7 Sultans Blog
Risks That Change The World
What does it take to change the world? Some might say a great invention. Take the automobile. Today’s world is defined by the cars we drive. The modern lifestyle is totally centred on the needs of cars – the roads that are built for them, the spaces set aside for them to be parked. The shopping mall is just an extension of the road network, if you think about it – you get in your car, drive to the mall (while thinking about your favourite online pokies game that was inspired by cars), park, do your shopping and drive home. The mall wouldn’t be there if it weren’t for cars. However, the mere invention of the automobile wasn’t enough to change the world on its own. What it took was a visionary who was prepared to put everything on the line to take the car to the people. That man was Henry Ford, and he risked everything to change the world.
People called them “horseless carriages”. The name tells you a lot about the way people thought in those days of the early twentieth century. Their minds were stuck in a world of horses and carriages. You can’t blame them – entire industries were built around servicing those carriages. Automobiles – horseless carriages – were noisy, expensive monstrosities. Invented by Germans. They were too expensive and didn’t even work very well. Only an arrogant show-off would drive around in one. (Think of Toad of Toad Hall.) It was the “new symbol of wealth’s arrogance” according to Woodrow Wilson. Horseless carriages for the people? Never in a million years. Why, most people couldn’t even afford a regular carriage, let alone a horse. However, Henry Ford dreamed of making cars that were better quality and cheap enough to sell to millions of ordinary Americans all over the United States. A horseless carriage for the average Joe. People thought he was crazy.
Weeping at the curb
Ford needed money, but the idea of producing quality automobiles at an affordable price was too much for most lenders in Detroit. Other car manufacturers only made them for racing and charged a fortune. “No man of money even thought of it as a commercial possibility,” Ford wrote later in his life. His business manager James Couzens recalled that Ford was thrown out of so many offices that once he just collapsed on the side of the road and wept. But Ford was the kind of man with the courage and the strength to keep failing. In fact, he failed twice before founding the Ford Motor Company in 1903. He did things this own way. He scoured the world for quality materials at the right price. When he wanted to try using tough vanadium steel, he had a French immigrant build a vanadium steel mill for him in Detroit. Pretty soon, 20 different kinds of steel were going into Ford cars.
As Ford’s cars started becoming affordable, they started selling in greater numbers. Customers bought almost 85 in 1907. His master-stroke, though, came with the Model T. At a time when most cars cost at least $2000, Ford did the unthinkable – he priced his first Model Ts at $850. And then he slashed the price. And kept on slashing the price. As sales went up and up, the price kept coming down, sometimes to the point of – gasp! – losing money on the sale. The price went down to $600 in 1913 and sales soared from 18 000 to 168 000. It was a revolution. Ford’s philosophy: “We have never considered any costs as fixed. Therefore, we first reduced the price to a point where we believe more sales will result. Every time I reduce the charge for our car by one dollar, I get a thousand new buyers.”
Folk hero billionaire
To keep up with demand, Ford invented the mass production assembly line. Production was broken into dozens of small specialised tasks. A Model T came off the line every 30 seconds. Sales reached 248 000. The price went down some more to $550 – affordable for even more Americans.
The work was dull, which was a problem – a lot of workers quit or stayed home. So Ford did another crazy thing – he doubled the minimum wage (to $5 a day) and cut working hours from nine to eight. Talented workers started lining up by the thousand. There weren’t enough jobs to go around, so absenteeism disappeared. Production took off, profits shot up, and Ford kept cutting the price until his own workers could afford to drive the cars they were making. In 1922, Model T sales reached a million a year. Ford cut the price to $300 and raised the minimum wage to $6.
By the time sales peaked at almost 1.8 million in 1923, Ford was a billionaire and a folk hero. His like has not been seen again.