AN AMERICAN LEGEND
Ask the question, "who invented the automobile?" and a high percentage of the answers will be, "Henry Ford." This popular misconception is a tribute to the man who made the automobile possible for the millions.
Although it is generally conceded that the automobile was conceived and born in Europe, a number of American and European experimenters worked on the idea at approximately the same time in the late 1800s. Full credit can be given to Henry Ford, however, for building the automobile millions could afford. His guiding philosophy was: "I will build a motor car for the great multitude…it will be so low in price that no man…will be unable to own one." Thanks to Henry Ford's vision and zeal, the Ford Motor Company was born.
THE BEGINNING
Three giants—steel, oil and transportation—set the stage for Henry Ford and the beginning of Ford Motor Company. In 1864, a year after Ford's birth, the open-hearth process was developed and the modern age of steel began. (
The following year, the oil industry laid in the valley of the Allegheny River the first short stretch of the vast network of pipelines that would eventually fuel a parade of 75 million automobiles. In 1869, the American continent was spanned with iron rails. THE 20TH CENTURY
Ford Motor Company was launched in a small converted wagon factory in Detroit on June 16, 1903. Its assets consisted of tools, appliances, machinery, plans, specifications, blueprints, patents, a few models and $28,000 in cash supplied by 12 investors. Along with Henry Ford, the first stockholders of the infant corporation were a coal dealer, the coal dealer's bookkeeper, a banker who trusted the coal dealer, two brothers who owned the machine shop that made the engines, a carpenter, two lawyers, a clerk, the owner of a notions store and a man who made windmills and air rifles.
The first car offered for sale was described as "the most perfect machine on the market" and "so simple that a boy of 15 can run it." The first sale was made to Dr. E. Pfennig, of Chicago, who bought the car a month after the company's incorporation, much to the delight of the worried stockholders who were nervously eyeing a bank balance that had dwindled to $223.
For the next five years, young Henry Ford, first as chief engineer and later as president, directed an all-out development and production program which shifted in 1905 from the rented quarters on Detroit's Mack Avenue to a much larger building at Piquette and Beaubien streets.
A total of 1,700 cars—the early Model A's—came sputtering out of the old wagon factory during the first 15 months of operation.
Between 1903 and 1908, Henry Ford and his engineers feverishly went through 19 letters of the alphabet—from Model A to Model S. Some of these cars were experimental models that never reached the public. Some had two cylinders, some had four, and one had six; some had a chain drive and some a shaft drive; and in two the engine was placed beneath the driver's seat. Perhaps the most successful of the production cars was the Model N—a small, light, four-cylinder machine that went on the market at $500. A $2,500 six-cylinder limousine, the Model K, sold poorly.
The Model K's failure, along with Mr. Ford's insistence that the company's future lay in the production of inexpensive cars for a broad market, caused increasing friction between Mr. Ford and Alexander Malcomson, the Detroit coal dealer who had been instrumental in raising the original $28,000. As a result, Malcomson left the company and Mr. Ford acquired enough of his stock to increase his holdings to 58.5 percent. He became president in 1906, succeeding John S. Gray, a Detroit banker, on his death.
But disagreements among stockholders did not threaten the young company's future nearly as seriously as did a man named George Selden. Selden had a patent on "road locomotives" powered by internal combustion engines.
To protect his patent he formed a powerful syndicate to license selected manufacturers and to extract royalties for every "horseless carriage" built or sold in America. Hardly had the doors been opened at the Mack Avenue factory when Selden's syndicate filed suit against the Ford Motor Company, which bravely had gone into business without a Selden license.
Other, stronger, automobile companies had paid royalties rather than risk battle with the Selden syndicate. But Henry Ford was convinced that George B. Selden's patent on all road vehicles powered by internal combustion engines was invalid and should be resisted. So he and his partners fought the suit. Eight years later, in 1911, after costly and incredibly complicated court proceedings, Ford Motor Company won the battle, which freed it, as well as the entire booming automobile industry, from this threat to further development.
Meanwhile, despite harassment from Selden's syndicate, the little company flourished. Up to this time, the automobile had been a rich man's toy. But it was Henry Ford's dream to build a rugged, simple car at a price low enough for anyone to afford. That dream car was the Model T, the most famous automobile ever built. Although it ultimately sold for as low as $300 in 1920, without extras, nearly everybody liked the extras and the average price was about $400.
The Model T chugged into history on Oct. 1, 1908. Henry Ford called it the "universal car." It became the symbol of low-cost, reliable transportation that could get through when other cars stuck in the muddy roads.
The Model T won the approval of millions of Americans, who affectionately dubbed it "Tin Lizzie." The first year's production of Model T's reached 10,660, breaking all records for the industry.
By the end of 1913, Ford Motor Company was producing almost half of all the automobiles in the United States. In order to keep ahead of the demand, Ford initiated mass production in the factory. Mr. Ford reasoned that with each worker remaining in one assigned place, with one specific task to do, the automobile would take shape more quickly as it moved from section to section and countless man-hours would be saved.
To test this theory, a chassis was dragged by rope and windlass along the floor of the Highland Park, Mich. plant in the summer of 1913. Modern mass production was born! Eventually, Model T's were rolling off the assembly lines at the rate of one every 10 seconds of each working day.
Henry Ford startled the world on Jan. 5, 1914, by announcing that Ford Motor Company's minimum wage would be $5 a day—more than double the existing minimum rate. Mr. Ford felt that since it was now possible to build inexpensive cars in volume, more of them could be sold if employees could afford to buy them. Ford considered the payment of $5 for an eight-hour day the finest cost-cutting move he ever made. "I can find methods of manufacturing that will make high wages," he said. "If you cut wages, you just cut the number of your customers."
The Model T started a rural revolution. The $5 day and the philosophy behind it started a social revolution. The moving assembly line started an industrial revolution. In the 19 years the Model T was in production, 15,007,033 cars were manufactured in the United States alone. Ford Motor Company became firmly established as a giant industrial complex that spanned the globe.
During these years of feverish expansion, the company:
- Moved to a larger plant in Highland Park, Mich. (1910)
- Established the industry's first branch assembly plant, in Kansas City, Mo. (1911)
- Established new plants in Philadelphia, Minneapolis, Long Island City and Buffalo to keep up with demand for cars (1913)
- Began producing trucks and tractors (1917)
- Began construction of the giant Rouge complex in Dearborn, Mich. (1917)
- Mass-produced the "Eagle" boats, famous World War I submarine chasers (1918)
- Became wholly owned by Henry Ford and his son, Edsel, who succeeded his father as president (1919)
- Bought the Lincoln Motor Company (1922)
By 1927, time had run out on the Model T. Improved but basically unchanged for so many years, it was losing ground to the more stylish, more powerful machines being offered by Ford's competitors. On May 31, Ford plants across the country closed for six months to retool for the new Model A.
The Model A was a vastly improved car in every respect. Close to 4,500,000 of them in several body styles and a wide variety of colors, rolled onto the nation's highways between late 1927 and 1931.
But the Model A was finally pushed aside by a consumer demand for even more luxury and power. Ford Motor Company was ready with plenty of both in its next entry—its first V-8 which was introduced to the public on March 31, 1932. Ford was the first company in history to cast the V-8 block in one piece and produce it in volume. Experts told Mr. Ford it couldn't be done. It was many years before Ford's competitors learned how to mass-produce a reliable V-8. In the meantime, the Ford car and its powerful engine became a favorite of performance-minded Americans.
Civilian car production came to a sudden halt in 1942 when it became necessary for the company to throw all of its resources into the war effort. Initiated by Edsel Ford, the giant wartime program produced 8,685 four-engined B-24 "Liberator" bombers, 57,851 aircraft engines, 277,896 jeeps and 2,718 tanks and tank destroyers in less than four years. Edsel Ford died in 1943, just as his program was reaching its maximum efficiency. A saddened, older Henry Ford resumed the presidency until the end of World War II when he resigned for the second time. His oldest grandson, Henry Ford II, became president on Sept. 24, 1945. He would serve as chairman of the board from July 13, 1960 until March 13, 1980, and remained chairman of the Finance Committee until his death in 1987.
Even as Henry Ford II drove the industry's first postwar car off the assembly line, he was making plans to reorganize and decentralize the company.
Losing money at the rate of several million dollars a month, Ford Motor Company was in critically poor condition to resume its prewar position as a major force in the fiercely competitive auto industry. Much the same as his grandfather faced the problems of the company's beginning, young Henry Ford II tackled the job of building an automobile company all over again.
Having finally relinquished the company's operation to his grandson, Mr. Ford lived quietly with his wife, Clara, at their estate, "Fair Lane," in Dearborn until his death on April 7, 1947, at the age of 83.
Soon after his death, his two younger grandsons, Benson and William Clay, assumed greater responsibilities with the company.
In 1948, all the major automotive companies presented the public with dramatic changes in their latest offerings. After three years of restyled '42 vehicles, a prosperous postwar America was ready for a design revolution in the car industry. On June 8, 1948, the 1949 Ford was introduced with much fanfare at the New York Waldorf Astoria. The sleek, smooth-sided '49 Ford featured independent front suspension, and new rear quarter windows that opened. The integration of body and fenders was an innovation that set the standard for the future of automotive design. The '49 Ford gave Ford Motor Company the momentum it needed and Ford sold approximately 807,000 cars bringing profits up to $177 million from $94 million in the previous year. This marked the highest volume of vehicles sold since 1929.
DIVERSIFICATION OVER THE YEARS
Henry Ford II's postwar reorganization program rapidly restored the company's health and launched it on an expansion program which resulted in 44 manufacturing plants, 18 assembly plants, 32 parts depots, two huge proving grounds and 13 engineering and research facilities in the United States. Besides substantially increasing Ford's vehicle production facilities, this program established company diversification into areas such as financing, insurance, parts and service, electronics, glass, aerospace and car rental.
Today, in addition to producing the Ford, Mercury, Lincoln, Mazda and Premier Automotive brands (Aston Martin, Jaguar, Volvo, Land Rover), the company retains an interest in financing (Ford Credit), parts and service (Ford Customer Service Division), and car rental (Hertz).
Ford Credit, a wholly owned subsidiary of Ford Motor Company, is the largest company in the world dedicated to automotive finance. With more than 10 million customers in 38 countries it has a diverse workforce of nearly 20,000 employees. It also serves the financing needs of more than 12,500 dealers with wholesale, capital and mortgage loans. Ford Credit is a leader in customer satisfaction and loyalty, having earned more customer and dealer satisfaction awards from J. D. Power than any other captive auto finance provider. Ford Financial Services was formed in October 1987 to provide a stable source of earnings to counterbalance the company's automotive business while focusing on the needs of customers.
Hertz, an indirect, wholly-owned Ford subsidiary is the world's largest car rental business.
Ford has operations in more than 140 countries in approximately 7,000 worldwide locations serving many commercial accounts including numerous Fortune 500 companies, as well as millions of individual customers worldwide. During the year 2001, Hertz claimed $4.9 billion in revenue [77% from the U.S. alone].
SUCCESS STORIES
THUNDERBIRD
No history of Ford Motor Company would be complete without a mention of the amazing public reception of the company's little sports car: the Ford Thunderbird. Under the leadership of a man named Lewis D. Crusoe that the Ford Thunderbird was born in 1955. The 1955 Thunderbird made its first public appearance in dealer showrooms on Oct. 22, 1954 with a selling price of $2,695, although delivery prices ranged from $3,000 to $4,000. The public went for the Thunderbird in a big way, placing more than 3,500 orders in the first 10-day selling period. In the years that followed, the Thunderbird underwent many design changes mainly driven by marketing research.
In the early 70's, Thunderbird had become so popular that the famed department store Neiman Marcus offered "His and Her" Thunderbirds in its catalog, which lists "gifts for the person who has everything." The twin T-Birds were equipped with phones, tape recorders and other special equipment, and carried a price tag of $25,000 for the pair. The '80s and the '90s saw an even different Thunderbird with the "aero-style" look that would lead the company and the industry in a new direction.
Thunderbird appeared on the race circuit in 1959 and burst onto the NASCAR circuit in 1982 and went on to win more than 150 races in NASCAR's top division.
As the 20th century drew to a close, customer's tastes shifted away from Thunderbird. Continuing sales declines led Ford to announce that the 1997 model would be the last – for a time. Then on Jan. 3, 1999, the company unveiled a new two-seater Thunderbird concept car at the 1999 North American International Auto Show in Detroit. In May of 2000, the company confirmed that it would build a production version of the hit concept car as a 2002 model year.Today the Thunderbird truly stands alone on the road. There's no other car like it. Since its public introduction in January 2001, Thunderbird sales have been consistent, steadily keeping pace with production.
MUSTANG
The focus of the 1960s was on youth. A young President John F. Kennedy led an economically healthy, upbeat America. Ford Motor Company recognized a strong market demand for an inexpensive sporty new vehicle targeted to the young buyer. Lee Iacocca, then the general manager of the Ford Division, sold the startling new concept to Henry Ford II and a skeptical finance department. Start-up costs were reduced due to the incorporation of the existing Falcon engine, transmission and axle. The Mustang exploded onto the scene in a 1964 introduction that drew many people to showrooms across the country. Such intense interest in a Ford car hadn't been witnessed since the introduction of the Model A. The sharp, four-seat 1965 Mustang became the "darling" of America. The "love affair" brought about the sale of 100,000 Mustangs in the first 100 days. Total sales for the year reached 418,812, far exceeding the 100,000 projected by market research.
The Ford Mustang has been part of the American scene for almost 40 years. It continues today to appeal to audiences of all ages.
TAURUS AND SABLE
Another Ford Motor Company success story followed the recession of the early 1980s. Skyrocketing gas prices and declining car sales prompted Ford to create a vehicle both fuel-efficient and designed radically different. The goal was to produce a world-class leader in the middle to upper middle market segment. The result was the Ford Taurus and Mercury Sable. These automobiles set the stage for future aerodynamic design trends in the auto industry, and embodied a new commitment to quality throughout the ranks at Ford.
At a time when Ford's losses were staggering, the $3 billion gamble on the Taurus' success represented dramatic decision-making. No one was certain how the public would respond to a daring new look. Ford took the risk. Team Taurus was established with the objective of achieving perfection in every detail. With support from top management, the team members were uncompromising in their commitment.
The effort paid off in a big way. Taurus' introduction was postponed — to Dec. 26, 1985 — when the team discovered that quality was not up to its rigorous standards.
As it turned out, even the busy holiday season and cold weather didn't hamper the late arrival. The Taurus was named 1986 Car of the Year. It reigned as the best-selling car in the U.S. from 1992 to 1996.
Ford's product innovation continued into the next decade, with 1993s debut of the Ford Mondeo, European "Car of the Year" and the first of Ford's family-size world cars, and the redesigned 1994 Mustang. Also new for 1994 was the Ford Windstar minivan. The Ford Contour and Mercury Mystique, North American versions of the Mondeo, outsold their nearest Japanese competitor by 88,000 units in the 1995 calendar year. A redesigned F-Series pickup and the new Fiesta and Galaxy minivans in Europe also were introduced. FORD TRUCKS – F-SERIES
With the end of World War II in 1945, America's automobile assembly lines resumed civilian production. Americans, most of who were not allowed to buy vehicles for the war's duration, needed new cars and trucks. On Jan. 16, 1948, Ford Motor Company publicly introduced the first of what was to become the most successful vehicle line in automotive history, the F-Series pickup truck.
In 1995, F-Series surpassed the Volkswagen Beetle as the world's best-selling nameplate – car or truck – in history. In North America, F-Series trucks have been the top selling vehicles for 20 consecutive years; and the best selling cars for 25 years. SUCCESSION AT FORD
On Jan. 1, 1999, William Clay Ford Jr., the great-grandson of Henry Ford, took office as the Chairman of the Board of Directors, with Jacques Nasser assuming the position of CEO. Then on October 30, 2001, William Clay Ford Jr. was named CEO of the company. In his new role, Mr. Ford is leading the company in a back-to-basics improvement program, concentrating on the fundamentals that made it great. In January, Ford senior management announced a revitalization plan that focuses on product, emphasizes cost reduction and positions the company for greater profitability.
THE 21st CENTURY
To an earlier generation of Americans, Ford Motor Company was Henry Ford and the Model T. Today Ford is the world's largest producer of trucks, and the second largest producer of cars and trucks combined. We sell more than 80 different vehicles worldwide marketed under the Ford, Lincoln, Mercury, Jaguar, Aston Martin, Volvo Car, Land Rover and Mazda brands [Ford has a 34% equity interest in Mazda Motor Corporation]. Ford's service brands include financial (Ford Motor Credit Company, incorporated in 1959), Automotive Consumer Service (QualityCare, Motorcraft) and car rental (Hertz Corp.) and more.
Ford Motor Company was only a year old when it inaugurated its foreign expansion program in 1904 with the opening of a modest plant in Walkerville, Ontario, named Ford Motor Company of Canada, Ltd.
Today, Ford has manufacturing facilities in 24 countries on six continents. Manufacturing employment is approximately two-thirds of the over 350,000 people employed at Ford. During 2001, Ford sold 6, 991 million vehicles worldwide. Total revenue for the year came to $162,412 million.
As Ford celebrates its centennial in 2003 and the automotive industry begins its second century, Henry Ford's remarkable achievement is underscored. Through years of prosperity and hardship, through war and peace, Ford Motor Company grew from one man, a small garage and a quadricycle, to a mighty American force contributing to international economic stability. In his March 14 letter to the Ford Motor Company shareholders, William Clay Ford Jr. discussed his vision for the future:
"Ford is a great company with an incredible heritage. Next year we celebrate our centennial. In our case, looking back is not a way to retreat into the past, but a way to prepare for the future.
We have learned a lot in the last 100 years.
We've learned that innovative, breakthrough products are what make us successful.
We know that we have a special relationship with the people whose lives we touch, including our employees, dealers, suppliers and customers. We have learned how to survive and prosper in a fiercely competitive industry, and how to bounce back from difficult circumstances. We are committed to being a good corporate citizen, and being open and honest with all of our stakeholders.
We will use all of these lessons to build an even greater legacy in the 21st century. We are looking forward and moving forward.
Ford has been dedicated to bringing the finest products to market, and at the same time keeping in mind the principles of global social responsibility and corporate citizenship. Enlightened corporations understand that environmental and social concerns are business issues. Ford plans on playing an even greater role in helping to solve many of the daunting issues facing today's society.
The Ford story, in a sense, is the story of an American Legend. The company has strong financial resources, excellent people, outstanding products and services, a compelling vision and enduring values. Ford makes customers the foundation of everything they do, and superior shareholder returns are the ultimate measure of its success.
Nearly 100 years ago, Henry Ford came up with an idea to make a better world by providing affordable personal mobility for everyone. And, as we approach the start of our next 100 years, those values are stronger than ever at Ford Motor Company.