Henry Ford and Mass Production
Mass production is a way of manufacturing things en masse (and for the masses) that takes the initiative for choosing products out of the hands of the consumer and puts it into the hands of the manufacturer. Before mass-production methods were introduced, producers made things to order. They did not, by and large, manufacture things in the vague hope of selling them at some later date. They made things when they knew they had a customer.
In Elizabethan times, shops were not stuffed with goods waiting for buyers. They were full of craftsmen waiting to fulfil orders. With mass-production methods, manufacturers produce things in large quantities without having orders for them in advance. They worry about selling them later—the price they pay for enjoying economies of scale in the manufacturing process.
Mass production is based on the principles of specialisation and division of labour as first described by Adam Smith in “The Wealth of Nations” in 1776, and as first practised in places like Eli Whitney's gun factory in America in the 1790s. Mass-production methods use highly skilled labour to design products and to set up production systems, and highly unskilled labour to produce standardised components and assemble them (with the help of specialised machinery). The early businesses that used such methods were able to take workers directly out of agricultural labour on the land and on to the factory floor. No significant retraining was required.
The parts used in mass production are often manufactured elsewhere and then put together on a moving production facility known as an assembly line. The result is a standardised product made in a fairly small number of varieties, produced at low cost and of mediocre quality. The work is repetitive, and the workers are regarded as a variable cost to be taken on or laid off as demand dictates. In factories that are designed on the principles of mass production, stopping an assembly line to correct a problem at any one point stops work at all points.
The seminal event in the history of mass production was the appearance of the Model T automobile which, to quote its manufacturer, the Ford Motor Company, “chugged into history on October 1st 1908”. Henry Ford himself called it the “universal car”, and it became so popular that, by the end of 1913, Ford was making half of all the cars produced in the United States.
To keep up with demand, says Ford's official record of events:
[The company] initiated mass production in the factory. Mr Ford reasoned that with each worker remaining in one assigned place, with one specific task to do, the automobile would take shape more quickly as it moved from section to section and countless man-hours would be saved. To test the theory, a chassis was dragged by rope and windlass along the floor of the Highland Park, Michigan, plant in the summer of 1913. Modern mass production was born! Eventually, Model Ts were rolling off the assembly lines at the rate of one every 10 seconds of each working day.
The moving assembly line was the start of an industrial revolution. In the 19 years that the Model T was in production, over 15m cars were produced and sold in the United States alone. Ford became an industrial complex that was the envy of every industrialist in the world.
In Innovation in Marketing, Theodore Levitt gave an alternative view of the Ford saga:
[Henry Ford's real genius] was marketing. We think he was able to cut his selling price and therefore sell millions of $500 cars because his invention of the assembly line had reduced the costs. Actually he invented the assembly line because he had concluded that at $500 he could sell millions of cars. Mass production was the result, not the cause of his low prices.
Not until the Japanese introduced techniques such as just-in-time did manufacturing industry again experience such a dramatic change. And not until the late 20th century did the development of the internet make it seem possible that the initiative in the buyer/seller relationship would shift back, out of the hands of manufacturers and into the hands of consumers.
Ford, H., “My Life and Work”, Doubleday, Page & Co, 1922; Arno Press, 1973
Levitt, T., “Innovation in Marketing”, McGraw-Hill, 1962
Smith, A., “The Wealth of Nations”, 1776
More management ideas
This article is adapted from “The Economist Guide to Management Ideas and Gurus”, by Tim Hindle (Profile Books; 322 pages; £20). The guide has the low-down on over 100 of the most influential business-management ideas and more than 50 of the world's most influential management thinkers. To buy this book, please visit our online shop.