HENRY FORD - A GREAT INNOVATOR
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MODEL T - AN ASTOUNDING SUCCESS
The first Model T finally rolled out in October 1908. It was affectionately
called 'Tin Lizzie,' slang for an obedient and reliable servant. The Model T
was priced at $850 and was simple, light, flexible, powerful, and easy to
drive. The car was targeted primarily at farmers and had higher than normal
ground clearance.
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In the very first year, Ford set new industry records
by manufacturing nearly 10,660 Model Ts. In the second year, 18,257 more
Model Ts were produced. With a significant increase in the demand for
Model Ts, Ford decided to set up a new factory. The facility at Highland
Park was inaugurated in 1910. It had four-storeys, encompassing a radius
of 62 acres. Production in the factory was structured to move from top to
bottom. Body panels were rolled out in the fourth floor and sent to the
third floor, where tires were fitted on to the wheels and the bodies of
cars were painted. Assembling took place on the second floor and was then
lowered on to the ground floor, where the car was finally made ready for
use. In the first three years, production of cars went up from 19,000 in
1910 to 34,500 in 1911 and to 78,440 in 1912. Ford believed in building a
lot of cars and making them affordable. |
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He sacrificed profit margins to boost sales. Profit per
car dropped from $220 in 1909 to $99 in 1914 while sales catapulted to 248,000
cars per year in 1913. The increased sales due to slashed prices pushed Ford's
profits up from $3 million in 1909 to $25 million in 1914. The price of Model T,
fixed at $850 in 1908, was gradually reduced over the years (Refer Table I).
From a market share of just 9.4% in 1908, Model T grabbed a market share of 48%
in the US by 1914. By 1921, Model T had a global market share of 56.6%.Ford
hired a metallurgist and got a steady supply of vanadium from a steel mill in
the US, which made it possible for the Ford Co. to switch to using vanadium
steel for its new Model T. This made Ford Co. the only manufacturer to use
vanadium in the world apart from French racing cars during that time.
TABLE I
FALLING PRICES OF MODEL T (1910-27)
|
Years(s) |
Price(s) |
|
1908 |
850 |
|
1910-11 |
780 |
|
1911-12 |
690 |
|
1912-13 |
600 |
|
1913-14 |
550 |
|
1914-15 |
360 |
|
1924-27 |
290 |
Source: www.willamette.edu &
www.abilene2000.com
Of all Ford's cars, the Model T became the greatest and most widely recognized
car in the global automobile industry. It was considered one of the greatest
inventions in the automobile industry. Describing Ford's contribution in
producing the Model T, writer Tedlow said, "More than any other individual, it
was he who put America on wheels. By making it possible for so many people in
the world to move, he moved the world. He was the Copernicus of cars."[1]
[1] From the book Giants of Enterprise, by Richard S. Tedlow,
HarperBusiness, 2001, page 141.
[2]As
quoted in the article, "Henry Ford Claims Business Honor," The Associated Press,
November 2, 1999.
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