The Real Influencers: Henry Ford

Henry Ford was born in 1863 on a farm in a clearing in the woods just outside Detroit in what is today Dearborn. The plain wood frame house in which his life began was restored by Henry Ford late in his life and stands today as a tourist magnet for those wanting to see where it all started.

His father wanted him to stay on the farm. But his main interest was fixing and fettling the new-fangled machinery that was arriving in Michigan, not farming the land. These were mostly steam engines, though he saw his first Otto-cycle internal combustion engine in 1888.

He was a naturally gifted mechanic, but never an engineer. His subsequent cars were rarely technically transformative, but they worked well and were cleverly (and often ingeniously) conceived. Imbued with the mechanic’s good sense, they were invariably simple and reliable. They represented Henry’s honest, no-nonsense, homespun values.

He went to work for Thomas Edison at 27 and by 33 had built his first car, technically a quadricycle. It had four bicycle wheels affixed to a simple frame and was powered by a Ford modified two-cylinder 4hp Otto-cycle engine. It weighed just 227kg and, less its engine, was light enough for two men to lift.

Its lightness was a key quality, reckoned Ford. ‘Fat men cannot run as fast as thin men,’ Ford would reason, in an early display of Colin Chapman-like engineering nous. Just as important, reducing materials didn’t just save weight; it saved cost too.

Encouraged by friends to start a business, he set up the Detroit Automobile Company in 1899. Its first offering was a delivery van but it ceased trading little more than a year later having built just 20 vehicles. Ford kept trying to improve his designs, infuriating investors. (Ironically, 20 years later Henry’s refusal to change his Model T saw sales collapse, and the Ford Motor Company permanently lose its US number one slot to General Motors.)

Out of the ashes of the Detroit Automobile Company rose a new car maker, the Henry Ford Company. It received a tremendous publicity fillip when, shortly before its inauguration, Henry won a high-profile race – albeit in a field of just two cars – at Grosse Pointe, a suburb of Detroit. As before, low weight and simplicity would be crucial. But when Henry spent too much time developing racing cars rather than road cars, he fell out with his investors (again) and left.

In two years, he’d been part of two corporate failures. But there was good news ahead. Henry’s newest racing car, christened 999 and named after a famous express train, won its first race (driven by bike racer Barney Oldfield); the Henry Ford Company (minus Henry Ford) was renamed as Cadillac and would soon become the flagship of the fledgling General Motors Corporation; and most significant of all, 39-year-old Henry became a commercial car maker for the third and final time, when the Ford Motor Company was incorporated on 16 June 1903.

His first car was the Model A but by far the most significant was the Model T, launched in 1908. It was simple, ingenious and durable, and tough enough to withstand terrible roads and appalling driving. Huge ground clearance helped its versatility.

In 1913, his moving assembly line – inspired by a Chicago slaughterhouse – boosted production and sales. Instead of taking 12 hours to build a Model T it now just took 93 minutes. His production system, though heavily modified, endures to this day. When production stopped in 1927, more than 15 million had been built. At its peak, one Model T left the production line every 24 seconds.

The effect was instant and extraordinary. When it was launched, there were 200,000 cars in the USA. A dozen years later that number was nine million, and every second car built was a Model T. In 1918, half of all the cars on American roads were Model Ts. In Britain in 1920, it was 40 per cent.

The sheer scale of Ford production revolutionised American industry and employment. His annual orders for the Model T included 12 million billets of hickory for the wheel spokes and 400,000 hides of leather for the upholstery. They had a profound effect on the scale, profitability and employment opportunities in American timberlands and in the meat trade, headquartered in nearby Chicago.

And it was the same bullish story for all other suppliers and the network of many thousand smaller companies that, in turn, supplied them, although Ford increasingly took many in house, including iron ore mines, railroads, ships, timberlands, glassworks and even rubber production (mostly for tyres) in Brazil.

His vertical business model meant he was no longer dependent on the vagaries of supplier problems, nor subject to their profit margins. Today, BYD, the world’s biggest maker of electric cars, runs a similar model, producing its own software, batteries and electric motors. This also reduced Ford’s need to stockpile. It pioneered the ‘just in time’ model Toyota would later perfect.

In employment, Ford was the first major employer to introduce the 40-hour, five-day week, which would become common working practice in America and Europe. His $5/day salary was about double that of rivals.

Little wonder that when it was introduced in 1914, some 10,000 people applied for jobs the very next day. This led to a huge migration from the farmlands to the city. By the 1920s, thousands of poor black workers – many from the rural south – had flocked to Detroit: Ford now paid the same wages, regardless of skin colour. Black workers were accepted into apprenticeship programmes and not segregated, though they were often given the hot, more dangerous foundry jobs. By 1930, Ford had more black employees than all other automobile makers and their suppliers combined.

The $5 daily wage was introduced because Ford could afford it, and he wanted to reduce staff turnover. Working on a production line was tough work. Staff turnover fell from 370 per cent in 1913 to 16 per cent in 1915. Paying his workers more also meant they could afford his cars.

Other car makers, invariably also based in Detroit, soon found themselves with no choice but to pay the same, cementing the principle that workers be paid high wages in high value industries. Mass production led to mass consumption, and a huge increase in societal wealth: Henry Ford made America affluent.

Ford also introduced the franchise dealer model, where privately owned independent retailers sold Ford cars in Ford branded sites. It’s still the most common car retailing model more than a century later. Ford believed local businesses were better at serving local communities: the strategy improved distribution and, as the retailer was usually the business owner, incentivised and kept dealers loyal too. Dealers serviced Model Ts, repaired them and stocked spare parts and accessories. By the 1930s, showrooms were common.

His first UK dealer was appointed in 1910. In a tremendous piece of entrepreneurial opportunism, Percy Hendy – whose family company on England’s south coast sold Benz and Bollé cars as well as bicycles and motorbikes – approached Henry Ford as he got off the ship at Southampton. Ford was on his way to inspect his new Trafford Park site, which opened in 1911. Hendy would become the UK’s first Ford dealer and remains the longest serving.

But as Henry Ford became famous, he was also becoming increasingly infamous. He believed the First World War was caused by money lenders and the munitions industry, and blamed Wall Street. Later, he blamed the Jews.

So he decided to fix the war. His solution was a ‘peace ship’ to sail to Europe where he would act as an international mediator. This achieved nothing, apart from giving Henry a bad dose of flu. Five days after arriving in neutral Norway in December 1915, he returned to New York, leaving the rest of the crew – mostly cranks and eccentrics – behind.

When America entered the Great War towards its conclusion, Ford enthusiastically embraced the war effort, ‘without one cent of profit’, saying that he refused to accept ‘blood money’.

As it turned out, the Ford Motor Company became one of the biggest suppliers of war goods, and would make aeroplane engines, tractors, steel helmets and much more, including a small boat designed to chase submarines called the Eagle. Ford decided to mass produce it on a new undeveloped site he’d bought on the banks of the River Rouge and got the US government to pay for the marshy banks to be drained and deepened.

The River Rouge plant would later become the world’s biggest car factory, supplanting Ford’s Highland Park plant. Sadly, it delivered only seven Eagles before the armistice. Henry Ford did very well out of the war however, earning an estimated $29 million.

Thereafter the Ford story turns much darker. An appalling anti-Semite and conspiracy theorist, he bought his local newspaper, The Dearborn Independent, and wrote a series of articles claiming Jews were destroying America.

His grubby newspaper was widely distributed across the US, including to every Ford dealer. The rants were turned into a book, The International Jew. Duly translated, they made it across the Atlantic where they appealed to an even more rabid anti-Semite. Whole passages were used almost verbatim in Mein Kampf.

In 1931, Adolf Hitler said Henry Ford was ‘my inspiration’ and later kept a portrait of the great industrialist behind his desk. In 1938, Hitler bestowed Ford with the Grand Cross of the German Eagle, the highest honour the Nazis could bestow on a foreigner, given to him in a ceremony in Dearborn by German officials.

Politics aside, Ford was not the all-seeing innovator some believe him to be. It is true that in the early days, Ford had a knack of guessing what the people would buy but had little time for customer research. ‘If I had asked people what they wanted, they would have said faster horses,’ he supposedly said when developing the Model T. Apparently a visionary like Ford didn’t need customer feedback.

Yet by the mid ’20s when increasingly influential General Motors was growing fast and sales of the now antiquated Model T were faltering, there was a chasm between Ford’s ideas of what people should be buying and what they wanted to buy.

GM boss Alfred Sloan listed the four key changes in the mid 1920s as the closed body (so a car could comfortably be used all year around), the annual model year change to spur demand, instalment selling and the trading in of used cars. Where GM pioneered, Ford now lagged. The Art and Color section introduced in 1927, under Harley Earl, would also give GM leadership in styling.

Ford’s resistance to change was evident in many other areas. He resisted hydraulic brakes and a choice of colour. Black was the ubiquitous Model T hue because it was cheapest and a single colour meant the line could run faster. It wasn’t until 1925 that other colours became available. He doggedly kept with the Model T’s four cylinders when increasingly successful rivals had sixes and V8s. Ford blustered: ‘I’ve got no use for a car with more spark plugs than a cow has teats.’ Yet by 1932, the new Ford flathead V8 gave sales a much-needed fillip and within a few years all Fords sold in America (but not in Europe) were V8s.

Even so, by 1936 Ford had slipped to number three in the US market behind GM and Chrysler and would trail GM for the next 90 years (and counting).

Ford also came to blows – quite literally – with the trade unions during the 1930s. He despised the new United Auto Workers union (UAW) which had secured deals with GM and Chrysler. His private army of spies and thugs, known as the Ford Service Department, intimidated and surveyed workers. As Ford effectively controlled the city government of Dearborn, its police force also bullied workers when required.

In 1932, his quasi-military band of thugs used machine guns to kill five marchers on a peaceful demonstration. In 1937, at the infamous Battle of the Overpass, the UAW organisers of a rally were attacked by Ford’s security service using clubs. The police did not intervene. It was not until 1941 that Ford finally signed a deal with the UAW.

Ford had one child, Edsel, who died young (aged 49) and is today best known for posthumously lending his name to Ford’s biggest corporate failure. Edsel’s son, and Henry’s grandson, Henry Ford II would run the company successfully from 1945 to 1980 and took Ford into F1 as the supplier of the world’s most successful Grand Prix engine and, famously, to victory at Le Mans. Although Henry II made Ford a publicly traded company, it is controlled by the Ford family to this day.

Towards the end of his life, old Henry became nostalgic for the rural life he helped to destroy. He built Greenfield Village, an idyllic restored rural village, and the Henry Ford Museum, filled with artefacts from his youth – and now greatly modernised (and well worth visiting).

He died in 1947 after a series of strokes, aged 83. One associate claimed he suffered the last and most serious stroke after seeing newsreel footage of the Nazi concentration camps.

Much of his personal stock was gifted to the Ford Foundation, which he and son Edsel set up in 1936. For many years it was the world’s largest philanthropic enterprise and remains one of the biggest funders of good causes around the world.