How Ford Built America — The Man Behind The Automobile
Henry Ford is one of the most influential American industrialists. Through his company, Henry transformed American life. And in this post, we’re going to learn how he did it starting from the very beginning.
Who is Henry Ford?
By all accounts, Henry Ford should’ve been a farmer. Born in Michigan barely 20 years after it had become a state, Henry grew up at a time when farming was slow, exhausting and manual, which is why unsurprisingly he came to hate it with passion. But whereas most people at the time didn’t have the fortune to escape what they were born into, Henry was lucky enough to get such an opportunity.
You see, the village he was born into was just eight miles west of Detroit, which was rapidly becoming an industrial center thanks to the steam engine. Early on in his childhood, Henry encountered technology which few children his age could play around with. He’d tinker with the watches of his better-off neighbors. And by the time he was 12, he could not just take them apart, but also put them back together and repair them.
His interest grew into an obsession when he got to observe a working steam engine firsthand while on a school trip to one of the rail companies in Detroit. By the time Henry had become a teenager, the steam engine was already making its way into the farming community.
Coal powered threshing machines and sawmills were becoming a common sight, and Henry was learning how they worked and how to fix them. At the age of 16, he made a big leap forward when, against his father’s wishes, he left his village to go work in Detroit where any young mechanic could easily find very lucrative employment.
Industry in Detroit was booming, and it had been doing so for close to five decades. In 1825, a canal had been dug connecting the Hudson River to the Great Lakes, which at the time were effectively the western frontier. All the untapped resources that had no way of getting out could suddenly be moved by steamboat to New York. And in the span of just 50 years, Detroit’s population increased by a factor of 10 with vast mines in the north producing copper and iron and lumber mills opening up virtually everywhere.
All this metal and wood sustained close to a thousand companies in Detroit alone, including the ones in which Henry would work at over the course of the 1890s. It is during this time that Henry by chance learned about the gas engine from a British magazine.
Henry Ford encounters gasoline engine
At the time, gas was being produced in small numbers by a German engineer, Nikolaus Otto, and it was gaining some traction in Europe.
However, it was practically unheard of in America. Henry would get the chance to work on such an engine himself in 1889, and he instantly recognized the advantages it had.
Because it did not use steam, the engine was much lighter and got rid of the heavy boiler and all the water in it because it did all the combustion internally, a much more efficient process. This also allowed the gas engine to start quickly, whereas steam engines of the time needed as much as 30 minutes to heat up the water and generate enough steam to start working.
The gas engine was an innovation Henry fell in love with it, but it was also one he didn’t fully understand. After all, he had extensive experience with steam and metal, but almost none with electricity and the gas engine was fired by an electric spark.
To obtain this missing knowledge, Henry went to work for the local branch of the Edison Illuminating Company. The company was already generating electricity for over a thousand homes in Detroit, and it was doing so by using steam engines, which meant that Henry was a natural hire for them. Whenever the engines broke, Henry had to fix them. But whenever they were working, he was free to do as he wished. It was the perfect job that allowed him to spend his days experimenting with gas engines.
The formation of Detroit Automobile Company
In 1893, when Henry had already been promoted to chief engineer at Edison, he created his first working gas engine.
The idea of using the gas engine to create a horseless carriage had been around in Henry’s mind since he first laid eyes on one, but actually making that idea a reality would take years of work. Building a car in a world with no car parts wasn’t easy, and Henry had to figure out every detail through trial and error.
It took him three years of constant effort to produce quadricycle, a simple frame with an engine powered by ethanol and four bicycle wheels mounted onto it. It had only two gears and neither one was for going in reverse. But what’s worse is that it had no cooling system to speak of, thus making overheating a constant issue.
And its first year, Henry made numerous improvements to the quadricycle, most notably adding a cooling system. And by the time he sold it in 1897 for $200, he had driven a thousand miles in it.
Henry built a second quadricycle and then the third one, always improving the design, before finally feeling confident enough in 1899 to start his own company. Capitalized at $150,000, the Detroit Automobile Company was a very ambitious venture. Many of the Detroit elite invested in it, including Henry’s friends from the Edison company, and everyone was eager to see what Henry could create with proper capital.
Henry’s plan was very clever. Since he personally knew many of the industrialists in Detroit by that point, he’d try to build an automobile they could use in their businesses. He leased a factory and planned to hire a hundred workers to make his new delivery wagon, as he called it. But it turned out that building such complex machines in high numbers was much more difficult than Henry imagined.
Model A
The vast majority of the parts used in the making of the delivery wagon were produced by other companies. And every time a single delivery was late, the entire factory would have no choice but to stop working.
The first delivery wagon took six months to produce and no more than 20 were made in the first two years of the company’s existence. By the end of 1902, the other shareholders were sick of Henry’s lack of progress and actually voted to get rid of him.
Now, because Henry held only 15% of the company, he had no choice but to comply. And interestingly enough, the man who took over the Detroit Automobile Company would eventually transform it into Cadillac, but that’s a story for a different time.
What matters is that Henry was pushed out of his own company and had only $1,000 to his name. It was back to the drawing board, and this time Henry would take a very different approach.
Instead of targeting businesses with expensive machines, Henry would design a vehicle to be used by the average man. You see, at the time, virtually all cars were high ticket items. They were mostly made by skilled craftsmen one at a time, and more often than not were designed for racing, which was rapidly becoming a favorite American activity.
Henry envisioned turning the car from a status symbol into a commodity, but doing that would not be easy. And in fact, it took him 20 different design iterations before he finally got one that worked. Henry labeled his first design as the Model A and worked his way through the alphabet over the next five years, sustained by capital from his friends and family. But what changed the most during this time is not the car itself, but the production process.
Perfecting the assembly line
Henry learned the importance of having a reliable supply chain when his first company failed, which is why this time around he tried getting as many parts as possible from the same manufacturer. The one he chose will probably sound familiar, the Dodge Brothers Company, a machine shop in Detroit that would eventually evolve into the eponymous American brand.
The biggest game changer of all, however, was Henry’s chance visit to a slaughterhouse in Chicago. He saw something interesting, a disassembly line, so to speak, where multiple workers would process carcasses moving down a line. Henry figured he could use the same process but in reverse, an assembly line.
Using the money he had saved from some of his earlier models, which were also assembled by the Dodge Brothers, Henry was able to build a factory of his own in 1904 where he could experiment with the assembly line process. By 1905, the Ford factory employed over 300 people that built 25 cars a day, but Henry still hadn’t figured out. He was producing multiple different models at the same time, which prevented him from properly using an assembly line. Nevertheless, there was a sign of things to come.
The affordable Model N, created in 1906, became the best selling car in the US, and Ford became the biggest car producer in America. It is actually during the production of this model that Henry would first use the assembly line process to at least partially assemble some of his cars. It wasn’t a full moving assembly line. But nevertheless, this experiment increased production by a factor of five in the same factory.
Logistics, of course, was another big part of Henry’s success. In 1905, he created the Ford Manufacturing Company, complete with its own factory, to start making the engines and transmissions of Henry’s cars to further eliminate any possibility of delays. But the biggest factor in Henry’s success came from perhaps the most unexpected place; Peru!
Now, this is a story you’re not going to hear anywhere else
In 1907, Henry began construction of a heat treatment plant to produce vanadium steel.
This alloy was new to America. In fact, few furnaces in the US could even reach the temperature needed to manufacture it. The difficulty in producing it, however, was worth it because vanadium steel was more than twice as strong as regular steel while actually being lighter.
Now, at the time, vanadium metallurgy was cutting edge research, but Henry had an extremely lucky connection. He was friends with the two brothers who owned the one vanadium mine in Peru producing 92% of the world’s supply. Joseph and James Flannery had commercialized vanadium steel in Europe and in the US by selling it to rail companies.
But their Peruvian mine was producing so much vanadium that they had to do something else with it. They sold vanadium steel to the US government for the construction of the Panama Canal, but even that wasn’t enough. So when they met Henry in 1906, they immediately made him an offer: they would help him transition his entire manufacturing process to use vanadium steel.
It was their chief engineer that built the heat treatment plant for Henry in 1907, and it was their company that supplied Ford with all the vanadium it needed for its cars.
The first Ford car designed with vanadium steel was the Model T in 1908, and it was this alloy that actually made it successful. It wasn’t the cheapest car Henry had made. The Model N and its upscale versions were actually cheaper, but it didn’t need to be because it was by far the best car built at the time, much stronger than any competitor.
Built for quality
The sheer difference in quality was the only marketing Henry needed. And within weeks of the Model T’s release, Ford received 25,000 orders for it, even though it managed to produce only 17,000 units for the entirety of 1909.
Henry realized just how big of a deal the Model T was, which is why he built a second factory in 1910, and it is there that he would perfect the moving assembly line in 1913. During this period, production would double every year. In 1910, he built 20,000 Model T’s. And just six years later, he was building over half a million.
At the same time, Henry adopted another brilliant strategy: “He was constantly reducing the price of his cars to further increase his market share.”
In fact, during these six years, he cut the Model T’s price by more than half. By 1918, half of all cars in America were Model T’s, and this trend would continue well into the 1920s. Henry had begun a new age in American history, the age of the automobile, and it was his company that would totally dominate it in its first two decades.
It wasn’t until the end of the 1920s that the rest of the auto industry caught up to Henry, but at that point, he was already one of the richest men alive.
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