The Great Leaders Series: Henry Ford, Founder of Ford Motor Company
Bringing the assembly line to car manufacturing is easily Henry Ford's greatest innovation, but his biggest success was proving that you don't have to be first to market—you just have to be the best.
Ford brought mass production and efficiency to automobile manufacturing when he started the Ford Motor Company in 1903. As head of the company, he raised wages for workers and lowered the cost of vehicles—moves that rippled out to change society in many ways, from the development of the nation's interstate highway system to the expansion of the middle class.
Widely noted for his dictatorial-style of management—he had a hand in most major decisions at the company and is said to have even monitored employee's activities outside of work—Ford was resolute in his vision. When investors wanted him to build a car for the wealthy driver, Ford thought that was the wrong way to go. "In typical fashion, instead of listening to his backers, Ford eventually bought them out," wrote Lee Iacocca in Time magazine in 1998. When Wall Street balked at the company's move to increase workers' wages to an average of $5 a day and institute an eight-hour workday, Ford knew that he wasn't engaging in a charitable gesture but rather an initiative to retain employees and keep his factories humming around the clock with three daily shifts. The bottom-line was clear, wrote Iacocca. "Because Ford had lowered his costs per car, the higher wages didn't matter — except for making it feasible for more people to buy cars."
The Model T was rolled out in 1908 and by 1927, more than 15 million vehicles had been sold. The arrival of the moveable conveyor belt in the car factories cut manufacturing time to a mere 93 minutes from half a day. The vehicles used lightweight steel, were easy to maintain, and had the suspension to weather bumpy, unpaved roads.
Ford also revolutionized the way that cars were sold by building up a network of some 7,000 dealers across the country. After World War II, Ford was the first car manufacturer to start producing vehicles again. The company went global in 33 countries before most American enterprises began looking at overseas markets.
Ford was born in 1863 and worked for Edison Illuminating Company as an engineer before embarking on his first auto venture. While working at Edison, he was frequently encouraged by Thomas Edison himself to tinker on the side with internal combustion engines. What came of that exploring was the Quadricycle, a gas powered buggy, and subsequently Ford's first company, Detroit Automobile Co., which he started in 1899. The venture soon failed but he quickly turned to a new one, Henry Ford Co., which he only operated for about a year until leaving. Ford began racing cars and eventually attracted $28,000 from investors to start Ford Motor in 1903.
The automobile industry at the time looked like the 1990s during the first wave of the dot-com boom. Competition was robust with some 80 auto companies in start-up mode and more trying to break into the industry every week. Ford retired in 1919 and his son Edsel took over the company. Edsel died in 1943 and Ford returned, retiring for the final time in 1947.
Ford's strict managerial style and vision for building vehicles may have also been his Achilles Heel. With the assembly line-fed conveyor belt, Ford was able to bring all the manufacturing for a vehicle under one roof, and the company eventually controlled all parts of the car-building process, including producing the raw materials and owning rubber plants overseas. The Model T was a great sales success, but for nearly twenty years it was the only model offered (in just one color), and Ford was criticized for lack of diversity in the product line.
Given the upheaval facing American automakers today, these early challenges at Ford seem minor. As car company executives, bankruptcy courts, and the U.S. government ponder how to fix the damaged car industry, Henry Ford may have already had a solution back in the early 20th century: He gave Thomas Edison $1.5 million to build an electric battery that could be put into a car.