This paper traces the history of Ford Motor Company from Henry Ford's early engineering career through the company's founding in 1903, landmark vehicles, and pioneering production methods. It examines Ford's contributions to industrial manufacturing—including the moving assembly line, standardized parts, and vertical integration—as well as the company's international expansion, labor relations struggles, and product innovations such as the Model T, the '49 Ford, the Mustang, and the F-Series. The paper also addresses Ford's corporate governance structure, its credit arm, acquisition strategy, the Pinto scandal, and the financial difficulties facing the company in the modern era.
Henry Ford began working on steam engines as an apprentice in Detroit in 1879, at the age of seventeen. After bouncing between jobs for several years, Ford found himself an engineer with the Edison Illuminating Company. He would later be named Chief Engineer, and with his newfound income he began to pursue his pet project: a self-propelled vehicle with an internal combustion engine.
Ford's move into production engineering and experimentation with self-propelled vehicles was more relevant for what it would mean down the road than for what it meant at the time. Many inventors were working on automobiles, and Ford's contributions at that stage were not revolutionary. When Ford committed himself to engineering, he was moving back and forth between the factory and the farm. Settling down in the factory and pushing into production management would set the tone for Ford's greatest contributions to society and for Ford Motor Company's greatest competitive advantages in its early years.
Ford's ventures into automobiles led to the founding of the Ford Motor Company in 1903. Five years later came the landmark vehicle, the Model T. The Model T was perhaps the most significant single vehicle in American automaking. The car was in incredibly high demand, and meeting that demand required Ford to apply his engineering expertise to automobile production.
Ford developed several production concepts and methods that would soon become staples of industrial production. These included the use of standardized and interchangeable parts, division of labor, and precision manufacturing. By 1913, his innovations included a continuous moving assembly line (The Henry Ford Museum, 2003).
By this point, Ford had already begun a path of international expansion. The company set up a Canadian subsidiary in 1904, and by the mid-1920s had opened several factories overseas. The move into international markets was unusual at the time, and few companies had as many overseas production sites as Ford. The international orientation the company established in its earliest days would set the tone for the scope of Ford's future development.
In the late 1910s and early 1920s, Ford Motor Company began construction of what would become the world's largest industrial complex in Dearborn, Michigan, Ford's hometown. This facility would be vertically integrated, including a steel mill and a glass factory (Ibid). Towards the end of the Model T's production run, its price dipped as low as $260, adding a new competitive dynamic to the automobile industry, as other car companies struggled to match that price point.
With the decline of the Model T, Ford was forced to chart a new course. The Rouge River plant, completed in 1928, had been producing tractors since the end of the war. The vehicle chosen as the next generation Ford was the Model A. This model was initially successful, but the onset of the Great Depression took its toll on sales, leading to the replacement of the Model A with the Model B.
The next major event in Ford's history was less a company initiative than a shock visited upon the company. In 1941, Ford signed its first union contract. The path to that point was rocky. Ford had been an early pioneer of the concept of paying workers top wages and benefits — primarily because he recognized that the monotony of assembly line work led to high turnover, and he believed generous compensation was the best means of increasing worker retention. As such, however, Ford felt there was no need for unions within his company.
This belief permeated management and culminated in a period of violence in 1937. Most notably, the Battle of the Overpass saw Ford security forces set upon union activists at the gates of the Rouge River plant. Workers were injured, and the case went before the National Labor Relations Board (Time, 1937). After unionization was finally secured, Ford contributed heavily to military production, halting all civilian production until July 1945.
The post-war era saw Ford embark on a new chapter alongside the country. As prosperity returned to America, so too did the love affair with the automobile. The '49 Ford is credited with revitalizing the company in the post-war era. In and of itself, the '49 was not the most landmark vehicle in Ford's history, but it set about a chain of events that would propel the company for decades. First, it marked the evolution of automobile styling, ushering in a new era. The designs that had been prevalent in the automobile industry were entirely cast aside by Ford, and the popularity of the '49 meant the industry would soon follow suit.
Moreover, this was the first Ford available in a variety of body styles — convertibles, coupes, sedans, and station wagons (Ford.com, 2009). This segmentation would provide the basis for the product segmentation in the automobile industry that still exists today. Ford simply changed the entire competitive dynamic of the industry with this car.
On the heels of the '49's success, Ford launched the Thunderbird in 1954 (as a 1955 model). The T-Bird furthered what the '49 had started, with respect not only to product segmentation but also to what Ford represented to the American psyche — it was the first American sports car of the post-war era. In 1953, Ford also redesigned the F-Series pickup, which the company had been selling to farmers and tradespeople since 1948. The new design made it more car-like in comfort and appearance, which would serve the F-Series well on its way to becoming the best-selling pickup truck of all time.
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