My Life and Work
basis of taking as much money away from the consumer as he will give
up--then surely the consumer ought to have a wide range of choice.
Standardization, then, is the final stage of the process. We start with
consumer, work back through the design, and finally arrive at
manufacturing. The manufacturing becomes a means to the end of service.
It is important to bear this order in mind. As yet, the order is not
thoroughly understood. The price relation is not understood. The notion
persists that prices ought to be kept up. On the contrary, good
business--large consumption--depends on their going down.
And here is another point. The service must be the best you can give. It
is considered good manufacturing practice, and not bad ethics,
occasionally to change designs so that old models will become obsolete
and new ones will have to be bought either because repair parts for the
old cannot be had, or because the new model offers a new sales argument
which can be used to persuade a consumer to scrap what he has and buy
something new. We have been told that this is good business, that it is
clever business, that the object of business ought to be to get people
to buy frequently and that it is bad business to try to make anything
that will last forever, because when once a man is sold he will not buy
again.
Our principle of business is precisely to the contrary. We cannot
conceive how to serve the consumer unless we make for him something
that, as far as we can provide, will last forever. We want to construct
some kind of a machine that will last forever. It does not please us to
have a buyer's car wear out or become obsolete. We want the man who buys
one of our products never to have to buy another. We never make an
improvement that renders any previous model obsolete. The parts of a
specific model are not only interchangeable with all other cars of that
model, but they are interchangeable with similar parts on all the cars
that we have turned out. You can take a car of ten years ago and, buying
to-day's parts, make it with very little expense into a car of to-day.
Having these objectives the costs always come down under pressure. And
since we have the firm policy of steady price reduction, there is always
pressure. Sometimes it is just harder!
Take a few more instances of saving. The sweepings net six hundred
thousand dollars a year. Experiments are constantly going on in the
utilization of scrap. In one of the stamping operations six-inch circles
of sheet metal are cut out. These formerly went into scrap. The waste
worried the men. They worked to find uses for the discs. They found that
the plates were just the right size and shape to stamp into radiator
caps but the metal was not thick enough. They tried a double thickness
of plates, with the result that they made a cap which tests proved to be
stronger than one made out of a single sheet of metal. We get 150,000 of
those discs a day. We have now found a use for about 20,000 a day and
expect to find further uses for the remainder. We saved about ten
dollars each by making transmissions instead of buying them. We
experimented with bolts and produced a special bolt made on what is
called an "upsetting machine" with a rolled thread that was stronger
than any bolt we could buy, although in its making was used only about
one third of the material that the outside manufacturers used. The
saving on one style of bolt alone amounted to half a million dollars a
year. We used to assemble our cars at Detroit, and although by special
packing we managed to get five or six into a freight car, we needed many
hundreds of freight cars a day. Trains were moving in and out all the
time. Once a thousand freight cars were packed in a single day. A
certain amount of congestion was inevitable. It is very expensive to
knock down machines and crate them so that they cannot be injured in
transit--to say nothing of the transportation charges. Now, we assemble
only three or four hundred cars a day at Detroit--just enough for local
needs. We now ship the parts to our assembling stations all over the
United States and in fact pretty much all over the world, and the
machines are put together there. Wherever it is possible for a branch to
make a part more cheaply than we can make it in Detroit and ship it to
them, then the branch makes the part.
The plant at Manchester, England, is making nearly an entire car. The
tractor plant at Cork, Ireland, is making almost a complete tractor.
This is an enormous saving of expense and is only an indication of what
may be done throughout industry generally, when each part of a composite
article is made at the exact point where it may be made most
economically. We are constantly experimenting with every material that
enters into the car. We cut most of our own lumber from our own forests.
We are experimenting in the manufacture of artificial leather because we
use about forty thousand yards of artificial leather a day. A penny here
and a penny there runs into large amounts in the course of a year.
The greatest development of all, however, is the River Rouge plant,
which, when it is running to its full capacity, will cut deeply and in
many directions into the price of everything we make. The whole tractor
plant is now there. This plant is located on the river on the outskirts
of Detroit and the property covers six hundred and sixty-five
acres--enough for future development. It has a large slip and a turning
basin capable of accommodating any lake steamship; a short-cut canal and
some dredging will give a direct lake connection by way of the Detroit
River. We use a great deal of coal. This coal comes directly from our
mines over the Detroit, Toledo and Ironton Railway, which we control, to
the Highland Park plant and the River Rouge plant. Part of it goes for
steam purposes. Another part goes to the by-product coke ovens which we
have established at the River Rouge plant. Coke moves on from the ovens
by mechanical transmission to the blast furnaces. The low volatile gases
from the blast furnaces are piped to the power plant boilers where they
are joined by the sawdust and the shavings from the body plant--the
making of all our bodies has been shifted to this plant--and in addition
the coke "breeze" (the dust in the making of coke) is now also being
utilized for stoking. The steam power plant is thus fired almost
exclusively from what would otherwise be waste products. Immense steam
turbines directly coupled with dynamos transform this power into
electricity, and all of the machinery in the tractor and the body plants
is run by individual motors from this electricity. In the course of time
it is expected that there will be sufficient electricity to run
practically the whole Highland Park plant, and we shall then have cut
out our coal bill.
Among the by-products of the coke ovens is a gas. It is piped both to
the Rouge and Highland Park plants where it is used for heat-treat
purposes, for the enamelling ovens, for the car ovens, and the like. We
formerly had to buy this gas. The ammonium sulphate is used for
fertilizer. The benzol is a motor fuel. The small sizes of coke, not
suitable for the blast furnaces, are sold to the employees--delivered
free into their homes at much less than the ordinary market price. The
large-sized coke goes to the blast furnaces. There is no manual
handling. We run the melted iron directly from the blast furnaces into
great ladles. These ladles travel into the shops and the iron is poured
directly into the moulds without another heating. We thus not only get a
uniform quality of iron according to our own specifications and directly
under our control, but we save a melting of pig iron and in fact cut out
a whole process in manufacturing as well as making available all our own
scrap.
What all this will amount to in point of savings we do not know--that
is, we do not know how great will be the saving, because the plant has
not been running long enough to give more than an indication of what is
ahead, and we save in so many directions--in transportation, in the
generation of our power, in the generation of gas, in the expense in
casting, and then over and above that is the revenue from the
by-products and from the smaller sizes of coke. The investment to
accomplish these objects to date amounts to something over forty million
dollars.
How far we shall thus reach back to sources depends entirely on
circumstances. Nobody anywhere can really do more than guess about the
future costs of production. It is wiser to recognize that the future
holds more than the past--that every day holds within it an improvement
on the methods of the day before.
But how about production? If every necessary of life were produced so
cheaply and in such quantities, would not the world shortly be surfeited
with goods? Will there not come a point when, regardless of price,
people simply will not want anything more than what they already have?
And if in the process of manufacturing fewer and fewer men are used,
what is going to become of these men--how are they going to find jobs
and live?
Take the second point first. We mentioned many machines and many methods
that displaced great numbers of men and then someone asks:
"Yes, that is a very fine idea from the standpoint of the proprietor,
but how about these poor fellows whose jobs are taken away from them?"
The question is entirely reasonable, but it is a little curious that it
should be asked. For when were men ever really put out of work by the
bettering of industrial processes? The stage-coach drivers lost their
jobs with the coming of the railways. Should we have prohibited the
railways and kept the stage-coach drivers? Were there more men working
with the stage-coaches than are working on the railways? Should we have
prevented the taxicab because its coming took the bread out of the
mouths of the horse-cab drivers? How does the number of taxicabs compare
with the number of horse-cabs when the latter were in their prime? The
coming of shoe machinery closed most of the shops of those who made
shoes by hand. When shoes were made by hand, only the very well-to-do
could own more than a single pair of shoes, and most working people went
barefooted in summer. Now, hardly any one has only one pair of shoes,
and shoe making is a great industry. No, every time you can so arrange
that one man will do the work of two, you so add to the wealth of the
country that there will be a new and better job for the man who is
displaced. If whole industries changed overnight, then disposing of the
surplus men would be a problem, but these changes do not occur as
rapidly as that. They come gradually. In our own experience a new place
always opens for a man as soon as better processes have taken his old
job. And what happens in my shops happens everywhere in industry. There
are many times more men to-day employed in the steel industries than
there were in the days when every operation was by hand. It has to be
so. It always is so and always will be so. And if any man cannot see it,
it is because he will not look beyond his own nose.
Now as to saturation. We are continually asked:
"When will you get to the point of overproduction? When will there be
more cars than people to use them?"
We believe it is possible some day to reach the point where all goods
are produced so cheaply and in such quantities that overproduction will
be a reality. But as far as we are concerned, we do not look forward to
that condition with fear--we look forward to it with great satisfaction.
Nothing could be more splendid than a world in which everybody has all
that he wants. Our fear is that this condition will be too long
postponed. As to our own products, that condition is very far away. We