This is a guest post by Charles Krome.
Henry Ford was far from the first person to build a modern-day automobile. Most observers credit that to Karl Benz, who received a patent for a “vehicle powered by a gas engine” in Germany, on January 29, 1886. But as the 20th century began, Mr. Benz’ Patent Motor Car hadn’t made much of an impact on this side of the Atlantic. In 1900, even as the U.S. population topped 76 million, there were only about 8,000 registered motor vehicles. Today, there are about 258 million light-duty vehicles in service for an estimated 323 million people. And the credit for that—and much more, including how those vehicles are produced—goes to Henry Ford and the Model T. In celebration of that iconic car’s 108th birthday (Ford finished the first production of the Model T on August 12, 1908) we look at how Ford shaped the auto industry, as well as the economy.
Building More Cars
Indeed, bringing a low-cost, high-quality car to the American public was one of Ford’s goals right from the start. The Model T, however, marked a tipping point. Introduced in 1908—following Models A, AC, B, C, E, F, K, N, R and S—the original Model T was priced from $825. Ford sold 12,176 of them during 1909, which was the car’s first full year of production. That number surpassed the total number of all vehicles on the road just nine years earlier. Still, the Model T’s production process was holding things back. The way Ford removed that obstacle revolutionized not only the auto industry, but industry as a whole.
Many early automobiles—including the early Model T’s—leveraged the concept of interchangeable parts for ease of assembly, but usually by having workers move from vehicle to vehicle in what must have been a bit like (barely) controlled chaos.
Henry Ford and a team of experts, drawn from multiple business fields, came together in 1913 with the solution: An assembly-line system in which vehicles were moved through workstations using chains and winches, with employees building up each car through a series of simple, repetitive tasks as it moved by.
The first test of the moving assembly line was on the Model T’s magneto (part of the car’s ignition system). Ford initially divided the magneto-assembly process into 29 tasks, each performed by a single worker, and this cut production time by more than half. Eventually, the time it took to build a magneto went from 15 minutes to five. With changes like that, Ford was able to decrease the time needed to build a Model T from 12.5 hours to about 1.5, and cars were coming off the assembly line every 24 seconds.
The results were startling—and so was the way moving assembly lines changed the world of manufacturing.
Buying More Cars
That drastic reduction in production time meant an equally steep decrease in production costs, too, assisted by the ability to spread those costs across so many more vehicles. It was another key to Henry Ford’s goal, since he passed a significant chunk of those savings onto customers, in the form of reduced prices. The same Model T that had a starting cost of $825 in 1909 cost $440 in 1914, after mass production began. That’s a 47 percent drop. The effect on sales? During that same five-year span, purchases of the Model T soared more than 2,000 percent, with the company reporting 260,722 deliveries during 1914. By 1923, when the least expensive Model T was $364, the Ford Motor Company produced a record 2,011,125 units.
As Ford’s methods became standard operating procedure throughout the auto industry, overall sales followed the same trend. Sales of passenger cars in the U.S. exceeded 100,000 units for the first time in 1909 and surpassed 1 million deliveries at the end of 1916. That year, automakers combined sold more than 1.5 units, nearly doubling the number year over year—with the Ford Model T accounting for more than a third of the vehicles.
By the time the Ford Model T was replaced with the brand-new Model A after 1927, annual industry sales routinely surpassed 3 million units, and 27.5 million U.S. families—55.7 percent of the total—owned at least one car.
Producing the Middle Class
Of course, the story of the Model T’s impact goes well beyond the launch of a best-selling consumer product. By becoming the first affordable, mass-produced automobile, the Model T had a big hand in creating modern-day consumers in the first place.
Henry Ford quickly saw the need for a stable workforce for his moving assembly lines, and he believed the best way to achieve that was through his workers’ wallets. Thus, in 1914, he raised wages to $5 a day, which was both more than twice his previous rate and $3 more than the average in the manufacturing industry. Ford also cut his workday from nine to eight hours. Now, in return for that large increase in salary, employees did have to adhere to some pretty strict “character requirements.” Ford “investigators” would even come to folks’ homes to make sure standards were being met.
That said—and though Henry Ford wasn’t without his prejudices—those requirements didn’t extend to skin color or nationality. The automaker opened up relatively high-paying jobs to everyone, including African Americans and recent immigrants, as well as to women and other people often shut out of the business world back then. For instance, the Ford Motor Company was a pioneer in providing opportunities for disabled veterans after World War I. Also, the first mosque built in the United States, established in 1919 in Dearborn, Mich., was erected to serve Detroit-area families who had come searching for work with Ford.
But Ford’s influence was not limited to the Motor City. By 1915, there also were Ford branch factories in dozens of other cities across the country.
At the time, the concept behind building a bestselling product like the Model T and combining it with secure employment, a living wage and modern-day production methods was called “Fordism.” Nowadays, it’s called the basis of the middle class.
Charles Krome grew up riding around in his dad’s Lotus Elan and currently writes about car buying. He has a particular interest in the role the Model T played in driving “Fordism.” He is also a Ford fanatic and writer for CARFAX.