Wednesday, September 18, 2013

Aggregation, Specialisation and Standardization in Industrial Organizations - Going Industrial Engineering - Chapter 2



IN the foregoing broad sketch of the rise of the industrial
system and of the influences controlling its development,
much stress is laid on the non-mechanical factors, because
when we consider manufacturing as a province of engineer-
ing we are prone to think first, oftenest, and most of the
technical aspects. They need no added emphasis. It is ex-
pedient rather to keep deliberately in view the other com-
ponents of the new applied science of industrial manage-
ment. But having made emphatic recognition and ac-
knowledgment of the economic and psychologic factors in
the movement, we may return to pay just tribute to the power
and effect of the great discoveries and inventions that in-
augurated the manufacturing system. The distinguishing
characteristic of this system was the introduction of me-
chanical power and machinery in place of hand labor. In-
crease in complexity of industrial organization was thereby
very much accelerated, and great changes were worked from
which have followed many of the difficulties and also many
of the advantages of manufacturing conditions to-day.

this replacement of the old handicrafts by power and ma-
chinery gave impulse to three great swiftly moving tenden-
cies: aggregation, or progressive increase in size of the
industrial unit; standardization, or the execution of work by
fixed patterns ; and specialization, or limitation of the work
of each individual to the repetition of some small element of
an entire process.

Each of them has far-reaching effects, not
only in the conduct of industry, but upon the social and po-
litical order. Let us consider them separately.


Aggregation is the coalescence of capital, of machinery, of
operatives, into larger and larger bodies under one central-
ized direction. Large bodies of workers had indeed been
assembled in the past for works of construction witness
the Pyramids but the occasion was unusual. Handi-
crafts induced distribution rather than concentration. But
when invention had given the world power-driven machines,
it became frequent, then customary, then inevitable (because
economical) to group them according to the largest number
that could be conveniently operated by some source of prime
energy the older water-power or the newer steam-engine.
In either case the result was the assembly in one establish-
ment of a body of workers, larger or smaller, according to
the mechanical and market conditions. In fact, the power-
plant became the principal material factor determining the
size of the industrial unit.

Before the mechanical prime-mover and the power-driven
machines were put into service, in the days when the hand
or the foot of the workman furnished all the motive power
necessary, the industrial unit was the single workman. He
was motive power, transmission gearing, and often driven
machine, all in himself, and he needed no factory building
other than the house in which he lived. This was the age of
domestic industries. It exists to-day to some extent, side by
side with the large manufacturing plant and in the midst of
this factory era. Familiar examples are the Scotch weavers,
the German toy makers, Swiss watch makers, and in many
large cities a certain proportion of the garment workers.

It would seem as if these domestic industries should af-
ford the most nearly ideal conditions for the welfare of
the worker, and should offer least opportunity for the evils
of the manufacturing system. But this supposition does
not seem always to be well supported by examination of the
facts. You may remember that Barrie does not draw a
very happy picture of the condition of the Scotch weavers,

and we do not have to go far to find that the lot of the
garment worker who carries on his work in his own home
is in many respects miserable. The concentration of
workers into factories, it is true, caused many evils; but the
very fact that the communities of workers were so large and
the conditions were so difficult to conceal, of itself operated
powerfully to bring about a correction of the evils. How-
ever, taking the whole range of industrial operations, and
the occupations dependent upon them, one of the first and
greatest of the changes occasioned by the new order was
this change of concentration or aggregation. It caused a
concentration of manufacturing enterprise in regions where
fuel was abundant and good. It caused aggregation of
capital to finance the larger and more extensive plants which
became necessary when costly engines and machinery be-
came part of the requisite equipment. It caused aggrega-
tion of workers in the buildings where work must be carried
on, and in the districts available for residence in the vicinity
of these works. The same principle extended its influence
into the field of transportation, which became focalized at
the great manufacturing centers and developed along cer-
tain lies connecting these.

This tendency to aggregation, be it noted, exists naturally
as the outcome of merely mechanical or physical conditions,
and even in this direction the things that set it in operation
continued to act in such a way as to cause permanence and
acceleration of the movement. Broadly speaking, the big
factory has some advantage over the little one. Its wants
are larger, its purchases greater, and hence its custom is
worth more to sellers of materials and it is likely to get its
supplies a little cheaper. Its fixed expenses for manage-
ment, superintendence, and administration generally, are
perhaps no greater absolutely than those of the small factory,
and almost certainly are less per unit of product. Its in-
fluence, prestige, and control of trade connections are likely

to be greater. It can frequently afford to hire better talent.
It may be in position to use waste or by-products advanta-
geously,, which, in smaller quantities, can not be recovered
except at expense greater than the saving. It is often in
position, if wisely administered, to undersell its small com-
petitor, and still deliver an equal or a better product.

This is not universally and unlimitedly true. There may
be, and there often are, critical points at which the large
manufacturer is at a disadvantage compared to the small
one. But the tendency is for the big to grow bigger, and
the strong to grow stronger, at some expense to the small
and weak. This is true of the pickerel in the pond and of
the tree in the woods. Given even equal brains in the
management, it is true of the industrial corporation; and
of course it is often, if not usually, true that the big con-
cern attracts or can attract to its service the best brains in
the market. I am still speaking of what we might term
wholly physical tendencies. But here again the physical
tendency becomes closely intertwined with another tendency,
which is at last partly psychological the tendency to as-
sociation. Whenever two or three are gathered together in
one place, with a common thought or sympathy, somebody
with the spirit of the organizer always turns up and starts
a society, or a brotherhood, or a lodge, or an order of sons
or daughters of something, and soon we have nobles and
princes, exalted and most worshipful grand masters, secrets,
grips, passwords, and a constitution, by-laws and ritual.
We find this everywhere, even when the common bond has
to be artificially created. It was absolutely inevitable
where great interests, vital to the well-being of the parties
in question, were at stake. Here we had a vast industrial
civilization growing up legislative bodies, transportation
companies, manufacturers and employees, all taking some-
what diverse views as to what was right and proper, and
all striving more or less selfishly to gain as much and to

yield as little as possible. It was absolutely inevitable that
the units in each and every one of these parties should draw
together, not only through the absorption of the lesser by
the greater, but in a co-operative effort to secure, by col-
lective bargaining, for themselves and their own interests,
the greatest advantage possible. So, as a logical outcome,
we have not only railway consolidation, but trunk-line
pools, presidents' agreements, and traffic associations among
the railways. On the part of employers, we have manu-
facturers' associations, syndicates, cartels and trusts. On
the part of workmen we have trade unions, labor organi-
zations and federations. In general, these things are in-
evitable, and they will persist. They are part of ttye
evolution of the time, and they can not be abolished by
legislation nor crushed by opposing organizations. I do
not mean for a moment that they have been or are yet
wholly beneficent far from it. Trusts, when they be-
came great enough, have proved ruthless in crushing com-
petitors, and soulless in wringing profits from helpless
customers. Labor unions have committed crimes of violence
that shock humanity. Railroads have cared for neither
law nor gospel in their autocratic pursuit of their own way.
But these are not the healthy, but the unhealthy, phe-
nomena of growth and change the abuses which seem to
be always incident to a changing era. They pass and dis-
appear with progress in the general mastery of understand-
ing as to what is best for society at large under the new
conditions. They are abated, not by arresting the whole
development, and perhaps not as much as is generally
thought by legislative enactment, but rather by a general
change in the temper of the world, which makes the evil
proceedings unthinkable and the position of the evil-doer
intolerable. The world has seen again and again these out-
breaks of destructive activity on the part of unscrupulous
men, who are partly quicker than others to see selfish op-

portunities in a new condition of affairs, and partly nearer
to the beasts of prey in their lack of conscience in seizing
whatever their skill enables them to grasp and their strength
enables them to hold.

In the days when the greatest prowess the world knew
was military, it was the " man on horseback " who waded
through blood to power and fortune; but it would be in-
conceivable that we should have another Napoleon to-day.
The rise of commerce and traffic over-seas, with or without
the opportunity afforded by almost continual wars and
that very elastic institution known as " letters of marque,"
saw the development of piracy to the rank almost of a gentle-
man's occupation ; but piracy has disappeared from the earth,
or rather from the ocean. The first great era of railroad
building in this country brought with it our now notorious
generation of millionaire railroad wreckers; but I think we
all must admit that the railroad world has purged itself
pretty thoroughly of that disease, or at least that our great
lines now are generally administered with honesty and faith-
ful regard for the interests of the security holders.

It is not to be denied that the hanging of pirates and
the jailing of dishonest railroad presidents has its effect in
stimulating a change of sentiment; but the great cause, after
all, is the altered public opinion which makes the hanging
or the jailing possible. To borrow a simile from bacter-
iology, these poisons that germinate in the body politic,
and seem sometimes to be increasing to fatal proportions,
appear also to develop their own anti-toxins by which they
are finally checked and destroyed. The world no longer
lives in fear of an Alexander or a Napoleon, but its confi-
dence is not based upon abolition of the military system
which gained Napoleon his opportunity. We still have
standing armies far more powerful than those with which
Napoleon conducted his campaigns, but in general they in-
spire in the minds of the Nation feelings of comfort, security,

and protection. I have a good deal of faith that the great
captains of industry will soon learn a lesson from the past
and the present which will make them as little a menace
to the country's good as the captains of war now are. I
think we shall eventually see that it is not a control of 25
per cent or 50 per cent of the output that makes a trust
good or bad, but only its fairness towards consumer and
employee, and the health and soundness of its economic
policy. I think we shall find that trust managers will in-
creasingly appreciate (as some of them do already) that
their own best interests are served when they share to the
largest consistent extent, with customers and employees, and
through them with the public, those advantages in manu-
facturing which vast organized facilities give; and I think
labor will realize (as some of its advanced leaders already
do) that its own cause will be best furthered when it aids
all sound measures and plans for increasing the efficiency of
the workman, and when it seeks to exact, not as much as
force can extort, right or wrong, but just what is reasonable
and equitable.

This may sound like a description of the millennium ; but
the curve of progress made in the last few decades tends
clearly in the direction I have tried to describe. There is
indeed yet a long way to go. But reason and common-
sense are growing more powerful year by year, and the more
enlightened common-sense becomes, the more it will see that
we must let those with whom we deal prosper, if we are to
prosper ourselves.

At all events, the great corporations and the great labor
unions are here, largely as the result of the great manu-
facturing plant. I do not pretend to speak ex cathedra,
but it seems to be as futile for a manufacturer or an as-
sociation of manufacturers to attempt to " smash the union,"
as it is for a politician or a legislature to propose to " bust
the trusts." They appear to be permanent institutions

or at least as permanent as most of our other economic in-
stitutions and while of course their excesses must be
curbed and many of their purposes must be enlightened,
they are a necessary part of the age, and we must deal with
them as wisely and as thoughtfully as we can, but with
conviction that they are here to stay, and that whether we
like it or not, they must be dealt with. Aggregation is a
functional necessity, indeed an organic part, of the industrial
and manufacturing system.


Specialization, the second great tendency, is the separation
of work into elementary or fractional parts which are dis-
tributed to different operatives. The workman no longer
produces, or even reproduces, a complete article, but only
performs over and over some one of the series of operations
necessary to the production of that article. This is the
natural outgrowth of the replacement of the journeyman
or mechanic by the machine tender. Take the case of the
weaving industry as an illustration. In its primitive form,
the one workman or workwoman proceeded first to card
wool or flax or cotton, until there was enough to spin the
yarn; then he spun yarn until he had enough to make the
rug or bolt of cloth or what not he had in view; then he
threaded the warp through the harness of his loom, and
worked at the weaving until the job was finished. Probably
he was dyer and finisher, also, when necessary. You can
see this whole process carried on to-day in the log cabins
of North Carolina, the farm-houses of Nova Scotia, or
the hogans of the Navajo reservation.

But as soon as the industry is taken away from hand
workers and given to machines, the operations of carding,
spinning and weaving are split up between at least three
and probably more than three different pieces of apparatus,
which means three or more different sets of operators, each
familiar with but one special stage of the process of cloth
making. There are at least three persons doing in the

aggregate what one did originally, each seeing but one-
third of the process completed under his hands. But the
total output will probably be much more than three times as
large, even though the power loom weaves no faster than
the hand loom or the spinning frame spins no faster than
the hand wheel. This is because the time of changing
from one sort of work to another is saved, and each operator
becomes much more rapid and efficient by the constant con-
tact with and repetition of his limited function. When-
ever enough work is assembled in one establishment to allow
this sort of segregation of functions, an economic gain is
experienced. Thus, in a manufacturing machine-shop, in-
stead of allowing the operative to perform one operation
after another until he has finished a given article, we
keep him, say upon one machine tool only lathe, planer,
drill press or whatever it may be with the double object
of saving, first, the time of changing from one part of the
floor to another, and, second, of cultivating a higher degree
of facility within the limited range. Next, we may go
a step further, and instead of allowing our machinist to do
all the miscellaneous work on a boring mill, for example,
we keep him busy on boring nothing but one size of cylinder.
We may even go further yet, and confine him to rough boring,
moving the pieces afterwards to another specialist, who
takes the finishing cut. If our production of standard sizes
is large enough, we may keep him continuously at work rough
boring only one size of cylinder. In certain lines of manu-
facture, for which America has become famous, this speciali-
zation has been pushed to remarkable extremes* In the
making of shoes, for example, some . operatives may spend
a life time doing nothing but sewing a single seam in the


Standardization is the third great tendency in manufac-
turing, resulting from aggregation and going hand in hand
with specialization. It is the reduction of work to fixed

patterns, which are more and more compiled by the oper-
ations of the machine, so that skill of creation is more and
more centred in a small force of designers and the ordinary
workman becomes more and more a mere reproducer. It
naturally follows specialization. If you give a man a single
job or one stage of a job to do over and over, the logical
and necessary thing is to give him at the same time a
pattern or standard to which every repetition of his job
shall exactly correspond. Take the case of making shoes.
The old-fashioned journeyman shoemaker takes the lines of
his customer's foot, builds up a last with patches here, and
slices off parings there, models and measures and cuts and
fits, and never makes two pairs of shoes exactly alike. The
machine-made-shoe factory classifies all human feet into
some dozen or two of stock sizes, reduces these to fixed
patterns by which the leather is cut, sub-divides the sewing
and other operations among an army of operators, each
of whom does but one thing, few of whom ever see the
finished shoe, and none of whom sees the foot that is to
wear it; and among the standard sizes turned out (every
pair of each size exactly like every other pair of that size)
somewhere between i A and 13 EE, each member of the
human race is supposed to find a shoe he or she can wear.
Standardization is reduction to type, and this reduction
to type this making everything of any given kind exactly
like every other thing of that same kind may be pushed
to any degree of completeness. It may go so far that it
comprehends the entire machine, as, for example, the loco-
motive, the dynamo, the typewriter, or the watch. Every
part of any one of these machines may be made so exactly
like the corresponding part of every other machine of the
same kind, that perfect interchangeability is secured. This
standard for the regular product has been set and substan-
tially attained by many American manufacturers, notably
in the lighter and finer mechanical lines such as the manu-

facture of firearms, sewing machines, cash registers, and
watches. The parts going to make up any one of these
mechanisms are made separately by different workmen, none
of whom may see the complete device, or have any chance
to fit the piece he is making to the other pieces with which
it is to work. The part is turned out to standard pattern,
perhaps on automatic and semi-automatic machines, con-
trolled in its every dimension by limit gauges, and is made
repetitively in dozens, hundreds, or thousands; yet when as-
sembled with the scores or hundreds of other parts which
go to make up the complete anatomy of the finished ma-
chine, it slides into its place and performs its appointed
duty probably without needing even the touch of a file in
the hands of the fitter.

In other cases where such absolute identity of reproduc-
tion is not possible, standardization may go part way.
Perhaps one standard bed-plate may serve for several sizes
of machines or engines. Sizes of shafting, or dimensions and
tapers of bolts and other details or accessories, may often
and advantageously be simplified by the adoption of one
or a few standard types. Again, standardization may be
applied to the operations by which a certain piece of work
is performed, or the time in which it is to be done, the work-
man being provided with a schedule of instructions and be-
ing expected to follow them implicitly. The idea every-
where is to concentrate the thought and skill upon the
production of the best possible type, and then to make the
reduplication of that type a purely mechanical process.
The production of the original type, whether this original
is a machine or a method of working, involves very expen-
sive study and the employment of very expensive talent.
But the process of reduplication can generally be performed
by very cheap labor; and this labor, through the constant
repetition of a limited number of movements, often attains
an almost incredible degree of rapidity. Under the old

methods of hand manufacture, every unit of product was
practically an original. It was built up piece by piece, al-
most wholly on the principle of " cut and fit and try again,"
and every good workman had to be a skilled artisan, to a
greater or less extent a designer, often an artist, and an
engineer. Under the modern method, the unusual and
extraordinary skill of a small body of designers is made
permanently effective in the tools and process, and the work
of the journeyman is little more than mere muscular effort.
Of course, this movement has characterized manufacturing
everywhere to a greater or less extent; but in American
practice it has been applied- through a wider range and has
been carried farther than it has abroad, not only in mechan-
ical but also in structural engineering work.

" Mass Production " is a term often used to describe the
method of wholesale manufacture resulting from speciali-
zation and standardization. It has to a great extent re-
placed the practice of building things singly to fill each
individual order, just as the shoe factory has replaced the
old-time cobbler. All sorts of things from carpet tacks up
to machine tools, dynamos, steam engines, locomotives, even
battleships, are manufactured in quantity, in standard pat-
terns and sizes, and are placed upon the general market
for . each customer to pick out the pattern and size that
meets his particular need. It is clear that in saving of
cost of manufacture and in saving of time to the buyer the
system offers great advantages, and that it also carries an
advantage in that the interchangeability of parts character-
izing standard apparatus greatly facilitates replacements and
repairs. Three important commercial advantages, there-
fore, are inherent in the system; these are quality for price,
promptness of delivery, and convenience of renewal or re-

These great tendencies aggregation, standardization
and specialization are all interlocked. It was only when

a large number of operatives had been collected, working
side by side on the same product, that it became possible
as well as desirable to bring this product to a fixed pattern,
so that they might all work alike. And it was only when
this had been done that the parts of the work could be
separated, that is, specialized, so that in a spectacle factory,
for example, instead of every man making complete pairs
of spectacles, one lot of men might do nothing but grind
lenses, another group might do nothing but polish them,
another group might cut them to shape, another group
grind the edges, another group make the frames, and still
another group fit the finished lenses into the finished frames. 1
The men in each group, working over and over at their
limited job, can do it much faster and better than the
original all-around man did. The complete process is thus
cheapened, because each part of it has been cheapened; the
product can be sold at a lower price and thus find larger
markets; the increased demand at the lower price in turn
makes it necessary to employ more men. The manufactur-
ing organization thus proceeds to a larger growth; aggre-
gation receives a new impetus ; and so the cycle turns around
again and again upon itself with increasing speed and force.

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