Thursday, November 14, 2013

Henry Ford - Fordism - Product and Productivity Achievements

The Model T was designed to be simple, reliable and easy to build. When it went on sale in the USA, it was sold for only US$825, much lower than the $2000-$3000 level of its counterparts.


The Ford Motor Company opened its 60-acre Highland park plant on January 1 in an effort to meet the unprecedented demand for the Model T. Company policy already dictated that production machinery was to be scrapped as fast as the tool department could develop improved types of specialized machinery that would support higher volumes of production. Henry Ford was trying to keep up with demand by developing more specialized machine tools and innovations in the production process.

Ford sold 32,053 of its popular Model T.


Henry Ford could put Model T's out of the Highland Park plant at the rate of 26,000 each month--without any assembly lines. That gave Ford a production capacity in excess of 300,000 a year. More than 1 in every 5 automobiles on the road (22%) were Fords even before the assembly line

Just 4 years after its introduction, the Model T accounted for 3/4 of all cars on America's roads

The Ford Motor Company had 3,500 dealers nationwide in the U.S.

Time and motion studies the newly hired Clarence Avery carried out at the Ford plant in Highland Park, Michigan, led to the installation of continuous conveyor belts designed to bring parts and materials to assembly areas. This is the reverse of the moving assembly line--the chassis stayed in one place, and all the various parts came to that one place. Assemblers walked down the line from chassis to chassis. No one had yet decided to move the chassis past stocks of parts.


By mid year, the Ford Motor Company was using moving lines to assemble magnetos, motors, and transmissions in its Highland Park, Michigan, plant. On the magneto line, switching to the moving assembly line cut the time required to produce one unit of this critical subassembly by 75%--from 20 minutes of labor per unit to 5 minutes labor. The flood of components coming off these lines producing major subassemblies quickly outpaced the ability of the chassis assemblers to keep up. By the end of the year, ropes and windlasses were in use to pull the chassis though the final assembly area--moving the assembly rather than the parts. Even this hastily rigged expedient dramatically increased productivity, cutting the time for chassis assembly from 12 and a half hours to 2 hrs and 40 minutes by the end of December 1913. The endless chain was installed in January 1914.


In January, the Ford Motor Company installed a continuous chain to pull chassis though its Highland Park, Michigan, plant.

This moving assembly line was a product of a policy of continuous improvements in plant and process machinery that had been underway since the introduction of the Model T in 1908. More specifically, the adoption of the moving assembly line for final chassis assembly had been made possible by the program that had first brought conveyor belts for the delivery of parts and, then, in 1913 had put the production of important subassemblies onto moving lines. The moving line for final assembly made no sense until all the bottlenecks in production and delivery of components had been cleared. By the end of 1914, adjustments to the chassis assembly line had reduced the labor input for assembly of each Model T to 1.5 hrs.

At the Ford plant in Highland Park, Michigan, the effort at continuous process improvement had resulted in the installation of about 15,000 separate pieces of machinery needed to support a moving assembly line for production of the Model T.

Henry Ford promised that if the Ford Motor Company passed sales of 300,000 Model T's within the next year, his company would give a rebate to every purchaser of a T. At the end of the specified period, the company sent out checks totaling more than $15 million to 308,313 people who had purchased new Model T's.

Based on the enormous productivity gains resulting from the introduction of moving assembly lines, Ford launched the $5, 8-hour day. The move more than doubled the average wage, but Ford clearly understood that in doing so he was helping to build the market for the Model T.


The introduction of the moving assembly line at Ford allowed the company to push production past 500,000 units, while dropping the price of a Model T to $440, and raising workers wages to $5 per day--twice the standard industrial wage in America. In terms of purchasing power, the Ford $5 day gave workers a daily wage that was equivalent to the weekly earnings for an industrial worker in Britain. Thus, assuming a 6-day work week for unskilled and semi-skilled workers, the Ford assemblers had twice the purchasing power of their American counterparts, 6 times the purchasing power of workers at comparable skill levels in Britain.

U.S. annual automobile production surpassed 1 million units for the first time. Over half were Ford Model T's. Ford sold 734,811 Model T's during the year. As of August 1, 1916, the runabout model sold for just $345 and the touring model was priced at $360

The Ford Model T got 20 miles per gallon of gasoline.

The cost reduction and price reduction cycles eventually pushed  price of Model T to US$300 and annual production passed 1 million units in 1922.

Case Study in Productivity of Model T Ford

Developments in Automobile Industry and Change in Human Effort

Ford and His Methods - Full Book

Ford searched thoroughly for cheaper materials.
Ford found vanadium steel as a lighter but stronger material and used it early by setting up a plant to make vanadium steel.

Clarence Avery
Determining responsibility for development of the moving assembly line
Author(s): Jay H. Heizer, (Texas Lutheran University, Seguin, Texas, USA)
Citation: Jay H. Heizer, (1998) "Determining responsibility for development of the moving assembly line", Journal of Management History (Archive), Vol. 4 Iss: 2, pp.94 - 103

Ford's Top People,_Charles_E.

Assembly - Ford's Innovation

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