In response, Malcomson brought in a group of other investors, and convinced the Dodge Brothers to accept a portion of the new company.[13] On June 16, 1903,[14] Ford & Malcomson was reincorporated as the Ford Motor Company, with $28,000 capital. The original investors included Ford and Malcomson, the Dodge brothers, Malcomson's uncle John S. Gray, Horace Rackham, and James Couzens. In a newly-designed car, Ford gave an exhibition on the ice of Lake St. Clair, driving one mile (1.6 km) in 39.4 seconds, setting a new land speed record at 91.3 miles per hour (147.0 km/h). Convinced by this success, the race driver Barney Oldfield, who named this new Ford model "999" in honor of a racing locomotive of the day, took the car around the country, making the Ford brand known throughout the United States. Ford was also one of the early backers of the Indianapolis 500.
Ford astonished the world in 1914 by offering a $5 per day wage which more than doubled the rate of most of his workers. The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing in their human capital and expertise, raising productivity, and lowering training costs. Ford called it "wage motive." The company's use of vertical integration also proved successful when Ford built a gigantic factory that shipped in raw materials and shipped out finished automobiles.
Model T
The Model T was introduced on October 1, 1908. It had many important innovations—such as the steering wheel on the left, which every other company soon copied. The entire engine and transmission were enclosed; the 4 cylinders were cast in a solid block; the suspension used two semi-elliptic springs. The car was very simple to drive, and—more importantly—easy and cheap to repair. It was so cheap at $825 in 1908 (the price fell every year) that by the 1920s a majority of American drivers learned to drive on the Model T, leaving fond memories for millions. Ford created a massive publicity machine in Detroit to ensure every newspaper carried stories and ads about the new product. Ford's network of local dealers made the car ubiquitous in virtually every city in North America. As independent dealers, the franchises grew rich and publicized not just the Ford but the very concept of automobiling; local motor clubs sprang up to help new drivers and to explore the countryside. Ford was always eager to sell to farmers, who looked on the vehicle as a commercial device to help their business. Sales skyrocketed—several years posted 100% gains on the previous year. Always on the hunt for more efficiency and lower costs, in 1913 Ford introduced the moving assembly belts into his plants, which enabled an enormous increase in production. Although Henry Ford is often credited with the idea, contemporary sources indicate that the concept and its development came from employees Clarence Avery, Peter E. Martin, Charles E. Sorensen, and C.H. Wills. (See Piquette Plant) Sales passed 250,000 in 1914. By 1916, as the price dropped to $360 for the basic touring car, sales reached 472,000.[15]
By 1918, half of all cars in America were Model T's. As Ford wrote in his autobiography, "Any customer can have a car painted any colour that he wants so long as it is black".[16] Until the development of the assembly line which mandated black because of its quicker drying time, Model T's were available in other colors including red. The design was fervently promoted and defended by Henry Ford, and production continued as late as 1927; the final total production was 15,007,034. This was a record which stood for the next 45 years.
In 1918, President Woodrow Wilson personally asked Ford to run for the United States Senate from Michigan as a Democrat. Although the nation was at war, Ford ran as a peace candidate and a strong supporter of the proposed League of Nations.[17] In December 1918, Henry Ford turned the presidency of Ford Motor Company over to his son Edsel Ford. Henry, however, retained final decision authority and sometimes reversed his son. Henry and Edsel purchased all remaining stock from other investors, thus giving the family sole ownership of the company.
By the mid-1920s, sales of the Model T began to decline due to rising competition. Other auto makers offered payment plans through which consumers could buy their cars, which usually included more modern mechanical features and styling not available with the Model T. Despite urgings from Edsel, Henry steadfastly refused to incorporate new features into the Model T or to form a customer credit plan.
"Model A" and Ford's later career
By 1926, flagging sales of the Model T finally convinced Henry to make a new model car. Henry pursued the project with a great deal of technical expertise in design of the engine, chassis, and other mechanical necessities, while leaving the body design to his son. Edsel also managed to prevail over his father's initial objections in the inclusion of a sliding-shift transmission. The result was the successful Ford Model A, introduced in December 1927 and produced through 1931, with a total output of over four million automobiles. Subsequently, the company adopted an annual model change system similar to that in use by automakers today. Not until the 1930s did Ford overcome his objection to finance companies, and the Ford-owned Universal Credit Corporation became a major car financing operation.
Labor philosophy
Henry 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. On January 5, 1914, Ford announced his five-dollar per day program. The revolutionary program called for a raise in 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,[18] while in 1926 they described it as five 8-hour days, giving a 40-hour week.[19] (Apparently the program started with Saturdays as workdays and some time later made them days off.) Ford says that with this voluntary change, labor turnover in his plants went from huge to so small that he stopped bothering to measure it.[20]
Ford had been criticized by other industrialists and by Wall Street for starting the 40-hour work week and a minimum wage. He proved, however, that paying people more would enable Ford workers to afford the cars they were producing and therefore be good for the economy. Ford explained the change in part of the "Wages" chapter of My Life and Work.[21] He labeled the increased compensation as profit-sharing rather than wages. The wage was offered to employees who had worked at the company for 6 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 we today would call "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 the 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 of the writing of 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, oftentimes 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."[22]
Ford was adamantly against labor unions. He explained his views on unions in Chapter 18 of My Life and Work.[23] He thought that they were too heavily influenced by some leaders who, despite their ostensible good motives, would end up doing more harm than good for workers. Most wanted to restrict productivity as a means to foster employment, but Ford saw this as self-defeating because, in his view, productivity was necessary for any economic prosperity to exist. He believed that productivity gains that obviated certain jobs would nevertheless stimulate the larger economy and thus grow new jobs elsewhere, whether within the same corporation or in others. Ford also believed that union leaders (most particularly Leninist-leaning ones) had a perverse incentive to foment perpetual socioeconomic crisis as a way to maintain their own power. Meanwhile, he believed that smart managers had an incentive to do right by their workers, because doing so would actually maximize their own profits. (Ford did acknowledge, however, that many managers were basically too bad at managing to understand this fact.) But Ford believed that eventually, if good managers such as himself could successfully fend off the attacks of misguided people from both left and right (i.e., both socialists and bad-manager reactionaries), the good managers would create a socioeconomic system wherein neither bad management nor bad unions could find enough support to continue existing.
To forestall union activity, Ford promoted Harry Bennett, a former Navy boxer, to be the head of the Service Department. Bennett employed various intimidation tactics to squash union organizing. The most famous incident, in 1937, was a bloody brawl between company security men and organizers that became known as The Battle of the Overpass.
In the late 1930s and early 1940s, Edsel (who was president of the company) thought it was necessary for Ford to come to some sort of collective bargaining agreement with the unions, because the violence, work disruptions, and bitter stalemates could not go on forever. But Henry (who still had the final veto in the company on a de facto basis even if not an official one) refused to cooperate. For several years, he kept Bennett in charge of talking to the unions that were trying to organize the Ford company. Sorensen's memoir[24] makes clear that Henry's purpose in putting Bennett in charge was to make sure that no agreements were ever reached.
The Ford company was the last Detroit automaker to recognize the United Auto Workers union (UAW). A sit-down strike by the UAW union in April 1941 closed the River Rouge Plant. Sorensen says[25] that a distraught Henry Ford was very close to following through with a threat to break up the company rather than cooperate, but his wife, Clara, told him that she would leave him if he destroyed the family business that she wanted to see her son and grandsons lead into the future. He complied with his wife's ultimatum, and Ford went literally overnight from the most stubborn hold-out among automakers to the one with the most favorable UAW contract terms. The contract was signed in June 1941.
