My Life and Work by Henry Ford , Last annotated on August 20, 2015
INTRODUCTION WHAT IS THE IDEA?
Power and machinery, money and goods, are useful only as they set us free to live.
Most of the present acute troubles of the world arise out of taking on new ideas without first carefully investigating to discover if they are good ideas. An idea is not necessarily good because it is old, or necessarily bad because it is new, but if an old idea works, then the weight of the evidence is all in its favor. Almost any one can think up an idea. The thing that counts is developing it into a practical product.
The natural thing to do is to work—to recognize that prosperity and happiness can be obtained only through honest effort.
We have two kinds of reformers. Both are nuisances. The man who calls himself a reformer wants to smash things. He is the sort of man who would tear up a whole shirt because the collar button did not fit the buttonhole.
Experience and reform do not go together. The other holds the world as so good that it might well be let stand as it is – and decay.
Freedom is the right to work a decent length of time and to get a decent living for doing so; to be able to arrange the little personal details of one's own life. The slogan of "less government in business and more business in government" is a very good one, not mainly on account of business or government, but on account of the people. We cannot live without business and we cannot live without government. Business and government are necessary as servants, like water and grain.
Being greedy for money is the surest way not to get it, but when one serves for the sake of service—for the satisfaction of doing that which one believes to be right—then money abundantly takes care of itself.
My effort is in the direction of simplicity. Real simplicity means that which gives the very best service and is the most convenient in use. The big thing is the product, and any hurry in getting into fabrication before designs are completed is just so much waste time. We have worked out a substitute. All our steels are special, but for every one of them we have at least one, and sometimes several, fully proved and tested substitutes. But also we aim to make some of every part so that we cannot be caught in any market emergency or be crippled by some outside manufacturer being unable to fill his orders. So if we want to work why not concentrate on the work and do it in the quickest possible fashion?
For any one to be required to use more force than is absolutely necessary for the job in hand is waste. The essence of my idea then is that waste and greed block the delivery of true service. Both waste and greed are unnecessary. Waste is due largely to not understanding what one does, or being careless in doing of it. Greed is merely a species of nearsightedness.
The institution that we have erected is performing a service. The principles of that service are these:
1. An absence of fear of the future and of veneration for the past. There is no disgrace in honest failure; there is disgrace in fearing to fail. What is past is useful only as it suggests ways and means for progress.
2. A disregard of competition. Whoever does a thing best ought to be the one to do it.
3. The putting of service before profit. Without a profit, business cannot extend. There is nothing inherently wrong about making a profit. It cannot be the basis—it must be the result of service.
4. Manufacturing is not buying low and selling high. It is the process of buying materials fairly and, with the smallest possible addition of cost, transforming those materials into a consumable product and giving it to the consumer.
CHAPTER I THE BEGINNING OF BUSINESS
given a good idea to start with, it is better to concentrate on perfecting it than to hunt around for a new idea. That is the way with wise people—they are so wise and practical that they always know to a dot just why something cannot be done; they always know the limitations.
That is why I never employ an expert in full bloom. If ever I wanted to kill opposition by unfair means I would endow the opposition with experts. They would have so much good advice that I could be sure they would do little work. Many inventors fail because they do not distinguish between planning and experimenting.
CHAPTER II WHAT I LEARNED ABOUT BUSINESS
I had built the car not to sell but only to experiment with. I had to choose between my job and my automobile. I chose the automobile. There was no "demand" for automobiles—there never is for a new article. I resigned, determined never again to put myself under orders.
That was my first race, and it brought advertising of the only kind that people cared to read. The most surprising feature of business as it was conducted was the large attention given to finance and the small attention to service.
The second feature was the general indifference to better methods of manufacture as long as whatever was done got by and took the money. If there are no earnings then that is a signal to the owner that he is wasting his time and does not belong in that business. I have never found it necessary to change those ideas, but I discovered that this simple formula of doing good work and getting paid for it was supposed to be slow for modern business.
Therefore they say that a proper charge against the operating expenses of a business is the interest on this money. This idea is at the root of many business failures and most service failures. Money is not worth a particular amount. As money it is not worth anything, for it will do nothing of itself. The only use of money is to buy tools to work with or the product of tools. Therefore money is worth what it will help you to produce or buy and no more. If a man thinks that his money will earn 5 per cent, or 6 per cent, he ought to place it where he can get that return, but money placed in a business is not a charge on the business—or, rather, should not be. It ceases to be money and becomes, or should become, an engine of production, and it is therefore worth what it produces—and not a fixed sum according to some scale that has no bearing upon the particular business in which the money has been placed. Any return should come after it has produced, not before.
if there were no way to get started in the kind of business that I thought could be managed in the interest of the public, then I simply would not get started at all. There was something more than a tendency in the early days of the automobile to regard the selling of a machine as the real accomplishment and that thereafter it did not matter what happened to the buyer. That is the shortsighted salesman-on-commission attitude. In the success of the Ford car the early provision of service was an outstanding element.
Everything is in flux, and was meant to be. Life flows. We may live at the same number of the street, but it is never the same man who lives there. So many men are afraid of being considered fools. It was the cause of low wages—for without well-directed work high wages cannot be paid. And if the whole attention is not given to the work it cannot be well directed. Leisure and work bring different results. If a man wants leisure and gets it—then he has no cause to complain. But he cannot have both leisure and the results of work.
CHAPTER III STARTING THE REAL BUSINESS
Making "to order" instead of making in volume is, I suppose, a habit, a tradition, that has descended from the old handicraft days. Ask a hundred people how they want a particular article made. About eighty will not know; they will leave it to you. Fifteen will think that they must say something, while five will really have preferences and reasons. The ninety-five, made up of those who do not know and admit it and the fifteen who do not know but do not admit it, constitute the real market for any product. The five who want something special may or may not be able to pay the price for special work. If they have the price, they can get the work, but they constitute a special and limited market. Of the ninety-five perhaps ten or fifteen will pay a price for quality. Of those remaining, a number will buy solely on price and without regard to quality. Their numbers are thinning with each day. Buyers are learning how to buy. The majority will consider quality and buy the biggest dollar's worth of quality.
Standardization (to use the word as I understand it) is not just taking one's best selling article and concentrating on it. It is planning day and night and probably for years, first on something which will best suit the public and then on how it should be made. The exact processes of manufacturing will develop of themselves. Then, if we shift the manufacturing from the profit to the service basis, we shall have a real business in which the profits will be all that any one could desire.
The "999" did what it was intended to do: It advertised the fact that I could build a fast motorcar. A week after the race I formed the Ford Motor Company.
It would make no difference whether one company or one individual owned all the factories fabricating the component parts of a single product, or whether such part were made in our independently owned factory, if only all adopted the same service methods. If we can buy as good a part as we can make ourselves and the supply is ample and the price right, we do not attempt to make it ourselves—or, at any rate, to make more than an emergency supply. In fact, it might be better to have the ownership widely scattered.
The car that I designed was lighter than any car that had yet been made. It would have been lighter if I had known how to make it so—later I got the materials to make the lighter car.
Since the first year we have practically always had plenty of money. We sold for cash, we did not borrow money, and we sold directly to the purchaser. We had no bad debts and we kept within ourselves on every move. I have always kept well within my resources.
We eventually appointed agents, selecting the very best men we could find, and then paying to them a salary larger than they could possibly earn in business for themselves.
CHAPTER IV THE SECRET OF MANUFACTURING AND SERVING
We, for the first time I think, in the history of any large construction, determined scientifically the exact quality of the steel. As a result we then selected twenty different types of steel for the various steel parts.
The universal car had to have these attributes:
(1) Quality in material to give service in use.
(2) Simplicity in operation—because the masses are not mechanics.
(3) Power in sufficient quantity.
(4) Absolute reliability—because of the varied uses to which the cars would be put and the variety of roads over which they would travel.
(6) Control—to hold its speed always in hand, calmly and safely meeting every emergency and contingency either in the crowded streets of the city or on dangerous roads.
(7) The more a motor car weighs, naturally the more fuel and lubricants are used in the driving; the lighter the weight, the lighter the expense of operation.
"Model T." : Simplicity. There were but four constructional units in the car—the power plant, the frame, the front axle, and the rear axle. All of these were easily accessible and they were designed so that no special skill would be required for their repair or replacement. it ought to be possible to have parts so simple and so inexpensive that the menace of expensive hand repair work would be entirely eliminated. The parts could be made so cheaply that it would be less expensive to buy new ones than to have old ones repaired. They could be carried in hardware shops just as nails or bolts are carried. I thought that it was up to me as the designer to make the car so completely simple that no one could fail to understand it.
There is a tendency to keep monkeying with styles and to spoil a good thing by changing it. "Any customer can have a car painted any colour that he wants so long as it is black."
The average number of employees from 1,908 to 4,110, and the cars built from a little over six thousand to nearly thirty-five thousand. You will note that men were not employed in proportion to the output.
CHAPTER V GETTING INTO PRODUCTION
If a device would save in time just 10 per cent. or increase results 10 per cent., then its absence is always a 10 per cent. tax. If the time of a person is worth fifty cents an hour, a 10 per cent. saving is worth five cents an hour.
If the owner of a skyscraper could increase his income 10 per cent., he would willingly pay half the increase just to know how.
It is the product that pays the wages and it is the management that arranges the production so that the product may pay the wages.
we have skilled mechanics in plenty, they do not produce automobiles—they make it easy for others to produce them. Our skilled men are the tool makers, the experimental workmen, the machinists, and the pattern makers.
The first step forward in assembly came when we began taking the work to the men instead of the men to the work. We now have two general principles in all operations—that a man shall never have to take more than one step, if possibly it can be avoided, and that no man need ever stoop over. The principles of assembly are these:
(1) Place the tools and the men in the sequence of the operation so that each component part shall travel the least possible distance while in the process of finishing.
(2) Use work slides or some other form of carrier so that when a workman completes his operation, he drops the part always in the same place—which place must always be the most convenient place to his hand—and if possible have gravity carry the part to the next workman for his operation.
(3) Use sliding assembling lines by which the parts to be assembled are delivered at convenient distances.
The net result of the application of these principles is the reduction of the necessity for thought on the part of the worker and the reduction of his movements to a minimum.
In short, the result is this: by the aid of scientific study one man is now able to do somewhat more than four did only a comparatively few years ago. Every piece of work in the shops moves; it may move on hooks on overhead chains going to assembly in the exact order in which the parts are required; it may travel on a moving platform, or it may go by gravity, but the point is that there is no lifting or trucking of anything other than materials. No workman has anything to do with moving or lifting anything. That is all in a separate department—the department of transportation. As the factory is now organized each department makes only a single part or assembles a part. We actually changed from making automobiles to making parts. Highly standardized, highly subdivided industry need no longer become concentrated in large plants with all the inconveniences of transportation and housing that hamper large plants.
None of our men are "experts." We have most unfortunately found it necessary to get rid of a man as soon as he thinks himself an expert—because no one ever considers himself expert if he really knows his job. Now we have about five per cent. of thoroughly skilled moulders and core setters, but the remaining 95 per cent. are unskilled, or to put it more accurately, must be skilled in exactly one operation which the most stupid man can learn within two days.
In the Piquette plant the cylinder casting traveled four thousand feet in the course of finishing; now it travels only slightly over three hundred feet.
CHAPTER VI MACHINES AND MEN
It takes about six weeks for the message of a man living in a berry on the lower left-hand corner of the chart to reach the president or chairman of the board, and if it ever does reach one of these august officials, it has by that time gathered to itself about a pound of criticisms, suggestions, and comments.
Now a business, in my way of thinking, is not a machine. It is a collection of people who are brought together to do work and not to write letters to one another. It is not necessary for any one department to know what any other department is doing. If a man is doing his work he will not have time to take up any other work. It is the business of those who plan the entire work to see that all of the departments are working properly toward the same end. It is not necessary to have meetings to establish good feeling between individuals or departments. It is not necessary for people to love each other in order to work together. Too much good fellowship may indeed be a very bad thing, for it may lead to one man trying to cover up the faults of another. That is bad for both men.
The sole object ought to be to get the work done and to get paid for it. And so the Ford factories and enterprises have no organization, no specific duties attaching to any position, no line of succession or of authority, very few titles, and no conferences. We have only the clerical help that is absolutely required; we have no elaborate records of any kind, and consequently no red tape.
We make the individual responsibility complete. The workman is absolutely responsible for his work. The straw boss is responsible for the workmen under him. The foreman is responsible for his group. The department head is responsible for the department. The general superintendent is responsible for the whole factory. Every man has to know what is going on in his sphere. I say "general superintendent." There is no such formal title. One man is in charge of the factory and has been for years. He has two men with him, who, without in any way having their duties defined, have taken particular sections of the work to themselves. With them are about half a dozen other men in the nature of assistants, but without specific duties. They have all made jobs for themselves—but there are no limits to their jobs. They just work in where they best fit. One man chases stock and shortages. Another has grabbed inspection, and so on.
This may seem haphazard, but it is not. A group of men, wholly intent upon getting work done, have no difficulty in seeing that the work is done. They do not get into trouble about the limits of authority, because they are not thinking of titles. If they had offices and all that, they would shortly be giving up their time to office work and to wondering why did they not have a better office than some other fellow.
Because there are no titles and no limits of authority, there is no question of red tape or going over a man's head. Any workman can go to anybody, and so established has become this custom, that a foreman does not get sore if a workman goes over him and directly to the head of the factory. The workman rarely ever does so, because a foreman knows as well as he knows his own name that if he has been unjust it will be very quickly found out, and he shall no longer be a foreman. One of the things that we will not tolerate is injustice of any kind. The moment a man starts to swell with authority he is discovered, and he goes out, or goes back to a machine.
The work and the work alone controls us. That is one of the reasons why we have no titles. Most men can swing a job, but they are floored by a title. The effect of a title is very peculiar. It has been used too much as a sign of emancipation from work.
There is perhaps no greater single source of personal dissatisfaction among men than the fact that the title-bearers are not always the real leaders. Everybody acknowledges a real leader—a man who is fit to plan and command. And when you find a real leader who bears a title, you will have to inquire of someone else what his title is. He doesn't boast about it.
The health of every organization depends on every member—whatever his place—feeling that everything that happens to come to his notice relating to the welfare of the business is his own job. Abolish the titles. A few may be legally necessary; a few may be useful in directing the public how to do business with the concern, but for the rest the best rule is simple: "Get rid of them." And when a man is really at work, he needs no title. His work honours him.
All of our people come into the factory or the offices through the employment departments. As I have said, we do not hire experts—neither do we hire men on past experiences or for any position other than the lowest. Since we do not take a man on his past history, we do not refuse him because of his past history. I never met a man who was thoroughly bad. There is always some good in him—if he gets a chance. That is the reason we do not care in the least about a man's antecedents—we do not hire a man's history, we hire the man.
All that he needs is the desire to work. If he does not desire to work, it is very unlikely that he will apply for a position, for it is pretty well understood that a man in the Ford plant works. With us every man is fairly certain to get the exact recognition he deserves. This habit of making the work secondary and the recognition primary is unfair to the work. It makes recognition and credit the real job. And this also has an unfortunate effect on the worker.
It is particularly easy for any man who never knows it all to go forward to a higher position with us. Some men will work hard but they do not possess the capacity to think and especially to think quickly. Such men get as far as their ability deserves. A man may, by his industry, deserve advancement, but it cannot be possibly given him unless he also has a certain element of leadership.
We have no cut-and-dried places—our best men make their places. This is easy enough to do, for there is always work, and when you think of getting the work done instead of finding a title to fit a man who wants to be promoted, then there is no difficulty about promotion. The promotion itself is not formal; the man simply finds himself doing something other than what he was doing and getting more money.
Everything that we have developed has been done by men who have qualified themselves with us. If we have a tradition it is this: Everything can always be done better than it is being done. A considerable part of the incentive to better methods is directly traceable to this simple rule-of-thumb method of rating production. The foreman need not be a cost accountant—he is no better a foreman for being one. His charges are the machines and the human beings in his department. When they are working at their best he has performed his service. The rate of his production is his guide. There is no reason for him to scatter his energies over collateral subjects.
But the vast majority of men want to stay put. They want to be led. They want to have everything done for them and to have no responsibility. Therefore, in spite of the great mass of men, the difficulty is not to discover men to advance, but men who are willing to be advanced. The whole factory management is always open to suggestion, and we have an informal suggestion system by which any workman can communicate any idea that comes to him and get action on it. If the new way suggested shows a saving and the cost of making the change will pay for itself within a reasonable time—say within three months—the change is made practically as of course.
The cleanliness of a man's machine also—although cleaning a machine is no part of his duty—is usually an indication of his intelligence. Whatever expertness in fabrication that has developed has been due to men. I think that if men are unhampered and they know that they are serving, they will always put all of mind and will into even the most trivial of tasks.
CHAPTER VII THE TERROR OF THE MACHINE
The average worker, I am sorry to say, wants a job in which he does not have to put forth much physical exertion—above all, he wants a job in which he does not have to think.
There will never be a dearth of places for skilled people, but we have to recognize that the will to be skilled is not general. And even if the will be present, then the courage to go through with the training is absent. One cannot become skilled by mere wishing.
We want artists in industrial relationship. We want masters in industrial method—both from the standpoint of the producer and the product. We want those who can mould the political, social, industrial, and moral mass into a sound and shapely whole. What this generation needs is a deep faith, a profound conviction in the practicability of righteousness, justice, and humanity in industry.
The kind of mind that does not like repetitive work does not have to stay in it. The work in each department is classified according to its desirability and skill into Classes "A," "B," and "C," each class having anywhere from ten to thirty different operations. A man comes directly from the employment office to "Class C." As he gets better he goes into "Class B," and so on into "Class A," and out of "Class A" into tool making or some supervisory capacity. It is up to him to place himself. If he stays in production it is because he likes it. I think that if an industrial institution is to fill its whole role, it ought to be possible for a cross-section of its employees to show about the same proportions as a cross-section of a society in general.
The blind man or cripple can, in the particular place to which he is assigned, perform just as much work and receive exactly the same pay as a wholly able-bodied man would. We do not prefer cripples—but we have demonstrated that they can earn full wages. Most certainly business and charity cannot be combined; the purpose of a factory is to produce, and it ill serves the community in general unless it does produce to the utmost of its capacity. To discover just what was the real situation, I had all of the different jobs in the factory classified to the kind of machine and work—whether the physical labour involved was light, medium, or heavy; whether it were a wet or a dry job, and if not, with what kind of fluid; whether it were clean or dirty; near an oven or a furnace; the condition of the air; whether one or both hands had to be used; whether the employee stood or sat down at his work; whether it was noisy or quiet; whether it required accuracy; whether the light was natural or artificial; the number of pieces that had to be handled per hour; the weight of the material handled; and the description of the strain upon the worker.
Eighty-two women were discharged because their husbands were working—we do not employ married women whose husbands have jobs. The men are there to get the greatest possible amount of work done and to receive the highest possible pay. In hiring a man the only data taken concerns his name, his address, his age, whether he is married or single, the number of his dependents, whether he has ever worked for the Ford Motor Company, and the condition of his sight and his hearing. No questions are asked concerning what the man has previously done, but we have what we call the "Better Advantage Notice," by which a man who has had a trade before he came to us files a notice with the employment department stating what the trade was. In this way, when we need specialists of any kind, we can get them right out of production. This is also one of the avenues by which tool makers and moulders quickly reach the higher positions.
One point that is absolutely essential to high capacity, as well as to humane production, is a clean, well-lighted and well-ventilated factory. To a stranger they may seem piled right on top of one another, but they are scientifically arranged, not only in the sequence of operations, but to give every man and every machine every square inch that he requires and, if possible, not a square inch, and certainly not a square foot, more than he requires. We do not consider any machine—no matter how efficiently it may turn out its work—as a proper machine unless it is absolutely safe. Every accident, no matter how trivial, is traced back by a skilled man employed solely for that purpose, and a study is made of the machine to make that same accident in the future impossible. A nearly even temperature is kept everywhere the year round and, during daylight, there is nowhere the necessity for artificial light. The dark corners which invite expectoration are painted white. One cannot have morale without cleanliness. New machines are tested in every way before they are permitted to be installed.
CHAPTER VIII WAGES
wages—most of the people of the country live on wages. The scale of their living—the rate of their wages—determines the prosperity of the country.
Every business that employs more than one man is a kind of partnership. It is utterly foolish for Capital or for Labour to think of themselves as groups. They are partners. When they pull and haul against each other—they simply injure the organization in which they are partners and from which both draw support. It ought to be the employer's ambition, as leader, to pay better wages than any similar line of business, and it ought to be the workman's ambition to make this possible. "What ought the employer to pay?"—"What ought the employee to receive?" These are but minor questions. The basic question is "What can the business stand?"
The business itself sets the limits. You cannot distribute $150,000 out of a business that brings in only $100,000. The business limits the wages, but does anything limit the business? The business limits itself by following bad precedents. But by no means all employers or all employees will think straight. The habit of acting shortsightedly is a hard one to break. What can be done? Nothing. No rules or laws will effect the changes. But enlightened self-interest will.
We mean a higher wage than was paid ten months or ten years ago. We do not mean a higher wage than ought to be paid. High wages cannot be paid unless the workmen earn them. Their labour is the productive factor.
But in a partnership of skilled management and honest labour, it is the workman who makes high wages possible.
It ought to be clear, however, that the high wage begins down in the shop. If it is not created there it cannot get into pay envelopes. Work is our sanity, our self-respect, our salvation. So far from being a curse, work is the greatest blessing. Exact social justice flows only out of honest work. The man who contributes much should take away much. Therefore no element of charity is present in the paying of wages. The kind of workman who gives the business the best that is in him is the best kind of workman a business can have. And he cannot be expected to do this indefinitely without proper recognition of his contribution.
But if a man feels that his day's work is not only supplying his basic need, but is also giving him a margin of comfort and enabling him to give his boys and girls their opportunity and his wife some pleasure in life, then his job looks good to him and he is free to give it of his best. Wages and salaries are in fixed amounts, and this must be so, in order to have a basis to figure on. Wages and salaries are a sort of profit-sharing fixed in advance, but it often happens that when the business of the year is closed, it is discovered that more can be paid. And then more ought to be paid. When we are all in the business working together, we all ought to have some share in the profits—by way of a good wage, or salary, or added compensation. Business represents our national livelihood, it reflects our economic progress, and gives us our place among other nations. Such are the fundamental truths of wages. They are partnership distributions.
The best wages that have up to date ever been paid are not nearly as high as they ought to be. Business is not yet sufficiently well organized and its objectives are not yet sufficiently clear to make it possible to pay more than a fraction of the wages that ought to be paid. Before then we had had some profit sharing. We had at the end of each year, for some years past, divided a percentage of our earnings with the employees. starting about 1913 we had time studies made of all the thousands of operations in the shops. By a time study it is possible theoretically to determine what a man's output should be. Then, making large allowances, it is further possible to get at a satisfactory standard output for a day, and, taking into consideration the skill, to arrive at a rate which will express with fair accuracy the amount of skill and exertion that goes into a job—and how much is to be expected from the man in the job in return for the wage. Without scientific study the employer does not know why he is paying a wage and the worker does not know why he is getting it. On the time figures all of the jobs in our factory were standardized and rates set.
We do not have piece work. Some of the men are paid by the day and some are paid by the hour, but in practically every case there is a required standard output below which a man is not expected to fall.
Were it otherwise, neither the workman nor ourselves would know whether or not wages were being earned. There must be a fixed day's work before a real wage can be paid. Watchmen are paid for presence. Workmen are paid for work.
Having these facts in hand we announced and put into operation in January, 1914, a kind of profit-sharing plan in which the minimum wage for any class of work and under certain conditions was five dollars a day. At the same time we reduced the working day to eight hours—it had been nine—and the week to forty-eight hours. This was entirely a voluntary act. All of our wage rates have been voluntary. It was to our way of thinking an act of social justice, and in the last analysis we did it for our own satisfaction of mind.
A low wage business is always insecure. A man was first to be paid his just wages—which were then on an average of about fifteen per cent. above the usual market wage. He was then eligible to a certain profit. His wages plus his profit were calculated to give a minimum daily income of five dollars. The profit sharing rate was divided on an hour basis and was credited to the hourly wage rate, so as to give those receiving the lowest hourly rate the largest proportion of profits. It was paid every two weeks with the wages.
It was a sort of prosperity-sharing plan. But on conditions. The man and his home had to come up to certain standards of cleanliness and citizenship. The pay of about half the men was doubled in the new plan; it might have been taken as "easy money." The thought of easy money breaks down work. The man with the larger amount of money has larger opportunity to make a fool of himself. We had about fifty investigators in the Social Department; the standard of common sense among them was very high indeed, but it is impossible to assemble fifty men equally endowed with common sense. When the plan went into effect, 60 per cent. of the workers immediately qualified to share; at the end of six months 78 per cent. were sharing, and at the end of one year 87 per cent. Within a year and one half only a fraction of one per cent. failed to share. As far as we know the turnover is somewhere between 3 per cent. and 6 per cent. a month.
CHAPTER IX WHY NOT ALWAYS HAVE GOOD BUSINESS?
We may have, at a particular time, too much of the wrong kind of goods. That is not overproduction—that is merely headless production. We may also have great stocks of goods at too high prices. That is not overproduction—it is either bad manufacturing or bad financing. Business is good or bad as we make it so.
When industry and farming are fully reorganized they will be complementary; they belong together, not apart.
have farmer-industrialists who both farm and work under the most scientific and healthful conditions. The function of the manufacturer is to contribute to this comfort. He is an instrument of society and he can serve society only as he manages his enterprises so as to turn over to the public an increasingly better product at an ever-decreasing price, and at the same time to pay to all those who have a hand in his business an ever-increasing wage, based upon the work they do.
Does the manufacturer exist for the consumer or does the consumer exist for the manufacturer? If the consumer will not—says he cannot—buy what the manufacturer has to offer, is that the fault of the manufacturer or the consumer? Or is nobody at fault? If nobody is at fault then the manufacturer must go out of business.
The loss of not doing business is commonly a loss greater than the actual money involved, for during the period of idleness fear will consume initiative and, if the shutdown is long enough, there will be no energy left over to start up with again. What is wrong in our industrial system is a reflection of what is wrong in man himself.
Manufacturers hesitate to admit that the mistakes of the present industrial methods are, in part at least, their own mistakes, systematized and extended.
Take the industrial idea; what is it? The true industrial idea is not to make money. The industrial idea is to express a serviceable idea, to duplicate a useful idea, by as many thousands as there are people who need it. Business is a process of give and take, live and let live.
CHAPTER X HOW CHEAPLY CAN THINGS BE MADE?
The markets were stagnant, but not "saturated" with goods. What is called a "saturated" market is only one in which the prices are above the purchasing power. A healthy patient has a normal temperature; a healthy market has normal prices.
We have found in buying materials that it is not worth while to buy for other than immediate needs. We buy only enough to fit into the plan of production, taking into consideration the state of transportation at the time. If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. The carloads of raw materials would arrive on schedule and in the planned order and amounts, and go from the railway cars into production. That would save a great deal of money, for it would give a very rapid turnover and thus decrease the amount of money tied up in materials.
Therefore in our buying we simply get the best price we can for the quantity that we require. We do not buy less if the price be high and we do not buy more if the price be low. We carefully avoid bargain lots in excess of requirements.
If any one has anything better than we have we want to know it, and for that reason we buy one of every new car that comes out. Usually the car is used for a while, put through a road test, taken apart, and studied as to how and of what everything is made.
Our policy is to reduce the price, extend the operations, and improve the article. You will notice that the reduction of price comes first. We have never considered any costs as fixed. Therefore we first reduce the price to a point where we believe more sales will result. Then we go ahead and try to make the price. We do not bother about the costs. The new price forces the costs down. The more usual way is to take the costs and then determine the price, and although that method may be scientific in the narrow sense, it is not scientific in the broad sense, because what earthly use is it to know the cost if it tells you you cannot manufacture at a price at which the article can be sold? But more to the point is the fact that, although one may calculate what a cost is, and of course all of our costs are carefully calculated, no one knows what a cost ought to be. One of the ways of discovering what a cost ought to be is to name a price so low as to force everybody in the place to the highest point of efficiency. The low price makes everybody dig for profits.
We cannot conceive how to serve the consumer unless we make for him something that, as far as we can provide, will last forever. We want to construct some kind of a machine that will last forever. It does not please us to have a buyer's car wear out or become obsolete. We want the man who buys one of our products never to have to buy another. We never make an improvement that renders any previous model obsolete. The parts of a specific model are not only interchangeable with all other cars of that model, but they are interchangeable with similar parts on all the cars that we have turned out. You can take a car of ten years ago and, buying to-day's parts, make it with very little expense into a car of to-day. Having these objectives the costs always come down under pressure.
And since we have the firm policy of steady price reduction, there is always pressure.
It is not good management to take profits out of the workers or the buyers; make management produce the profits. Don't cheapen the product; don't cheapen the wage; don't overcharge the public. Put brains into the method,
CHAPTER XI MONEY AND GOODS
The minutes we spend in becoming expert in finance we lose in production.
The place to finance a manufacturing business is the shop, and not the bank.
A business that misuses what it has will continue to misuse what it can get. The point is—cure the misuse.
Borrowing for expansion is one thing; borrowing to make up for mismanagement and waste is quite another. Waste is corrected by economy; mismanagement is corrected by brains. Neither of these correctives has anything to do with money. My financial policy is the result of my sales policy. I hold that it is better to sell a large number of articles at a small profit than to sell a few at a large profit. If a business is not increasing, it is bound to be decreasing, and a decreasing business always needs a lot of financing. They confuse inertia with stability.
we have no place for the non-working stockholders. The working stockholder is more anxious to increase his opportunity to serve than to bank dividends. If we want the home to be happy, we must contrive to keep the shop busy. The flow of money ought to be nearly continuous. One must work steadily in order to work profitably. Shutting down involves great waste. We make cars to sell, not to store. We can no more afford to carry large stocks of finished than we can of raw material. Everything has to move in and move out.
CHAPTER XII MONEY—MASTER OR SERVANT?
we found out how to use less money in our business by speeding up the turnover. And that is the danger of having bankers in business. They think solely in terms of money. They think of a factory as making money, not goods. We want to discover whether it is not possible to take away power which is not based on wealth creation.
The ultimate check on credit is the amount of gold in the country, regardless of the amount of wealth in the country. The wealth of the world neither consists in nor is adequately represented by the money of the world. Gold itself is not a valuable commodity.
CHAPTER XIII WHY BE POOR?
By poverty I mean the lack of reasonably sufficient food, housing, and clothing for an individual or a family. So long as leadership thinks more of money than it does of service, the wastes will continue. The cure of poverty is not in personal economy but in better production. The "thrift" and "economy" ideas have been overworked.
All waste is misuse; all misuse is waste. To teach a child to invest and use is better than to teach him to save.
One can put a small plant on a little stream, and the combination of little plants, each making a single part, will make the whole cheaper than a vast factory would. The modern city has been prodigal, it is to-day bankrupt, and to-morrow it will cease to be. The highest use of capital is not to make more money, but to make money do more service for the betterment of life.
CHAPTER XIV THE TRACTOR AND POWER FARMING
All of which shows what getting into scientific production will do to a price. Just as I have no idea how cheaply the Ford automobile can eventually be made, I have no idea how cheaply the tractor can eventually be made. Power-farming is simply taking the burden from flesh and blood and putting it on steel. Cooperative farming will become so developed that we shall see associations of farmers with their own packing houses in which their own hogs will be turned into ham and bacon, and with their own flour mills in which their grain will be turned into commercial foodstuffs.
CHAPTER XV WHY CHARITY?
It is easy to give; it is harder to make giving unnecessary. Real human helpfulness is never card-catalogued or advertised. Professional charity is not only cold but it hurts more than it helps. It degrades the recipients and drugs their self-respect. The charitable system that does not aim to make itself unnecessary is not performing service. Charity becomes unnecessary as those who seem to be unable to earn livings are taken out of the non-productive class and put into the productive. Philanthropy, no matter how noble its motive, does not make for self-reliance.
Modern industry requires a degree of ability and skill which neither early quitting of school nor long continuance at school provides. To meet this condition—to fulfill the boy's educational possibilities and at the same time begin his industrial training along constructive lines—the Henry Ford Trade School was incorporated in 1916. From the beginning we have held to three cardinal principles: first, that the boy was to be kept a boy and not changed into a premature working-man; second, that the academic training was to go hand in hand with the industrial instruction; third, that the boy was to be given a sense of pride and responsibility in his work by being trained on articles which were to be used. The school is incorporated as a private school and is open to boys between the ages of twelve and eighteen. It is organized on the basis of scholarships and each boy is awarded an annual cash scholarship of four hundred dollars at his entrance. This is gradually increased to a maximum of six hundred dollars if his record is satisfactory.
In addition to his scholarship each boy is given a small amount each month which must be deposited in his savings account. This thrift fund must be left in the bank as long as the boy remains in the school unless he is given permission by the authorities to use it for an emergency. the boy takes his training in blocks of weeks—one week in the class and two weeks in the shop. Classes are continuous, the various groups taking their weeks in turn. The best instructors obtainable are on the staff, and the text-book is the Ford plant. It offers more resources for practical education than most universities. The arithmetic lessons come in concrete shop problems. The actual processes and actual conditions are exhibited to him—he is taught to observe. The shop shipments to Singapore, the shop receipts of material from Africa and South America are shown to him, and the world becomes an inhabited planet instead of a coloured globe on the teacher's desk. In physics and chemistry the industrial plant provides a laboratory in which theory becomes practice and the lesson becomes actual experience. The school has a regular factory workshop with the finest equipment. The boys work up from one machine to the next. They work solely on parts or articles needed by the company, but our needs are so vast that this list comprehends nearly everything. They repair their own machines; they learn how to take care of themselves around machinery; they study pattern-making and in clean, well-lighted rooms with their instructors they lay the foundation for successful careers. When they graduate, places are always open for them in the shops at good wages.
We have been able to let the boy have his boyhood. These boys learn to be workmen but they do not forget how to be boys. That is of the first importance. They do not have to go into our factories; most of them do because they do not know where better jobs are to be had—we want all our jobs to be good for the men who take them. But there is no string tied to the boys. They have earned their own way and are under obligations to no one. There is no charity. The place pays for itself.
There are plenty of hospitals for the rich. There are plenty of hospitals for the poor. There are no hospitals for those who can afford to pay only a moderate amount and yet desire to pay without a feeling that they are recipients of charity. This hospital is designed to be self-supporting—to give a maximum of service at a minimum of cost and without the slightest colouring of charity. The rooms—which are in groups of twenty-four—are all identical in size, in fittings, and in furnishings. There is no choice of rooms. It is planned that there shall be no choice of anything within the hospital. Every patient is on an equal footing with every other patient. It has been an aim of our hospital to cut away from all of these practices and to put the interest of the patient first.
All of the physicians and all of the nurses are employed by the year and they can have no practice outside of the hospital. These men have been selected with great care and they are paid salaries that amount to at least as much as they would ordinarily earn in successful private practice. They have, none of them, any financial interest whatsoever in any patient, and a patient may not be treated by a doctor from the outside. We gladly acknowledge the place and the use of the family physician. We do not seek to supplant him. We take the case where he leaves off, and return the patient as quickly as possible. Our system makes it undesirable for us to keep patients longer than necessary—we do not need that kind of business. And we will share with the family physician our knowledge of the case, but while the patient is in the hospital we assume full responsibility. It is "closed" to outside physicians' practice, though it is not closed to our cooperation with any family physician who desires it. The admission of a patient is interesting. The incoming patient is first examined by the senior physician and then is routed for examination through three, four, or whatever number of doctors seems necessary. This routing takes place regardless of what the patient came to the hospital for, because, as we are gradually learning, it is the complete health rather than a single ailment which is important. Each of the doctors makes a complete examination, and each sends in his written findings to the head physician without any opportunity whatsoever to consult with any of the other examining physicians. At least three, and sometimes six or seven, absolutely complete and absolutely independent diagnoses are thus in the hands of the head of the hospital. They constitute a complete record of the case. These precautions are taken in order to insure, within the limits of present-day knowledge, a correct diagnosis. Every patient pays according to a fixed schedule that includes the hospital room, board, medical and surgical attendance, and nursing. There are no extras. There are no private nurses. If a case requires more attention than the nurses assigned to the wing can give, then another nurse is put on, but without any additional expense to the patient. This, however, is rarely necessary because the patients are grouped according to the amount of nursing that they will need. There may be one nurse for two patients, or one nurse for five patients, as the type of cases may require. No one nurse ever has more than seven patients to care for, and because of the arrangements it is easily possible for a nurse to care for seven patients who are not desperately ill. This hospital is designed to save steps. Each floor is complete in itself, and just as in the factories we have tried to eliminate the necessity for waste motion, so have we also tried to eliminate waste motion in the hospital. The hospital has a cost system just like a factory. The charges will be regulated to make ends just meet. The only difference between hospital and factory accounting is that I do not expect the hospital to return a profit; we do expect it to cover depreciation.
Nobody can get more out of life than life can produce—yet nearly everybody thinks he can. Speculative capital wants more; labour wants more; the source of raw material wants more; and the purchasing public wants more. A family knows that it cannot live beyond its income; even the children know that. But the public never seems to learn that it cannot live beyond its income—have more than it produces.
Become a freeman in the place where you first surrendered your freedom. Win your battle where you lost it.
CHAPTER XVI THE RAILROADS
The men who know railroading have not been allowed to manage railroads. The guiding hand of the railway has been, not the railroad man, but the banker. Instead of operating under the rules of common sense and according to circumstances, every railroad had to operate on the advice of counsel. If a man works more than eight hours he is not paid for overtime—he deducts his overtime from the next working day or saves it up and gets a whole day off with pay. Our eight-hour day is a day of eight hours and not a basis for computing pay. We think that a delay is a criticism of our work and is something at once to be investigated. That is business. wherever it is possible a policy of decentralization ought to be adopted. We need, instead of mammoth flour mills, a multitude of smaller mills distributed through all the sections where grain is grown.
CHAPTER XVII THINGS IN GENERAL
war never settles anything. It was war that made the orderly and profitable processes of the world what they are to-day—a loose, disjointed mass. Business should be on the side of peace, because peace is business's best asset.
An old gambling trick used to be for the gambler to cry "Police!" when a lot of money was on the table, and, in the panic that followed, to seize the money and run off with it. There is a power within the world which cries "War!" and in the confusion of the nations, the unrestrained sacrifice which people make for safety and peace runs off with the spoils of the panic. Nobody can deny that war is a profitable business for those who like that kind of money.
what it is that makes a nation really great. It is not the amount of trade that makes a nation great. The creation of private fortunes, like the creation of an autocracy, does not make any country great. Nor does the mere change of an agricultural population into a factory population. A country becomes great when, by the wise development of its resources and the skill of its people, property is widely and fairly distributed. You can never develop Mexico until you develop the Mexican. And yet how much of the "development" of Mexico by foreign exploiters ever took account of the development of its people?
We learn more from our failures than from our successes. Once we were in the war, every facility of the Ford industries was put at the disposal of the Government.
An able man is a man who can do things, and his ability to do things is dependent on what he has in him. What he has in him depends on what he started with and what he has done to increase and discipline it. A man who cannot think is not an educated man however many college degrees he may have acquired. Thinking is the hardest work any one can do—which is probably the reason why we have so few thinkers. But the best that education can do for a man is to put him in possession of his powers, give him control of the tools with which destiny has endowed him, and teach him how to think. A man's real education begins after he has left school. True education is gained through the discipline of life.
Knowledge, to my mind, is something that in the past somebody knew and left in a form which enables all who will to obtain it. The point is this: Great piles of knowledge in the head are not the same as mental activity. A man may be very learned and very useless. And then again, a man may be unlearned and very useful. The object of education is not to fill a man's mind with facts; it is to teach him how to use his mind in thinking. And it often happens that a man can think better if he is not hampered by the knowledge of the past. One good way to hinder progress is to fill a man's head with all the learning of the past; it makes him feel that because his head is full, there is nothing more to learn.
CHAPTER XVIII DEMOCRACY AND INDUSTRY
The only strong group of union men in the country is the group that draws salaries from the unions. Some of them are very rich. Some of them are interested in influencing the affairs of our large institutions of finance. recognize that with principles accepted and observed, conditions change. The union leaders have never seen that. They wish conditions to remain as they are, conditions of injustice, provocation, strikes, bad feeling, and crippled national life. Else where would be the need for union officers? Every strike is a new argument for them; they point to it and say, "You see! You still need us." The only true labour leader is the one who leads labour to work and to wages, and not the leader who leads labour to strikes, sabotage, and starvation.
There is a change coming. When the union of "union leaders" disappears, with it will go the union of blind bosses—bosses who never did a decent thing for their employees until they were compelled. If the blind boss was a disease, the selfish union leader was the antidote. When the union leader became the disease, the blind boss became the antidote. Both are misfits, both are out of place in well-organized society. And they are both disappearing together. am not opposed to labour organization. I am not opposed to any sort of organization that makes for progress. It is organizing to limit production—whether by employers or by workers—that matters. But the fact that he was unnecessary on that particular job does not mean that he is unnecessary in the work of the world, or even in the work of his particular shop. We have no antagonism to unions, but we participate in no arrangements with either employee or employer organizations. The wages paid are always higher than any reasonable union could think of demanding and the hours of work are always shorter. There is nothing that a union membership could do for our people. We respect the unions, sympathize with their good aims and denounce their bad ones.
The only harmonious organization that is worth anything is an organization in which all the members are bent on the one main purpose—to get along toward the objective. A common purpose, honestly believed in, sincerely desired—that is the great harmonizing principle.
CHAPTER XIX WHAT WE MAY EXPECT
We are—unless I do not read the signs aright—in the midst of a change. It is going on all about us, slowly and scarcely observed, but with a firm surety. We are gradually learning to relate cause and effect.
There are two fools in this world. One is the millionaire who thinks that by hoarding money he can somehow accumulate real power, and the other is the penniless reformer who thinks that if only he can take the money from one class and give it to another, all the world's ills will be cured. They are both on the wrong track.
lack of production is due only too often to lack of knowledge of how and what to produce.
The business of life is easy or hard according to the skill or the lack of skill displayed in production and distribution. It has been thought that business existed for profit. That is wrong. Business exists for service. basis of all our work:
(1) An absence of fear of the future or of veneration for the past. One who fears the future, who fears failure, limits his activities. Failure is only the opportunity more intelligently to begin again. There is no disgrace in honest failure; there is disgrace in fearing to fail. What is past is useful only as it suggests ways and means for progress.
(2) A disregard of competition. Whoever does a thing best ought to be the one to do it. It is criminal to try to get business away from another man—criminal because one is then trying to lower for personal gain the condition of one's fellow-men, to rule by force instead of by intelligence.
(3) The putting of service before profit. Without a profit, business cannot extend. There is nothing inherently wrong about making a profit. Well-conducted business enterprises cannot fail to return a profit but profit must and inevitably will come as a reward for good service. It cannot be the basis—it must be the result of service.
(4) Manufacturing is not buying low and selling high. It is the process of buying materials fairly and, with the smallest possible addition of cost, transforming those materials into a consumable product and distributing it to the consumer. Gambling, speculating, and sharp dealing tend only to clog this progression.
Every advance begins in a small way and with the individual.
The mass can be no better than the sum of the individuals.
Advancement begins within the man himself;
Everything is possible … "faith is the substance of things hoped for, the evidence of things not seen."