Ford Automates: Technology and Organization in Theory and Practice
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Ford Automates: Technology and Organization in Theory and Practice David A. Hounshell • CarnegieMellon University Manufacturingis the heartof a manufacturingcompany. A troubledmanufacturing companyinvariably requires significant improvements in the managementof this activity. Most of the key aspectsof manufacturingare of a professionalnature. The manufacturingorganization's key executivesmust be well educated and have broad experience.A manufacturingorganization led and primarilystaffed by men who worked theirway up from the shopfloor is inappropriatetoday. If this is the case,it may be oneof the company'sproblems. EugeneF. Finkin, SuccessfulCorporate Turnarounds (1987), p. 91 The Rouge in 1945 was very confused. The deteriorationsince he had left was shocking."Ford wasa gonegoose." The Bennett-Rauschgroup had just aboutwrecked the place. Few wantedto have anythingto do with the situationin the Rouge. No one knew who reportedto whom; the linesof authoritywere indistinct. If Willow Run hadbeen badly administered,the Rougewas in far worseshape. Noteson Interviewwith CharlesPatterson, Vice President,Ford Motor Company, November 13, 1959, as recordedby F.E. Hill and M. Wilkins, Ford Archives By the late 1940s,the U.S. autoindustry had adopted the structureand strategyit wouldpursue for nearly40 years.Well-defined tasks eased the burdenof automating,since a dedicatedmachine could be assignedto eachspecial task. This policyled to inflexible automation,so that by the 1960s,even a smallchange in thedimensions of an enginewould requiremillions of dollarsfor new tooling. Michael L. Dertouzoset al., eds., Made in America: Regainingthe Productive Edge (1989), pp. 176-177 The centralproblem I wishto addressin this paperis the reorganizationof the Ford Motor Companyafter 1945 andthe developmentof Ford's automation program.By all accounts,Ford Motor Companyhovered near organizational and •Thispaper draws heavily on myextensive article on the Ford Motor Company's Cleveland EnginePlant, which is citedin the bibliography.My focushere is on organizationalissues, a subjectI barelytouched in my article. BUSINESS AND ECONOMIC HISTORY, Volume twenty-four,no. 1, Fall 1995. Copyright¸1995 by the BusinessHistory Conference. ISSN 0849-6825. 59 60 technologicalcollapse in 1945. Yet whenproduction began six yearslater at its newCleveland Engine Plant, the company was hailed as the pioneer of automation, the leaderof the new waveof productiontechnology that sweptthrough American manufacturingin the 1950s [2; 13]. For a brief period,Ford's top executivesand its publicrelations department touted automation as a revolutionarydevelopment in Americanmanufacturing that would soon give rise to the workerlessfactory [16]. Fear of automationspread quickly throughoutthe ranks of Ford's production workersand, more generally, the American workforce. Perceived as a majorthreat to the livelihoodsof Americanworkers, the developmentof automationled to two congressionalinquiries, the first in 1955 [26] andthe secondin 1960 [27], andto intensediscussion at all levelsof Americansociety. By the time of the first series of hearings,the Ford Motor Companyhad abandonedits revolutionaryrhetoric aboutautomation, but it embracedthe newtechnology even more firmly in spiteof already-apparentproblems of inflexibility. Since 1948, owing in part to its substantialinvestment in automation,the companyhad reversedits downward course,had recovered a significantshare of the U.S. automobilemarket, and had returnedhandsome profits to its owners. (SeeFigure 1.) How did Ford movefrom beingperceived as a companyin which rigor mortis had already set in to one perceivedas the leader of a revolutionary, productivenew technologyin sucha shortspan of time? Given thatFord Motor Companywas consciouslyreorganized after 1945 by applyingthe management principlesof GeneralMotors--especially those involving decentralization--how did Ford wind up with a productionsystem that was in many waysmore Fordist than in the glory daysof Henry Ford? The storyof the long,steady decline of theFord Motor Companyfrom the peakof the 1920sto thedramatic succession of HertryFord II, grandsonof theelder Ford, has beenmasterfully told by the teamof historiansassembled under Allan Nevins. The third volumeof this monumentalhistory of Ford Motor Company, whichappeared in 1962, chroniclesthe "rebirth"of the firm underthe leadership of Henry Ford II andthe mentorhe recruitedfrom GeneralMotors, ErnestBreech [21]. As this studymakes clear, the reorganizationof Ford Motor Companywas carriedout usingblueprints from GeneralMotors, at thattime, the largestand most successcorporation in the world. The architectsof this reorganizationwere by no meansnovices at readingand understandingthese blueprints. A largenumber of them were seasoned executives from General Motors, and the remainder of the reorganizationteam were taughtabout General Motors throughPeter Drucker's now-classic1946 book, The Conceptof the Corporation,which reified General Motors,its organizationalstructure, and its managerialprinciples [7]. Ford: Decline and Rebirth articulatesclearly how the GeneralMotors modelwas brought to Ford andhow it waspromoted within the company. Yet it is lessdirect in statinghow difficult applyingthe GeneralMotors modelto Ford provedto be. In fact, the authorsprovide little or no indicationof the struggle wagedwithin Ford over how far the companywould go in recreatingitself in the imageof GeneralMotors. Perhapsthey wereunaware of the struggle,or perhaps theysaw it asbeing peripheral to theirinterpretation. But my research suggests that thestruggle was more than academic. The debatewent well beyondthe theory of themodern corporation. It movedvery quickly to thevery heart of theFord Motor Company--toFord's system of production,its in-place assets, its ingrainedpatterns of thought,and its organizational routines. Even before what became the Cleveland 61 EnginePlant was authorized,how Ford would produceengines became a central focusfor debateover the degreeto whichFord wouldemulate General Motors. The company'sdecision to buildthe Cleveland Engine Plant constituted the end of the debate.The old order--theFordist ideal, not old Ford managers--triumphed.The companycommitted itself moredeeply to the principlesof massproduction and centralizedcontrol of productionthan ever before. FIGURE 1 FORD'S SHARE OF THE U.S. AUTOMOBILE MARKET Per Cent PassengerVehicles 45 40 30 25 WAR 20 YEARS 10 SOURCE.'Ford Motor Company Annual Reports, 1947, 1954. 62 The dominanttheory of decentralizedmanagement to whichmany of thetop managersrecruited from General Motors clung centeredon the existenceof divisionsand the principle of divisionalautonomy [7; 4]. Whenthey looked at Ford MotorCompany, they saw only a tiny hintof divisionalization.Even before Ernest Breecharrived at Ford Motor Company,Henry Ford II had takena steptoward decentralizationby creatinga distinctLincoln-Mercury Division nominallyin chargeof its own development,manufacturing, and marketing. (See Figure 2.) Here emphasismust be placedon the word "nominally"because such conditions existedmainly in theoryand not in practice. FIGURE 2 FORD MOTOR COMPANY ORGANIZATION, AUGUST 1946 DirectorsBoardof I President I ExecutiveV.P, I PolicyCommittee OperatthgDivisions I Staff Divisions j - - etc. Mfg SOURCE: Adaptedfrom Report of ManagementMeeting, May 1947. Whenthey considered the future of the FordMotor Company,the GM men envisageda multi-divisionalfirm that mightlook like the following. It would consist of at least four automobile divisions: a new one that would manufacture and sell a light, fuel-efficientvehicle comparable to Europeanautomobiles; a Ford Divisionthat would manufacture and market a car calleda Ford that corresponded to the typeof car alreadymade by the company:a MercuryDivision that would manufactureand market a hotter,perhaps larger, and certainly more expensive car than the Ford Division; and a Lincoln Division that would make and market a 63 luxurycar that could compete head-to-head with GM's Cadillac. In the future, Ford MotorCompany might add another division such that the company could have completecoverage of themarket--a "car for everypurse and purpose" in the immortalwords of GM's AlfredSloan. (See Figure 3.) Thiswas the theory held bythe GM guysand toward which they fervently worked. FIGURE 3 THE "GM PLAN" FOR FORD MOTOR COMPANY, C.1946-1948 DirectorsBoardof I President I ExecutiveV.P. I PolicyCommittee OperatingDivisions Staff Divisions SOURCE: Author'sInterpretation of FordExecutives' Discussions on Organization,1946-1948. Realitysoon got in theway of theory,however. First, unlike General Motors,Ford Motor Company was not a organizationthat had been built out of a looseassemblage of acquisitions. Ford was the manifestation of a dominant idea of producinga solid, low-cost automobile [15]. Nowherewas this ideal better exemplifiedthan in thecompany's River Rouge plant. With the exceptions of regionalassembly plants and some Lincoln operations, virtually everything that the FordMotor Company made was produced at the Rouge. The scaleof and investmentinthe Rouge proved to be too big to ignore; the Rouge loomed so large 64 in thecompany's operations as to makealternatives to it difficult,if not impossible, to conceive. Second, although some executives were attracted to the idea of the company'smanufacturing a light vehicleand establishingan autonomouslight vehicledivision, as time passed, the forces against the lightcar gained ground. By 1949,the idea was dead. With onedivision down, the