secured a license to produce engines. When Ford was denied such a license, he fought back; after eight years of legal action, the courts decided the patent was valid but not violated. The case gave the Ford Company valuable publicity, with Ford cast as the underdog, but by the time the issue was settled, the situation had been reversed. 4. Ford’s philosophy of management
In 1909 Ford made the important decision to manufacture only one type of car—the Model T, or the “Tin Lizzie.” By now he firmly controlled the company, having bought out Malcomson. The Model T was durable, easy to operate, and economical; it sold for $850 and came in one color—black. Within four years Ford was producing over forty thousand cars per year. During this rapid expansion Ford held firmly to two principles: Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines; by 1914 these methods were known around the world as Fordism. Fordism is “the eponymous manufacturing system designed to spew out standardized, low-cost goods and afford its workers decent enough wages to buy them”.
It has also been described as “a model of economic expansion and technological progress based on mass production: the manufacture of standardized products in huge volumes using special purpose machinery and unskilled labor”. Although Fordism was a method used to improve productivity in the automotive industry, this principle could be applied to any kind of manufacturing process. Major success stemmed from three major principles: 1. The standardization of the product (nothing hand-made: everything is made through machines, molds and not by skilled craftsmanship) 2. The use of special-purpose tools and/or equipment designed to make assembly lines possible: tools are designed to permit workers with low skill levels to operate “assembly lines”—where each worker does one task over and over and over again—like on a doll assembly line, where one worker might spend all day every day screwing on doll heads. 3. Workers are paid higher “living” wages, so they can afford to purchase the products they make.
These principles coupled with a technological revolution during Henry Ford’s time allowed for his revolutionary form of labour to flourish. It is true that his assembly line was revolutionary, but it was in no way original. His most original contribution to the modern world was his breaking down of complex tasks into simpler ones with the help of specialised tools. This allowed for a very adaptable flexibility allowing the assembly line to change its components whenever the product being assembled, changed enough to warrant a change in tools. In reality, the assembly line had already been around before Ford, but not in quite the same effectiveness as Ford would create. His real accomplishment was recognizing the potential, breaking it all down into its components only to build it back up again in a more effective and productive combination, therefore to produce an optimum method for the real world.
The major advantages of such a chang change was that it cut down on the man power necessary for the factory to operate, not to mention that it deskilled the labour itself, cutting down on costs of production. Ford’s philosophy was one of self-sufficiency using vertical integration. Ford’s River Rouge Plant, which opened in 1927, became the world’s largest industrial complex able to produce even its own steel. Ford’s goal was to produce a vehicle from scratch without reliance on outside suppliers. He built a huge factory that shipped in raw materials from mines owned by Ford, transported by freighters and a railroad owned by Ford, and shipped out finished automobiles. In this way, production was able to proceed without delays from suppliers or the expense of stockpiling.
Ford was a pioneer of “welfare capitalism”, designed to improve the lot of his workers and especially to reduce the heavy turnover that had many departments hiring 300 men per year to fill 100 slots. Efficiency meant hiring and keeping the best workers. Ford astonished the world in 1914 by offering a $5 per day wage ($120 today), which more than doubled the rate of most of his workers. A Cleveland, Ohio newspaper editorialized that the announcement “shot like a blinding rocket through the dark clouds of the present industrial depression.” The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs. Ford announced his $5-per-day program on January 5, 1914, raising the minimum daily pay from $2.34 to $5 for qualifying workers. It also set a new, reduced workweek, although the details vary in different accounts.
Ford and Crowther in 1922 described it as six 8-hour days, giving a 48-hour week, while in 1926 they described it as five 8-hour days, giving a 40-hour week. (Apparently the program started with Saturday being a workday and sometime later it was changed to a day off.) Detroit was already a high-wage city, but competitors were forced to raise wages or lose their best workers. Ford’s policy proved, however, that paying people more would enable Ford workers to afford the cars they were producing and be good for the economy. Ford explained the policy as profit-sharing rather than wages. It may have been Couzens who convinced Ford to adopt the $5 day. The profit-sharing was offered to employees who had worked at the company for six months or more, and, importantly, conducted their lives in a manner of which Ford’s “Social Department” approved.
They frowned on heavy drinking, gambling, and (what today are called) deadbeat dads. The Social Department used 50 investigators, plus support staff, to maintain employee standards; a large percentage of workers were able to qualify for this “profit-sharing.” Ford’s incursion into his employees’ private lives was highly controversial, and he soon backed off from the most intrusive aspects. By the time he wrote his 1922 memoir, he spoke of the Social Department and of the private conditions for profit-sharing in the past tense, and admitted that “paternalism has no place in industry.
Welfare work that consists in prying into employees’ private concerns is out of date. Men need counsel and men need help, often special help; and all this ought to be rendered for decency’s sake. But the broad workable plan of investment and participation will do more to solidify industry and strengthen organization than will any social work on the outside. Without changing the principle we have changed the method of payment.” 5. World War I
Ford was now an internationally known figure, but his public activities were less successful than his industrial ones. In 1915 his peace ship, the Oskar II, sailed to Europe to seek an end to World War I (1914–18; a war fought between the German-led Central powers and the Allies: England, the United States, Italy, and other nations). His suit against the Chicago Tribune for calling him an anarchist (a person who desires to change the existing government) received unfortunate publicity. In 1918 his race for the U.S. Senate as a Democrat met a narrow defeat. Ford’s worst mistake was his approval of an anti-Semitic (anti-Jewish) campaign waged by the Ford-owned newspaper, the Dearborn Independent.
When the United States entered World War I, Ford’s output of military equipment and his promise to give back all profits on war production (which he never did) silenced the critics. By the end of the conflict his giant River Rouge plant, the world’s largest industrial facility, was near completion. Ford gained total control of the company by buying the outstanding stock. In the early 1920s the company continued its rapid growth, at one point producing 60 percent of the total United States output. But problems began to arise. Ford was an inflexible man and continued to rely on the Model T, even as public tastes shifted. By the middle of the decade Ford had lost his dominant position to the General Motors (GM) company. He finally saw his error and in 1927 stopped production of the Model T. However, since the new Model A was not produced for eighteen months, there was a good deal of unemployment among Ford workers. The new car still did not permanently overtake the GM competition, Chevrolet, and Ford remained second.