Henry Ford: A Great Innovator

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Describing the impact of the Model T in the US, John Steinbeck, Nobel Prize winner for literature (1962), wrote in his book Cannery Row, "One should write an essay brimming with erudition. An essay on the moral, physical and aesthetic impact of the Model T Ford on the American people. Two generations of Americans knew more things about the Ford batteries, than about the human embryo. More things about the planetary system of the gears than about the sun system of planets. Most children of the period were conceived in a Model T and quite a number of them were born in a Model T." More than 16 million Model Ts were sold during 1908-1927. In 1925, the Ford Co. was rolling out two million Model Ts per annum. Analysts attributed the secret of production in such high volumes to Ford's mass-production and assembly line manufacturing methods. Thomas A. Stewart, Associate Editor, Fortune, said, "As Ford adapted the emerging principles of mass production to the automobile and hired tens of thousands of workers to put those principles into practice, he gave rise to an entirely new phenomenon: the blue-collar middle class."24

Ford's Employee-Friendly Practices

Ford had generous labor policies and believed in the importance of harmonious relations with workers. In order to retain the workers, Ford gave them bonuses and other benefits including free medical treatment, and invested heavily in training programs. A sociology department was established in mid-1910 to carry out research studies on employees' social attitudes, their loyalty and obedience. The studies helped improve the plant layout and the job description of workers. Sports facilities like fields and playgrounds for the company's employees and their families were set up. Ford said, "I want the whole organization dominated by a just, generous and humane policy."²⁵ In spite of the benefits offered to employees, the employee turnover rate at the Ford Co. in late-1913 was around 50%. The high turnover was due to the repetitive nature of assembly-line work and continuous increases in workers' production targets. Moreover, the workers were getting a wage of just $2.38 for a nine-hour workday. Ford soon realized that employee morale was low. In January 1914, he announced a significant increase in employee wages and a decrease in labor hours. One of the Detroit newspaper published Ford's announcement, "The Ford Motor Company, the greatest and most successful automobile manufacturing company in the world, will, on January 12, inaugurate the greatest revolution in the matter of rewards for its workers ever known to the industrial world. At one stroke it will reduce the hours of labor from nine to eight, and add to every man’s pay a share of the profits of the house. The smallest amount to be received by a man 22 years old and upwards will be $5 per day."²⁶

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24] As quoted in the article, "Henry Ford Claims Business Honor," The Associated Press, November 2, 1999.
25] As quoted in the article, "Driving Force: Henry Ford," by Lee Iacocca, TIME.
26] As quoted in the article, "What Titans Can Teach Us," by Richard Tedlow, Harvard Business Review, December 2001.

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