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FORD, HENRY 1863-1947

INDUSTRIALIST

Early Aptitude

Henry Ford did not invent the automobile, but he developed design concepts and production techniques that allowed its manufacture in such high volume and at such low cost as to bring it within reach of the average wage earner. His impact on American life in the twentieth century was enormous. Ford was born on a farm near Dearborn, Michigan. From his earliest days he displayed a marked mechanical aptitude, and all his life he loved working with machinery. In 1879 he became an apprentice in a machine shop in Detroit, repairing watches at night to make ends meet.

Farm to Factory

In 1888 his father gave him a fortyacre tract of land in Dearborn on the condition that he abandon the machinist's trade and return to the farm. Ford built a house on the land and made a small income selling lumber and firewood. But he did not engage in farming and used his spare time to experiment with steam and gasoline engines in a shop attached to the home. In 1891 he left the farm for an engineering job in Detroit. In 1899, with the support of a group of investors, he established the Detroit Automobile Company, capitalized at $150,000. This was the first company organized in Detroit for the manufacture of autos, but after turning out twelve unreliable vehicles, it went out of business in the fall of 1900.

Henry Ford Company

Ford then turned to auto racing and built a racer to gain a wider reputation. The success of his racer revived the enthusiasm of former stockholders and resulted in his firm's reorganization as the Henry Ford Company in November 1901. The firm was capitalized at $60,000, of which more than half was paid in stock. Dissension broke out between Ford and the promoters, and in 1902 Henry M. Leland was brought into the firm as a consulting engineer. Ford resigned, and the firm was then reorganized as the Cadillac Motor Car Company.

Birth of Ford Motor Company

Ford again turned to auto racing and began construction of two racing cars, the Arrow and the 999. With success in racing Ford again turned his attention to creating a model car capable of competing with such popularly priced cars as Oldsmobile. Needing $3,000 in developmental cost, Ford approached Alexander Y. Malcomson, a leading Detroit coal dealer, and in 1902 they formed a partnership to produce a marketable automobile. With demand growing for their model they were able to attract a substantial number of investors, and the Ford Motor Company was incorporated in June 1903 with $150,000 capital. The first Ford automobile, the Model A, was brought out in June 1903, selling for $850. A total of 1,708 sold in the first fifteen months, so a second story was added to the plant. Higher priced B, C, and F models were offered in 1904 and 1905. In early 1905 manufacturing operations were transferred to a newer and larger plant.

Cash Flow Problems

The financial panic of 1907 turned out to be a turbulent summer rather than an extended depression. Makers of expensive cars and ill-financed marginal plants suffered most, but makers of inexpensive cars were also damaged. Since income had dropped, luxuries had to be sacrificed. Fortunately for the Ford Motor Company it had maintained large reserves, but because of the panic and the recent purchases of the Highland Park tract for a new factory and its absorption of the Ford Manufacturing Company, tremendous strain was put on the cash flow. Ford was forced to postpone paydays several times in the fall of 1907. In order to maintain adequate cash flow, the company turned to its dealers for cash and resorted to paying bills by issuing notes. Ford kept building cars and shipping them to dealers, who had to pay for those cars. This forced the dealers to raise the money for the cars or risk losing their dealership.

Model T

The result of Ford's vision, the Model T was introduced in 1908, combining in a standard utility vehicle the features of lightness, durability, efficiency, interchangeable parts, and low cost. By 1916 the company was able to reduce the price of the car to about $350 because of cost-cutting production methods. From its inception until 1927 the Model T was the sole model sold by the company, and most of the time was available only in black. Ford designed the car for rural America, and it was well suited for travel over poor country roads. It became extremely popular in the untapped market of the Midwest and Plains states and rode the prosperity of agriculture's "golden age" from 1909 to 1916. Production went from 18,664 in 1911 to 78,440 in 1912. By 1913 there were seven thousand dealers affiliated with the company, with at least one in every town with a population of more than two thousand.

Later Years

Although Ford was a mechanical genius, he was otherwise ignorant, narrow, and naive. He published many scurrilous anti-Semitic articles and fought unionization with every weapon at his disposal, including a private police force. Nor would he allow modern management techniques to interfere with his autocratic ways. By the mid 1930s the company was riven by factions, and no one was really in charge. A decade later the Ford Motor Company, once the most prodigious engine of wealth creation in the American economy, was on the brink of ruin, losing __BODY__ million a day. Two years before his death Henry Ford's family finally forced him to cede control to his grandson, Henry Ford II.