Monday, December 8, 2008

Henry Ford

It is estimated that over 100,000 patents created the modern automobile. So when people say that Henry Ford “invented” the car, they don’t have it exactly right.

In 1769, the very first self-propelled road vehicle was a military tractor invented by French engineer and mechanic, Nicolas Joseph Cugnot (1725 - 1804). Many others made important contributions, including moving the automobile from steam power to internal combustion. But at Heroes of Capitalism, we look to celebrate those who used these revolutionary ideas to create wealth. And this is where Ford comes in.

Ford’s real contribution to the history of the automobile was his improvement of the assembly line. Others had begun to use assembly line technology to assemble their cars, but Ford perfected the process. His assembly line reduced production costs for cars by reducing assembly time. Ford's famous Model T was assembled in just ninety-three minutes.

Ford is known for his intense commitment to lowering costs. His efforts at this led to many of his 161 patents. So when Ford, in 1914, offered to pay workers $5 a day - roughly double what they typically made in factory job – people were shocked. Of course, this move turned out to be brilliant, as Ford attracted high quality workers and suffered much lower turnover (and consequently lower training costs) than other early manufacturers.

These reduced costs made the automobile accessible to a wider audience. Ford’s cars were significantly more affordable than any of his rivals, and it was this affordability that made the Model T a huge success. The first model T came out in 1908 at a cost of $950. The moving assembly lines were completed in 1913 and shortly thereafter, the price fell to as low as $280. By 1927, over 15 million Model Ts had been assembled and sold in the U.S. alone.

A great deal of attention is being paid to the modern car companies, as they descend on Washington with their hats in their hands. Ford’s legacy carried them to nearly a century of prosperity. Perhaps a focus on innovative ways to cut costs would serve them better than any temporary bailout ever will.

History of early autos
Ford Bio


Mrs. Reed said...

Was the model T the only type of Ford produced in those years? Did the model T change from year to year? Perhaps one of the things the car companies need to think about is Do we need so many choices or changes from year to year?

David said...

It may be that the opposite is true. In the long run, a static market should yield little or no profit because the advantages of first-entry will have eroded. Manufacturers need to innovate and create new models to maintain a competitive edge and make profits. Or, they need to rent-seek. But that's another matter entirely.

Jill said...

as more workers came, they hated the monotonous job of the assembly and quite...thus creating a LARGER turnover ratio than before, leaving less-experienced workers behind. and not all workers were paid $5, some still got min. wage if Ford did not like what he saw in them.

Anonymous said...

I agree wit the article because this man was so intelligent and considered the cars' father but I heard he died soon because he took an overdose of viagra.