Henry Ford

When one thinks of influential people in business in the first part of the 20th century in the United States, one name that inevitably will come to mind is Henry Ford.  As the founder and driving force behind the Ford Motor Company, Henry Ford demonstrated innovation, business acumen, and forward thinking to create one of the most influential and profitable automobile manufacturers in the United States. 

Henry Ford was born in Greenfield Township, Michigan, outside of Detroit on July 30, 1863, the oldest of six children of an immigrant Irish family.  After completing a basic education at home and at the local school, Ford became an apprentice at a machine shop as well as with a watch and jewel repairer.  At sixteen years old, he demonstrated an aptitude for this type of work and moved on from Flower Brother’s machine shop to the Dry Dock Engine Company of Detroit; building steam engines.  By the age of 21, Ford began working for Westinghouse as a “road expert,” setting up new steam engines and servicing them.  He also spent time in the winters back on his father’s farm in the machine shop he built there, developing small engines.[1]

Following his marriage to Clara J. Bryant in 1888, and the couple’s only son, Edsel Bryant Ford was born in 1893.  Shortly after this, Ford moved his family from the Dearborn farm which had been a gift from his father, William Ford, to Detroit to work for the Edison Illuminating Company.  At night in his own machine shop at home, Ford began building the first Ford car, and by 1898, he started work at the Detroit Automobile Company.  Within five years, he built a new car, with which he launched the Ford Motor Company, the capital for which was $100,000.  Ford held 25% of the company, and the vehicle was on the road by June 1903.[2]

In his book, Scale and Scope: The Dynamics of Industrial Capitalism, Alfred D. Chandler, Jr. describes modern business enterprises as a having two basic characteristics.  First, these businesses have several distinct operating units, with a hierarchy of full-time salaried employees to manage them.[3]  Ford’s company grew throughout the early 20th century and quickly took on these characteristics. 

From its founding in 1903, Ford Motor Company remained small, with 450 employees and producing 10,607 automobiles in 1908; accounting for 9.8% of the market share of automobiles.[4]  Most of these employees being skilled craftsman.  In this same year, Henry Ford determined to gain efficiencies in how he produced vehicles.  He achieved this by means of the assembly line and other innovations.  In 1908, Ford built a new factory in Highland Park, Michigan, with the vision that “in this plant everything from screws to upholstery that enters into Ford cars will be manufactured.”[5]  Thus, one can see how Henry Ford sought vertical integration.  His emphasis on lean production principles included eliminating wasted motion, organizing the plant efficiently, and installing mechanization which supported this.

Ford designed the Highland Park factory to have everything packed in closely, with multiple functions under one roof, and mechanical handling facilities to eliminate transfer and handling requirements wherever possible.  Organization focused on proper sequencing and layouts which sped up production, as well as the implementation of the assembly line.[6] These innovations were successful; in 1909, Ford built 13,941 model T cars, at a cost of $590 per car.  By 1916, this output was 585,400 cars built at a cost of $262 per car.[7]  The Ford Motor Company was able to achieve this due to organization, mechanization, and an emphasis on production.  Additionally, using the same chassis for all vehicle types was critical.  Another area where Ford improved efficiency was in terms of labor.

In 1913, Ford personnel manager John R. Lee conducted a study of labor at ford plants to combat the excessive turnover which the company suffered.  He found that the reasons for employee dissatisfaction was due to long hours, low wages, bad home conditions, unsanitary shop conditions, and poor handling of employees by supervisors.[8] To address these issues, on October 1st, 1913, Ford implemented several steps to address these issues-a 15% wage increase, a standardized pay scale, and the centralization of hiring and firing in the Employment Department.[9]  Ford continued with improving things for his workers by introducing a profit sharing program, which resulted in workers earning five dollars a day, based on certain qualifications.  Men over the age of 22 were eligible, who had been with the company over six months, and who passed the scrutiny of the Ford Sociological Department.[10]  This program had a marked improvement on productivity and greatly decreased turnover rates, from 370% in 1913, down to just 16% in 1915.[11] 

Henry Ford was a pioneer in the automobile industry.  His emphasis on organization, mechanization, a standardized product, and fair labor practices brought his company to the top of the automobile market, and Ford today is one of the number one produces of vehicles internationally. 


[1] John J. Horgan, “Henry Ford: Captain of Industry,” Studies: An Irish Quarterly Review, 10, no. 39 (Sep., 1921), 437-439, https://www.jstor/org/stable/30093028

[2] Ibid, 440-441.

[3] Alfred D. Chandler, Jr., Scale and Scope: The Dynamics of Industrial Capitalism, 1st Harvard University Press Paperback Edition (Cambridge, MA: Harvard University Press, 1990), 14.

[4] Daniel M.G. Raff and Lawrence H. Summers, “Did Henry Ford Pay Efficiency Wages?,” Journal of Labor Economics, 5, no. 4, Part2: The New Economics of Personnel (Oct., 1987), S61, https://www.jstor.org/stable/2534911

[5] Karel Williams, Colin Haslam and John Williams, “Ford Versus “Fordism”: The Beginning of Mass Production?,” Work, Employment & Society, 6, no. 4 (December 1992), 521, https://www.jstor.org/stable/23746549

[6] Ibid, 525-526.

[7] Ibid, 550. 

[8] Raff and Summers, S66.

[9] Ibid, S67.

[10] Ibid, S69.

[11] Ibid, S79.


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