Economy and social affairs

A totally crazy experiment

As of October 2008:

Published in GralsWelt 49/2008

One hundred years ago, in October 1908, perhaps the most important automobile in history was unveiled. As a reminder of this milestone in the history of technology, the following story:
“We were just in the typesetting room of the 'New York Times' when Mr. Ochs, our boss, showed up and made his way between the machines. His arms were stretched out a little, as if he were carrying a burden, and his eyes were wide. This suggested that he was in a state of extreme excitement. When he spoke, his voice was barely stronger than a whisper, 'He's crazy, isn't he? Don't you think he's totally nuts? '
We knew what he was referring to. The big news in the daily press was the announcement… that the minimum wage for all blue-collar and white-collar workers, including cleaning ladies, will be increased from two to five dollars a day, while working hours will be reduced from nine to eight hours ” (2, p. 9).

Who was the madman who, in January 1914, was generally believed to be ruining himself by more than doubling the usual daily wage of $ 2.34? It was none other than the idiosyncratic inventor, entrepreneur, philanthropist (philanthropist) Henry Ford (1863-1947), who, despite all theories of economics, tried out a new way of doing business and generously put into practice something that had never been thought of before: Fordism ".

Wage costs too high?

To everyone's amazement, the “madman” didn't go broke. On the contrary. The unheard-of wage increase caused an incredible increase in productivity. The workers were moving at an unprecedented pace and Henry Ford said:
"The five-dollar rate for the eight-hour day was one of the best steps we've taken in terms of manufacturing costs." (2, p. 14).
Since Ford was also interested in the benefits for its customers, the wage increase was also followed by price cuts.

Taylor and Ford

The American Winslow Taylor (1856-1915) was one of the founders of ergonomics, who promoted his "scientific management" with the catchphrase: "High wages - low prime costs" (4, p. 3). So he did not strive for the much-cited "exploitation of the workers", but wanted everyone to participate in the "blessings of technology" and the "rational production" made possible by it.

Taylor's principle was the strict separation of executive and dispositive (arranging) tasks; First and foremost, the breakdown of the production work into the smallest steps that could be optimized. Allegedly, the individual work processes should be so simple that an "intelligent monkey" could carry out them. The workers were not asked to think for themselves; they were only supposed to do the work assigned to them quickly and reliably. So you didn't need a skilled craftsman, you could train the unskilled with the necessary dexterity in hours. Given the shortage of skilled workers in the USA, this principle was a prerequisite for rapid industrialization; whether in a shoe factory, a slaughterhouse, or in canning.

Ford and his rationalization engineers related Taylor's ideas to mechanization and assembly line manufacturing (the first in the world, starting October 7, 1913[i]) consistently in an unprecedented manner.
The many work processes (the Ford T-Model consisted of over 5,000 parts) were divided into the smallest possible units, which could be precisely analyzed and optimized in order to achieve the best possible workflow in the least amount of time.
For example, assembling the connecting rod is a relatively straightforward process. First, 175 poles were put together in one working day by 28 men. After a detailed analysis and optimization of the workflow, 7 men were able to assemble 2,600 pieces per day. (2, p. 21).
In 1908 the average work cycle of a Ford worker took 514 minutes to repeat, in 1915 it was only 79 seconds: Always the same movements that were trained to perfection. This also reduced the time it takes to assemble a T-model from over 12 hours to just under 90 minutes. In 1920 a T-model rolled off the production line every minute.

The Ford workers were initially uncomfortable with the assembly line work, resulting in a large turnover that contributed to the above-mentioned exorbitant wage increase.
Such a job according to Ford's motto "Everything can be done better than it has been done before" (1, p. 15) is monotonous, perhaps inhumane ...

However, the many discussions about what a decent workplace should look like could not prevent the B. in China or India - under by no means better working conditions than 100 years ago at Ford - 12 hours (instead of 8 hours as at Ford) toil for a starvation wage.

The Ford T-Model

The first automobile to be mass-produced on an assembly line became one of the most famous passenger cars of all time: the Ford T-model, whose daily production reached ten thousand in 1923. 15.5 million T-models were produced between 1908 and 1927; a world record that lasted 45 years until it was surpassed by the VW Beetle on February 17, 1972 under other conditions[ii].

The T models were all black and so simple that no specialist knowledge was required to fix them:
“Anyone who can still remember their Model T will think of how to take the car apart with pliers and a wrench and carry the old or broken parts in a sack to the nearest Ford service center in order to exchange them for new ones for a small surcharge , and then put everything back together at home " (2, p. 50).
Mass production with interchangeable parts was a prerequisite for this convenient spare parts supply.

With the productivity increases made possible by the Ford system, it was not only possible to pay exorbitant wages for those times, but also to reduce sales prices. The price of the "Tin-Lizzy" fell from 850 to 295 dollars. With a wage of 6, - dollars per day (as it was paid at the end of the 20s) a Ford worker only needed approx. 50 working days to be able to pay for a T-Model with his gross wages.

“If a company is not growing, it is losing weight, and a company that is losing weight always needs new capital. The outdated business policy required that prices be kept as high as possible as the public was just willing to pay them. Really modern business policy demands the exact opposite.
Bankers and lawyers rarely appreciate this fact. You mistake standstill for stability. It is completely beyond their conception that prices can be lowered voluntarily. For this reason, it is downright unfortunate when you include the average type of banker or lawyer in the management. "
Henry Ford (1, pp. 35 f.).

The competition is awakening

Unfortunately, Henry Ford focused too much on perfecting production and neglected product development. He shied away from new developments, if only because the fully rationalized mass production on the assembly line was not so easy to switch to another model.

But the market changed, the roads got better, automotive technology continued to develop, and customers became more demanding. Then the competition saw in frequent model changes a means to keep the market moving and, if possible, to constantly raise the prices for cars. The offer of installment transactions should entice customers to buy.

The minimalist construction of the T-Model was no longer in keeping with the times. Finally, in 1927, when there were not enough T-models to sell, production had to be shut down for nine months until a more modern automobile was developed: the Model A. Henry Ford lost its leading position in the automotive sector with a market share of 55 %.

Fordism fails

Ford's bold (or crazy) experiment with high wages and low prices forced other manufacturers to rethink mass production, assembly lines, wages, profits and the purpose of a business. Other manufacturers had to follow suit, and the standard of living in the USA rose.

Nobody thanked Henry Ford for this. Even his workers hated him for the strict discipline required. The industrialists would never forgive him for having roused them out of their self-satisfied satisfaction and forcing them to rebuild their factories according to his example and to rationalize them consistently.

The Ford system got stuck in the economic crisis after 1929. Another wage increase to $ 7 was just a dramatic gesture that didn't even increase the purchasing power of Ford workers as production had to be cut back.

For years, Henry Ford had held the optimistic conviction:
“We don't need to have a downturn in our company. We never need to have unemployed people. Our recipe for bad times is lowering prices and raising wages. And it only takes the effort of a few large companies to suppress the panic of any economic crisis. " (2, p. 15).
In the great doldrums, when markets worldwide collapsed and huge fortunes were gambled away on the stock market, Ford also reached its limits. Even his workers' wages fell to $ 4 a day.

Fordism meant the greatest possible rationalization of production in order to make wage increases and price reductions possible. This method worked in a growth market with initially almost unlimited potential and huge opportunities for rationalization. When the competition caught up and the markets stagnated, Ford's altruistic theory had to fail.

Finally, the unions made sure that the Ford Motor Company became a “completely normal” industrial company. The entrepreneur Ford decidedly refused to have a say in the union. He tried to counter the intrusion of union officials by spying on employees and created a working atmosphere of mistrust.

Ultimately, the unions were given greater rights in the wake of Roosevelt's "New Deal" - government intervention in the economy to overcome the recession in the 1930s. For example, unionists were able to enforce the - Henry Ford hated - participation in wages, working hours and the pace of work through a strike.

A philanthropic entrepreneur

Henry Ford was once considered a propagandist of the machine age, who saw the only way to increase prosperity in the skillful use of machines:
"A million manual workers couldn't nearly produce our daily production. " (2, p. 20).
Ford placed machines close together, let the workpieces move from machine to machine on the assembly line, and divided the work into the simplest of steps. In this way even the unskilled worker could earn high wages, and people's needs could be satisfied with inexpensive products in a way that was previously unthinkable. Ford's name will forever symbolize a turning point in industrial history.

When people look for solutions to our economic problems today, nobody thinks about Henry Ford and his sometimes questionable ideas. Many of his successes were only possible under the specific conditions of his time and his environment. The working atmosphere in his factories was at times catastrophic, and one cannot necessarily call the philanthropist Ford a worker friend.

But when “shareholder value above everything” is preached once again, and only “cost factors” are seen in the workforce, no longer people, one should read a saying by Henry Ford that is contrary to the goals of modern managers, but perhaps it is Serious Thought Contains:
"Lowering wages is the easiest and at the same time the most dissolute way to master a difficult situation, not to mention the inhumanity ...
If I were ever given the choice of either lowering wages or abolishing dividends, I would cut dividends without hesitation. However, this choice is unlikely because, as has already been shown, low wages do not generate savings. Reducing wages is bad financial policy, as purchasing power is also reduced at the same time. Provided that a leading position includes responsibilities, it is also one of the duties of its owner to ensure that the personnel subordinate to him are given the opportunity to establish a sufficient existence for themselves.
There is something sacred about wages - it represents domesticity, family, and inner prosperity. One should therefore go to work very carefully when dealing with the question of wages shakes. " (1, p. 29).

Technical data of the Ford T-model:
4-cylinder in-line engine with 2898 cm³
Stroke 102 mm / bore 95 mm
Side steered (SV)
Output 17.6 kW (24 hp) at 1800 rpm
Maximum torque 100 Nm
2-speed gearbox with foot operation, separate reverse gear
Top speed approx. 63 km / h
Fuel consumption up to 12 liters / 100 km
Good ground clearance and low overall weight allowed driving through uneven terrain.
Purchase price:
1908: 850, - dollars (according to today's purchasing power approx. 18,000, - euros)
1918: $ 360
1922: $ 295
After that, the prices rose again slightly due to better equipment.

(1) Ford Henry, Success in Life, Paul List, Leipzig, undated
(2) Garrett Garet, Rasenderäder, Hermann Rinn, Munich, 1953.
(3) Porázik Juraj, Oldtimer, Weltbild, 1990.
(4) Gottl-Ottilienfeld Friedrich v., Fordism, Gustav Fischer, Jena, 1926.
(5) Sponsel Heinz, Henry Ford, Sigbert Mohn, Gütersloh, 1960.
(6) www.kfz-tech / de / FordTL.htm.
[i] There were precursors, e.g. B. the then notorious "killing conveyor belt" Chicago slaughterhouses. But never before has such a complex technical product as an automobile been manufactured in large series.
[ii] The order of the most popular automobiles produced today is: 1. Toyota Corolla; 2. VW Golf; 3. VW Beetle; 4. Ford Model T. It should be noted that the Beetle and T-Model were produced pretty much unchanged, while the Corolla and Golf underwent significant further developments and changes.