Three words: craft, mass, lean. That's how the authors of the epochal book The Machine that Changed the World sum up U.S. manufacturing for the past 100 years or so. A lot has changed in the past six years since its publication, but then again, not that much. Compared with the cataclysmic events of the past 100 years little has changed at all.
There have been no 90% increases in productivity, no doubling of wages for factory workers. There have been no 75% plunges in U.S. production rates, like there were in the 1930s. No giant new unions have formed, no tooling changeovers so staggering in size they have altered the world economy.
No. Manufacturing in today's mature car industry just doesn't register on the Richter Scale of human events like it used to. Toyota's production system certainly has changed the world over the past five decades, but Ford's assembly line changed it like it had never been changed before.
Consider these mind-boggling facts and events:
* In 1904, the U.S. auto industry employed about 3,000 workers, most of them in Michigan. In 1914, just 10 years later, 67,538 Michigan auto workers made 442,982 cars and trucks, 78% of America's total vehicle production.
* Five years after that, in 1919, the auto industry employed more than 75,000 people in Detroit alone. Thousands of others built cars in Highland Park, Hamtramck, Flint, Pontiac, Lansing -- and all over the world.
* Henry Ford realized a 90% productivity gain in vehicle assembly from 1913 to 1914 at his plant in Highland Park, MI, when he implemented his moving assembly line. The cost savings were so huge he was able to double wages, cut the workday from 10 hours to eight and simultaneously slash vehicle prices. He would later recall it as his most "momentous" year.
* In 1927, Henry Ford finally acknowledged that the Model T had to be replaced with a more modern car. In what is called one of the worst business decisions in history, he shut down production before he had a successor car developed.
The 6-month new-model changeover reportedly cost Ford $1 million per day in lost sales and allowed Chevrolet to pass Ford for the first time. The debacle could have finished off the company, but the new Model A was a huge success. The introduction was front-page news in almost every newspaper in the world, and the company received 500,000 orders in the first two weeks.
* Cost estimates for shifting production from Highland Park and tooling up the new River Rouge complex to build the Model A range from $100 million to $250 million (1927 dollars). It was so great an expenditure at the time that it is given credit for singlehandedly postponing the Great Depression for at least a year.
* In 1955, more than 7 million cars were sold in the U.S. for the first time. The Big Three built 95% of them, and six models accounted for 80% of all models sold. It was the peak of American mass production. For the Big Three, it never got better.
Henry Ford didn't invent interchangeable parts, standardized gauging systems, or machinery that could cut hardened metal. What he did was design a car that would be easy to manufacture -- and developed a production system using all of these crucial elements to build it.
In 1913 at a new plant in Highland Park, he spent about $3,500 to build a conveyor belt that would pull cars down an assembly line, instead of having workers move from one car assembly to another during the build process. The components they put on the car were funneled to them, so they didn't have to waste movement going to and from parts bins. Now this was a machine that changed the world.
But true mass production never would have happened without the genius of Alfred P. Sloan, who was the first to understand how to effectively manage and decentralize the giant manufacturing organizations that grew out of mass production -- and sell their products.
In the late 1800s Detroit was an ideal manufacturing spot. It already was a production center for ships, stoves and steam engines. Most importantly, Detroit had lots of marine engine builders who were very familiar with the workings of internal combustion engines.
But as hundreds of aspiring carmakers started producing thousands of cars during the next 10 years, there was one basic assumption that wasn't true for them. The cost per unit did not fall dramatically as production numbers increased. With their crude, craft-based production techniques, a vehicle would cost the same if they made 10 -- or 10,000.
Companies did not use standard gauging systems, and the machine tools of the 1890s couldn't cut hardened steel. Instead, components were machined and cut to shape and then hardened in ovens after ward. Often this heat-treating would cause the parts to warp, making them useless or requiring extensive rework.
The carmaking process during this time consisted of taking delivery of hundreds of approximated parts and using highly skilled craftsmen to file and rework each part to make it fit another. Each vehicle was different.
But by 1906, Henry Leland brought interchangeable parts to the auto industry.
Mr. Ford used the idea of interchangeable parts and took it further when he designed his Model T in 1908 to be especially easy to manufacture, drive and repair. This laid the groundwork "for the revolutionary change in direction for the entire motor industry," says Machine.
Mr. Ford began insisting that the same gauging system be used for all parts. No one else in the industry had yet understood how important standardized gauging was. Advances in machine tools helped him further. For the first time they could cut and shape pre-hardened metals. That meant parts could be mated easily, with greater precision, and far less scrap.
Mr. Ford continually analyzed the production process, searching for new ways to cut costs and increase production. Although most of the hand-filing and craft work was eliminated on the early Model Ts, they were still built individually, often by one "fitter" on assembly stands. But soon after, he found it was faster to have numerous assemblers perform specialized tasks and move from vehicle to vehicle around the assembly area.
All the pieces started to fall into place by 1913. The first "line" was a magneto assembly line that used all of the principles Ford was refining. A few months later, a line for vehicle assembly was born. One of its many benefits: It enforced a constant pace that could be continually speeded up.
Huge productivity increases enabled Ford to double the minimum daily wage of workers to $5 while cutting their hours and slashing vehicle prices. He later created a legend by saying he did this to help mankind and enable workers to buy the cars they were making.
But many historians argue that Mr. Ford cared little about workers and considered them as interchangeable as the parts of his cars. He offered a good wage to ensure a steady stream of new workers for his growing assembly lines. Turnover was extremely high.
Henry Ford's concept of mass production reached its climax in the giant Rouge complex in Dearborn. Finalized in 1927, raw materials came in one end, and finished cars came out the other. Part of Mr. Ford's logic was that he could build all vehicle components more efficiently than suppliers could. But the Rouge was driven just as much by his distrust of outsiders and neurotic need to control every aspect of vehicle production.
Centralizing such a massive complex under the control of one man proved unworkable, and the company almost went bankrupt as Mr. Ford's mental powers flagged in the 1930s.
Meanwhile, Mr. Sloan created a highly decentralized system of management and a concept of marketing cars "for every purse." GM became the largest, most successful industrial corporation in the world.
The concept peaked in 1955, and went downhill from there. GM suffered most in the 1980s and early 1990s because it was so successful at traditional mass production techniques that it was the last to start changing its ways when the marketplace -- and the world-- began changing. GM, stuck in its old ways, couldn't move fast enough.
After WWII, Eiji Toyoda and Taichi Ohno at Toyota Motor Co. in Japan pioneered the concept of lean production. The rise of Japan followed, as other Japanese companies and industries copied their manufacturing system, which combines elements of both craft and mass production while avoiding the high costs and rigidity of each system. Lean manufacturing uses more input from suppliers and employs teams of multi-skilled workers at all levels of the organization so the company is more flexible and adapts faster to change.
Today, even though they are searching to define the next level of productivity to come after "lean" with terms such as "agile manufacturing," none of the Big Three can match Toyota in production efficiency.
Ford's factories, regarded as the U.S. industry's most efficient five years ago, actually have become less so as it has introduced several major new products that have more engineering content and take more workers to build.
Although it's improving, GM still is suffering from having too many plants, too many managers and too many workers, but the UAW has made it clear with a recent strike that it will not allow major changes. A huge showdown could be in the works.
Chrysler Corp.'s plants still aren't the most efficient, but its product-development processes now are so well honed that it makes up for whatever shortcomings its factories have. It's now generally regarded as the most efficient U.S. producer overall.
