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He invented modern mass production. He gave the world the first people’s car, and his countrymen loved him for it. But at the moment of his greatest triumph, he turned on the empire he had built—and on the son who would inherit it.
October/November 1986 | Volume 37, Issue 6
“We’ll get along,” she said. “We did before you went to work there.”
In 1921 he quit, virtually forced out. “I let him go not because he wasn’t good, but because he was too good—for me,” Ford later said.
Knudsen went to General Motors for a starting salary of $30,000, but GM soon put him in charge of its sluggish Chevrolet division. It was the perfect time to join GM. Alfred R Sloan, Jr., was putting together a modern automotive giant, building on Ford’s advances in simplifying the means of production and bringing to that manufacturing success the best of modern business practices. Within three years of Knudsen’s arrival, GM became a serious challenger to Ford.
By the early twenties the rumblings from Ford’s dealers were mounting. They begged him to make changes in the Model T, but he had become so egocentric that criticism of his car struck him as criticism of himself. Ford defiantly stayed with the Model T. Perhaps 1922 can be considered the high-water mark of Ford’s domination of the market. The company’s sales were never higher, and with an average profit of $50 a car, it netted more than $100 million. From then on it was downhill. As Chevy made its challenge, the traditional Ford response —simply cutting back on the price—no longer worked. The success of that maneuver had been based on volume sales, and the volume was peaking. From 1920 to 1924 Ford cut its price eight times, but the thinner margins were beginning to undermine Ford’s success. The signs got worse and worse. For the calendar year ending February 1924, the Ford company’s net profit was $82 million; of that only $41 million came from new cars, and $29 million came from the sales of spare parts. If anything reflected the stagnation of the company, it was that figure.
In 1926 Ford’s sales dropped from 1.87 million to 1.67. At the same time, Chevy nearly doubled its sales, from 280,000 to 400,000. America’s roads were getting better, and people wanted speed and comfort. In the face of GM’s continuing challenge, Henry Ford’s only response was once again to cut prices—twice in that year. The Model T was beginning to die. Finally, in May of 1927, on the eve of the manufacture of the fifteenth million Model T, Henry Ford announced that his company would build a new car. The T was dead. His domination over a market that he himself had created was over. With that he closed his factories for retooling, laying off his workers (many of them permanently).
The new car was the Model A. It had shock absorbers, a standard gearshift, a gas gauge, and a speedometer, all things that Chevy had been moving ahead on and that Ford himself had resisted installing. In all ways it seemed better than its predecessor, more comfortable, twice as powerful, and faster. When it was finally ready to be revealed, huge crowds thronged every showplace. In Detroit one hundred thousand people turned up at the dealerships to see the unveiling. In order to accommodate the mob in New York City, the manager moved the car to Madison Square Garden. Editorials ranked the arrival of the Model A along with Lindbergh’s solo transatlantic flight as the top news story of the decade. The car was an immense success. Even before it was available, there were 727,000 orders on hand. Yet its success was relatively short-lived, for once again Henry Ford froze his technology. Even the brief triumph of the Model A did not halt the downward spiral of the company. Henry Ford remained locked into the past. The twenties and thirties and early forties at Ford were years of ignorance and ruffianism. Henry Ford grew more erratic and finally senile. At the end of his life he believed that World War II did not exist, that it was simply a ploy made up by the newspapers to help the munitions industry. No one could reach the old man any more. His became a performance of spectacular self-destructiveness, one that would never again be matched in a giant American corporation. It was as if the old man, having made the company, felt he had a right to destroy it.
After he built his fifteen millionth Model T, Ford’s domination over a market that he himself had created came to an end.
With Knudsen’s departure, the burden of trying to deal with Ford fell on his son, Edsel. Gentle and intelligent, Edsel Ford reflected the contradictions in his father’s life. He had been born while the Fords were still poor. (As a little boy, Edsel had written Santa Claus a letter complaining: “I haven’t had a Christmas tree in four years and I have broken all my trimmings and I want some more.”) By the time he entered manhood, his father was the richest man in the country, unsettled by the material part of his success and ambivalent about the more privileged life to which his son was being introduced. Henry Ford wanted to bestow on his son all possible advantages and to spare him all hardship, but, having done that, he became convinced that Edsel was too soft to deal with the harsh, brutal world of industry, symbolized by nothing better than the Ford Motor Company.