Ford Motor Company

How A Father-And-Son Venture Became America's Largest Automaker

Bill Senefsky
Mar 1, 2010
Photographers: Courtesy of Ford
Revisionist historians have claimed a number of different people invented the modern automobile. It's true, Karl Friedrich Benz was the producer of the first motorcar, but his machine was a three-wheeled affair that more closely resembled the cycle cars of the 1800s. Gottlieb Daimler and Wilhelm Maybach are credited with the first four-wheeled, four-stroke-engine vehicle, yet brothers Charles and Frank Duryea can lay claim to the first American-built gasoline-powered automobile. In fact, the Chicopee, Massachusetts-based Duryea Motor Wagon Company was the first automaker in the United States. But it shouldn't come as a surprise that Henry Ford was the man that put America-and the world-on wheels.
Photo 2/7   |   ford Motor Company henry Ford
The Road Engine
Many modern researchers have forgotten about American patent attorney-and sometime inventor-George Seldon. On May 8, 1879, Seldon filed a patent for a four-wheeled, gas-powered vehicle he called the Road Engine. Seldon produced paper blueprints for the machine and was granted a patent in 1895 (after 16 years of revisions), yet he never built an operational vehicle. The Seldon patent meant many early American automakers had to pay Seldon a licensing fee to build autos. Henry Ford was one of the few who totally ignored the Seldon patent, claiming (and finally proving in 1911) that his vehicle used a propulsion system based on the Otto engine, and not the Brayton engine that Seldon's patent was based on. Henry Ford's court victory played a role in opening up auto manufacturing in the United States for hundreds of companies.
Born in Dearborn
Born on a Dearborn, Michigan, farm in 1863, Henry Ford displayed a talent for mechanical things. His father tolerated his dabbling but was not impressed, as he needed help on the family farm. Father and son never got along, and after the death of his mother, Henry left home and walked to Detroit. He found immediate employment at Flowers Marine and Machine Shop. As his skills progressed, he eventually found his way to the Edison Illuminating Company in 1890. Always tinkering, Henry expressed an interest in watches. He repaired and built several of his own design that incorporated multiple time zones for his friends and associates.
Photo 3/7   |   ford Motor Company henry And Edsel Ford
Ford's First Vehicle
Henry was also comfortable with steam, electric power, and the internal combustion engines of the day. When the German inventor Nicolaus Otto constructed a working model of the Otto engine, Henry was inspired to build his own version in the kitchen sink of a rented home.
Henry's first operational vehicle, the Quadricycle, was completed in 1896. To the amazement of onlookers, he cruised the neighborhoods with his creation during the day. Henry sold the first Quadricycle to fund an improved version. Despite the fact that Henry had been promoted to chief engineer of Edison Works and had met Thomas Edison personally, he left the company to pursue his automotive cravings in 1899.
Henry's first automotive business was called the Detroit Automobile Company. He relied on outside funding to get the venture going, which meant he also shared control of product planning. When the financial backers of his company wanted to mimic other high-priced cars on the market, quarrels broke out, and Henry left the organization.
FoMoCo
Henry made other manufacturing attempts, all of which followed with the same result. Finally, with much greater capital and local renown created by his racecar activities, Henry founded the Ford Motor Company on June 16, 1903 on Mack Avenue in Detroit.
Photo 4/7   |   ford Motor Company 1921 Ford Model T Truck
Ford Motor Company's first production two-cylinder vehicle was dubbed the Model A. This vehicle produced 8 hp. Almost 2,000 Model A cars were built in 1903. During this period, Ford Motor Company produced several other models in a variety of price ranges to satisfy its investors. A Model N and a luxury Model K were produced with the latter priced at $2,500. But Henry's preoccupation with low-priced platforms differed with management, only this time he was in the position to buy them out. He personally controlled 58.5 percent of Ford Motor Company stock and became president of the firm.
In spite of the Seldon patent litigation, Ford introduced the Model T in October of 1908. Because of the Model T's success, Henry sought to expand his facilities and production methods-and the modern assembly line was born. At Ford's Highland Park factory, each worker performed a single task at a quicker pace, thus driving the quantity and quality up and the cost down. In the T's first mass production year, more than 10,000 units were sold. More than 15 million Model T cars were produced during its lifetime.
Ford At War
Henry Ford was an outspoken pacifist when it came to war. But when the United States entered World War I, he immediately placed all of his factories on a war footing. His massive production of Model T ambulances, trucks, tractors, tanks, Liberty aircraft engines, and Eagle patrol boats helped the Allies end the conflict sooner. Upon the war's completion, Henry planned another expansion. Ford built its River Rouge Complex from 1917 to 1928. Upon completion, it was the largest factory in the world and is now home to Ford's Dearborn Truck Plant.
Photo 5/7   |   ford Motor Company highland Park Plant
Internal conflict developed when some shareholding suppliers (including the Dodge brothers) balked at the size and cost of the Rouge project. Henry simply bought them out as he had with other dissenters in the past. With the last of the outside shareholders gone, the company reorganized in Delaware in 1919.
Edsel Ford
Young Edsel Ford, Henry Ford's only child, was appointed president of Ford in 1919. Cash flow was an issue, and in 1921, Ford owed a cool $58 million for payment on the Rouge project. Though the financial community offered to extend Ford loans in return for a controlling interest in the company, Henry balked at the offer and placed Ford's dealer organization on a cash-paying basis for cars and parts. In addition, Henry purchased an entire railroad to further control his costs on the material transportation side.
Young Edsel, president in name only, persuaded his father to purchase the Lincoln Motor Company in 1922 for $8 million. Though the purchase agreement was troubled, the brand was developed by Edsel to become a mainstay in the luxury car field. Through Edsel's efforts, Ford also entered the aviation field when it purchased Stout Metal Airplane company in 1924. The highly popular Ford Tri-Motor aircraft was the result.
On the other side of town, General Motors introduced its new Chevrolet brand in 1926. More stylish and powerful than Ford's Model T, the Chevrolet was offered with custom colors and trim. Ford's Model T sales evaporated. Edsel and the dealer organization had to convince Henry that a radical change was necessary. The result was the highly successful Model A. Edsel was responsible for both the styling and mechanical upgrades.
Photo 6/7   |   ford Motor Company 10 Millionth Model T
In this same period, Henry decided to improve Ford's productivity by offering a $5-a-day wage, along with a five-day workweek. Employees were able to work in eight-hour shifts. Edsel took advantage of the Roaring Twenties and branched out into banking. Edsel paralleled Ford's competitors by using the Guardian National Bank of Detroit as an investment bank for Ford's monetary needs.
When the Great Depression began in 1929, Henry and Edsel assumed the financial crisis would be temporary. However, Ford's losses approached $68 million a year and nearly crippled the company. Workers' hours and pay were reduced, and the company became actively engaged in relief efforts for its employees in the form of fertilizer and crop sharing. When bank failures increased in 1933, Edsel had lost an additional $35 million in deposits and personal securities. To further add to Ford's troubles, in 1937, the UAW began an organizational push for membership in Ford plants. Henry had no time for what he considered socialism and immediately went to war with the unions.
World War II
True to form, Henry opposed America's entrance into another war. But when public opinion proved otherwise, he relented and constructed the famed Willow Run B-24 aircraft plant in Michigan. Willow Run's assembly line was three miles long, and the facility encompassed more than 3.5 million square feet of floor space. The factory produced a new B-24 every hour-roughly 14 planes a day. Ford produced other war material as well, including tanks, aircraft engines, gliders, and tires.
Photo 7/7   |   ford Motor Company ford River Rouge Complex
Edsel passed away in 1943, in essence leaving the company leaderless. Though Henry Sr. again took over the reins, it was immediately clear to the U.S. War Production Board that an immediate change in management was necessary.
Henry Ford II
At both Mrs. Fords' (Clara and Eleanor) direction, Edsel's son Henry Ford II took control of the company at age 28. What he found was shocking. The company's finances were non-existent due to Henry Ford Sr.'s distrust of accountants. Young Henry Ford II approached Ernest R. Breech from Bendix and brought on Robert S. McNamara's Whiz Kids team from the Air Force.
With fresh management in place, Ford expanded into world markets, kept a tight reign on costs, and built its reputation as a successful producer of more than 27 million automobiles and trucks. When Henry Ford Sr. died in 1947, the company remained strongly in the Ford family's control.
The '50s saw the merger of the Lincoln and Mercury brands and the successful launch of the Thunderbird and the Continental Mark II. Lincoln and Mercury became Ford's styling leaders. The '60s brought massive changes to the company in both management style and product. Philco Corporation was purchased in 1961 and added modern electronics and appliances to Ford's portfolio. The Fordson tractor series was established as an official division, and the brand expanded into the implement market. Ford's Total Performance campaign was launched by Lee Iacocca, as was the mid-1964 launch of the Ford Mustang. Ford's European operations showed accelerated profitability and were producing components for the North American market.
With the '70s came the company's return to the compact car segment with the successful launch of the Ford Maverick. Later, the Pinto and Bobcat platforms found initial success, as did the launch of the Lincoln Mark III. The Mercury Capri from Europe made a splash in the United States, but lawsuits over its gas tank placement and structure, coupled with the government's Clean Air Act caused Ford to suffer severe losses in 1980. In all, the company lost almost $4 billion by 1982.
Henry Ford II stepped down and Phillip Caldwell took over as Ford's chairman in 1980. Harold Poling was brought over from Europe to apply a new global viewpoint. The result was the success of Ford's Escort and Mercury's Lynx compact models. A new Mustang GT was launched, along with a totally revamped Thunderbird. In 1984, the Ford Taurus and Mercury Sable were introduced. These models generated the profits necessary to surpass General Motors in 1986.Ford
Diversification Challenges
Ford purchased several financial and automotive brands in the mid-'80s to help it weather the cyclical nature of the automotive business. First Nationwide Financial was brought in with the notion that it would contribute to a projected 30 percent of Ford's profits. Sperry-New Holland farm equipment, Jaguar, and Turkey's Otosan, were also added to the manufacturing base.
The early '90s brought an economic recession, and Ford lost $3.2 billion in 1991. A year later, a $7.38 billion loss was recorded. The good news was Ford had highly profitable SUV and truck platforms-more than 2.3 million units were sold. Aston Martin and Volvo brands were purchased, along with an increased stake in Mazda. By 1999, the company was the most profitable in the world, with its stock increasing in value by 130 percent between 1996 and 1999.
The Bottom Falls Out, Again
Ford decided to sell off its troubled Visteon parts and electronics unit and at the same time purchase BMW's Land Rover SUV brand. The remainder of the Hertz rental car business was also purchased. A major blow to Ford occurred when the company was involved in the recall of 13 million Firestone tires. The cost ended up being a cool $3 billion.
Ford began a major restructuring in 2002, with the elimination of 35,000 employees, the closure of five plants, and a reduction of $9 billion in costs. In addition, more non-core assets went on the sales block. Showing strong leadership, Bill Ford recruited Alan Mulally from Boeing in 2006. Crisis decisions were in order, and the company mortgaged all of its assets including its factories, equipment, office property, intellectual property (patents and trademarks), and its subsidiary percentages to raise $23.4 billion in cash. Upper management went to work cutting thousands of employees and closing departments.
The worldwide brand diversification plan was eliminated with the sale of Aston Martin, Jaguar, and Land Rover. The company's stake in Mazda was also reduced. Immediate attention was directed at Ford's North American automotive operations with the introduction of the Fusion and an all-new Taurus and Lincoln line. Quality and fuel economy were pointedly addressed with the launch of the Fusion and Mercury Milan hybrids, in addition to the established Ford Escape hybrid. The truck operations were revamped with the launch of a new Ford F-150 line, along with a new Super Duty powered by an in-house-designed and produced diesel engine.
Ford Today
In spite of the complete meltdown of the world's automotive market (due to the collapse of worldwide credit availability), Ford finds itself in the ideal position of being the only American automaker, not having to rely on government funding or control for survival. This fact alone, along with earlier financial preparation and solid management, helps the company maintain a profitable global market presence.

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