Automobile Industry

AUTOMOBILE INDUSTRY

AUTOMOBILE INDUSTRY became the world's largest form of manufacturing by the middle of the twentieth century, making more money and employing more people than any other industry. In the United States, the automobile industry changed how business was conducted and how Americans lived; automobiles were more popular in America than anywhere else in the world.

Origins of the Industry

It was in America that the first three important steps toward automobile manufacture were taken, two of them by Oliver Evans of Philadelphia. During the last two decades of the 1700s, he created an automated flourmill. It took in unprocessed grain and used conveyor belts and screws to transport the grain from step to step, through chaffing, grinding, and packaging, without human intervention. The mill was powered by a steam engine. Evans had not quite invented the assembly line Henry Ford would later use to change how the world manufactured almost everything, but the basic ideas were present: stations for each step in the flour-making process and machines doing the physically strenuous work.

Evans's other significant contribution was the world's first amphibious, fully functioning automobile. In 1805, he completed work on a machine that could be stored on land, driven to the shoreline, and then paddled through the water. It was a dredge for keeping waterways clear. With its steam engine chugging away, Evans' automobile made a great deal of noise as it was driven down to the docks on four large wheels. Once in the water with the paddle wheel attached, the machine could paddle about for several hours. It was the first clear demonstration that a mechanically powered transport could function for hours at a time without falling apart and do practical work.

The other important American in the history of the automobile from Evans's day was Eli Whitney of Connecticut. He developed the concept of interchangeable parts and showed that the concept could be put to practical use: in 1798, he was contracted by the United States government to produce 10,000 muskets that would be identical to each other.

In the 1830s, Charles Goodyear discovered that sulphur mixed with boiling natural rubber created a material that was not prone to melting under friction; this breakthrough would lead to the tires that automobiles would use. In 1832, Walter Hancock of Britain made a steam carriage for personal use. His ideas would quickly evolve into busses that ran regular routes in England, but the English government would outlaw most uses of mechanical power for transportation, dropping England out of the competition for producing practical automobiles.

In 1860, in France, Étienne Lenoir invented a rival to the steam engine, the first practical internal combustion engine. Its advantage over the steam engine was its compactness: it was smaller and lighter. The German engineer Nikolaus Otto refined the internal combustion engine, making it more powerful and more efficient. In 1876, he introduced his four-stroke-cycle compression engine. A compression engine mixes air and fuel, draws the mixture into a chamber, a piston compresses it, and then it is ignited by a spark.

Otto's engine would become the foundation for most internal combustion engines. Almost immediately, it was put to use in automobiles. In some, it generated electricity rather than powering a drive shaft; the electric cars needed no gearshifts and gained or lost power smoothly when in use. These electric cars would be competitive with automobiles with direct drives into the 1920s. Another German, Wilhelm Maybach, invented the carburetor that, by squirting a spray of fuel into air to form the mixture the piston would compress, made possible the use of gasoline in Otto's engine.

In 1879, New Yorker George Baldwin Selden applied for a patent for what he called a "road locomotive." It was the frame of a buckboard with a compression engine underneath the front seat, above the front axel. Selden quickly discovered that the technology of the time needed to catch up to him; the tools for manufacturing his machine were not in general use, so he delayed the patent process until he had financial backing and a market for his device. He and his backers claimed the patent rights to every motor vehicle that used a compression engine, and they made millions of dollars from the manufacturers of cars until they pushed Henry Ford too hard; he took them to court and won in January 1911, breaking their monopoly.

In 1894, the French firm Panhard and Levassor produced an automobile with a V-engine, a water-cooling system, a gearshift transmission, springs under the passengers to cushion the ride, and brakes fitted to wheel hubs. This state-of-the-art automobile was crafted piece by piece, rather than with interchangeable parts, but it is the first automobile to pull together most of the major ingredients of the modern automobile. In 1899, a visionary American, Ransom E. Olds, made the necessary leap of thought to the idea of using interchangeable parts for the purpose of producing automobiles for the masses and soon out produced every other automobile manufacturer in the world; in 1901, he produced the Oldsmobile. Elsewhere in 1899, Henry Ford helped form the Detroit Automobile company. Ford had an idea for a simple-to-maintain automobile that would appeal to farmers. His first effort was taken over by his financial backers, becoming Cadillac. In 1903, Buick Motor Company was founded in Flint, Michigan, while Ford formed the Ford Motor Company in Detroit, Michigan.

Henry Ford and Mass Production

Henry Ford did not invent the automobile, but he did coin the phrase "mass production," and he found a way to excel beyond Olds' efforts by creating a process whereby goods could be made so fast, and in such great quantities, that they could be sold for a tiny profit and still earn millions for their manufacturer. In 1903, he produced his first Model A (there was another in 1927). He tried new designs, working up the alphabet until he reached T in 1908. In 1908, he tried reorganizing his factory; it took twelve-and-a-half hours to produce one car, and he realized that he had just about reached the limit for speeds using old, craftsman techniques of fitting parts to automobiles. His ambition was to sell a car to every American home, and he needed to speed up the process of production. Two of his innovations began the mass-production revolution.

One had to do with small parts. At the time, automobile manufacturers used wood for many of their parts because steel was so soft it would warp when heated during the manufacturing process. It took workers many hours to hammer such parts back into shape and to file them until they fit each other. Ford took advantage of a new kind of steel that was hardened during production and therefore would not warp during the manufacturing of an automobile or while the automobile was in use. Ford combined this development with manufacturing-to-gauge: that is, he assigned an exact set of specifications for every part, and all the parts were to be made exactly to those specifications so they did not need to be hammered or filed to fit a particular car; the idea was that if the parts of cars were all mixed together, workers would be able to build the cars while randomly selecting their pieces. Ford was obsessed with manufacturing-to-gauge, and brought his zeal to the work floor of his factory.

With parts made of hardened steel that were universally interchangeable, he was able to effect his other great innovation. He had chassis of his automobiles hitched to ropes and towed the length of his factory. Workers would walk alongside the chassis to piles of parts; each pile was a station where the chassis would stop and the workers would add the parts. In 1908, this dropped the production time for a single automobile to under six hours, and his company became the world's largest annual producer of cars.

The Model T became popular. At a little over 900 dollars, it was within the financial reach of middle-class Americans. Even so, Ford wanted the car to be within reach of anyone earning a living wage; this meant faster production and lower overhead. In 1913, he introduced the assembly line, as it would be known even into the twenty-first century. Instead of having workers move to piles of parts, he had the parts moved to them; each station had a worker or a small team of workers who performed one function over and over throughout their long work day. The time to produce one Model T dropped to one-and-a-half hours. In 1914, the price for one Model T dropped to 490 dollars and Ford produced forty-five percent of America's automobiles.

Ford's business practices were considered insane by most manufacturers: in 1915, he shook the manufacturing

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world. He promised customers that if he sold 300,000 Model Ts during the year he would send each purchaser a rebate; when sales exceeded 300,000 he rebated fifty dollars per car. More disturbing to other companies was his doubling the minimum wage of his workers from $2.50 a day to $5.00 a day. It became possible for a Ford worker who stayed on the job for several years to own his own home and automobile and to build a sizeable savings. Ford would go on to advocate shorter working hours and fewer work days, because, he said, mass production enabled a company to meet all of its market demands with shorter work times; in the 1930s, he advocated a thirty-hour work week. In 1917, he bought out his stockholders for $105,250,000, and then he could experiment even more.

He did what he did partly out of idealism and partly because of his memories of being young and poor. Further, he wanted to build worker loyalty; he wanted his workers to have jobs for life with his company. In addition, he wanted to build brand loyalty; he wanted his customers to remember that Ford gave them a fair deal. Not all of his efforts worked. His implementation of the assembly line changed how workers viewed their jobs. No longer craftsmen who would learn how everything in the factory worked, Ford's workers learned only about the function of their specific work stations; status came not from skill but from seniority, and status was not rewarded with increasing responsibilities for the manufacturing process but by moving to the work stations that required the least amount of physical effort. Workers became more like interchangeable parts of the manufacturing process. When Dodge began production in 1915, the lesson became clear: assembly-line workers could easily move to another factory and stand at workstations doing what they had done before. There was another dark side to Ford's achievements: while long-term workers benefited from their loyalty to Ford, on average, a worker lasted three months on the assembly line. The tedium was over-whelming; assembly lines were dangerous and losing limbs was a risk workers took; what came to be known as repetitive motion injuries could cripple workers. Automobile manufacturers managed to cover up many of these problems well into the 1920s, but they were a constant tax on production.

1920–1950

By 1920, the automobile industry was shaking down to a small number of competitors. A recession in 1921 caught small manufacturers without enough cash on hand to operate their factories. During the 1920s, the big two manufacturers were Ford and General Motors (GM), with a young Chrysler Motor Corporation, established in 1925, gaining ground. In 1920, the luxury car maker Dusenberg introduced four-wheel brakes and a straight-eight engine. In 1924, Hudson introduced an enclosed sedan as a standard release, costing the same as its open car, $895.00. Further, ethylene glycol antifreeze was invented. These two innovations meant that manufacturers could produce all-weather cars that could withstand cold and shelter their drivers.

In 1925, the last strong challenge to the internal combustion engine ended when the versatile Stanley Steamer ceased being manufactured. Journalists had been predicting the "saturation" of the automobile market for over a decade, claiming automobile sales had to decline once everyone who wanted a car had a car; they had long been wrong. In 1925, Alfred P. Sloan, Jr., who ran GM, suggested that the time was coming when the saturation of the market would have to be dealt with, and he suggested what would later be called "planned obsolescence" as the solution. Change the style every year to make older styles seem out of date. By 1927, GM's Chevrolet division was outselling Ford. Meanwhile, Chrysler bought out Dodge and in 1928, launched Plymouth and De Soto.

It was in 1928 that automakers began to make planned obsolescence a reality, but in the early 1930s, the industry was hit hard by the Great Depression. From 1931 to 1932, nine thousand auto dealerships went out of business, although neither Ford nor GM lost even one. Because of its virtues of being inexpensive and durable, the Ford Model A, introduced in 1927, helped Ford re-take its lead in sales in a much diminished market. In 1933, Chrysler introduced aerodynamic designing, but its futuristic offering did not fit public tastes in hard times.

Unionization hit the industry in the 1930s. Ford was outraged, viewing his workers as ungrateful, but his reaction was mild compared to the violence GM used to discourage unionization of its plants. Even so, the major automakers eventually signed collective bargaining agreements with the United Auto Workers. In 1942, the automotive industry almost came to a stop because the United States had entered World War II. The government ordered the automobile companies to produce war supplies, and this they did. The Ford Motor Company had been taken over by Henry Ford II, grandson of the founder, and he was beginning to reshape the company in 1941. During the war, Ford applied its mass production principles to manufacturing heavy bombers. By the end of the war, it was producing a B-24 bomber every sixty-three minutes. To GM fell the manufacturing of tanks. The GM management rethought their manufacturing process, introducing teams of workers who ran their work stations and a new whole chassis welding process that encouraged workers to be their own quality managers.

1950–1980

In 1945, Henry Kaiser founded Kaiser-Frazer Corporation and began manufacturing innovative automobiles. In 1954, Nash and Hudson merged to form American Motors. The big three in automobile production were GM, first, Chrysler, second, and Ford, third. At the time, about seventeen percent of American-made automobiles were sold in foreign countries. Ford was especially well positioned for sales in Europe with factories in England and elsewhere on the continent. The "Big Three" did not seem to care about what was happening in Japan during the 1950s.

The Japanese were listening to American management consultant W. Edwards Deming, who told them they should produce high-quality, durable products, and stand behind their quality with warranties in order to sell their wares internationally. Not all Japanese manufacturers believed Deming, but some invested everything they had into Deming's ideas. One such company was Toyota, who developed the "Toyota Production System." They encouraged worker suggestions for improving products as well as procedures and they created teams of workers who were responsible for the quality of their workstations' performances, which they called kaizen. During the 1950s and 1960s, planned obsolescence governed the American auto industry; the fiasco in 1957 of the Ford Easel came about in part because it was not at all innovative in performance or design.

Meanwhile, the world and Americans were changing fast. By the end of the 1960s, people who had never been in a coalmine were dying of black lung disease in polluted cities such as New York and Los Angeles. In the early 1970s, the United States Congress mandated cleaner burning automobile engines and set standards for automobile safety. The Japanese were ready with cars that met the standards; the Americans were not. Then in 1973, the Organization of Petroleum Exporting Countries (OPEC) cut back steeply on exports, gasoline prices rose steeply, and Americans had to wait in long lines at gas stations because of gasoline shortages. Since the 1920s, automobile manufacturers knew that Americans preferred big cars over small ones. A forty-miles-per-gallon automobile, the Crassly Hotshot, had been produced in the 1940s but had disappeared because of poor sales. In the 1970s, Americans wanted small, gas efficient cars. The Japanese had them.

In 1977, more American automobiles were recalled because of faulty parts or construction than were actually built during the year. In 1979, Chrysler almost went bankrupt, and only earnest pleas for help from charismatic company president Lee Iacocca won the federal loan guarantees the company needed in order to continue operations.

Meeting the Japanese Challenge

In 1980, America's automakers lost 1.8 billion dollars. In 1980, Japanese automobiles outsold American automobiles worldwide for the first time. Yet, in that year, American automobile companies invested seventy billion dollars to reconstruct their plants. They were putting computers into their cars to manage fuel, the shifting of gears, and other aspects of cars, to make driving them more efficient and with less wear and tear. The Texaco Controlled-Combustion System, invented in the 1940s, allowed automobiles to burn almost any fuel efficiently, and engines that ran on methanol, coal dust, and natural gas were created.

Meanwhile, Japanese manufacturers ran into problems. The most important one was their dependence on foreign imports of raw materials. Another problem was the saturation level: they were running out of markets for their small cars, and without high volume sales, it was hard to earn profits making them. Thus, Japanese manufacturers began to shift toward making more expensive large automobiles with luxury features; they could make a higher profit per car for the large ones than for the smaller ones. Further, the Japanese yen had been strong against the American dollar for many years, helping make Japanese cars cheaper than American ones. By 1985, the yen had dropped against the dollar, adding two thousand dollars to the price of a Japanese automobile in America.

In 1987, Chrysler bought out American Motors and showed its renewed financial strength by paying back its loans early. GM showed that there was still life in the idea of worker participation in quality management by beginning, in June 1982 (but publicly announced in 1983), a new car division for the Saturn, the first of which was manufactured 15 September 1984. The car depended on its reputation for high quality to succeed in the American market. In Japan, automobile manufacturers depended heavily on robots to man their workstations, whereas American companies did not. What seemed to make economic sense in the 1980s, proved a money pit for the Japanese. They discovered that while they saved money from laying off workers who were replaced by robots, they were spending extra money on the people who maintained the robots and programmed the robots' computers. Plus, kaizen was disappearing as the workers who could have made constructive suggestions were laid off. The result was that by 1995, American automobile makers regained their dominant position in the marketplace.

BIBLIOGRAPHY

"The Arsenals of Progress." The Economist (US) 330, no. 7853 (5 March 1994): M5–7.

De Camp, L. Sprague, and Catherine C. De Camp. The Story of Science in America. New York: Charles Scribner's Sons, 1967.

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Ingrassia, Paul J., and Joseph B. White. Comeback: The Fall and Rise of the American Automobile Industry. New York: Simon & Schuster, 1994.

Kerson, Roger. "Ending the Bends." Technology Review 89 (April 1986): 6.

Showalter, Williamm Joseph. "The Automobile Industry: An American Art That Has Revolutionized Methods of Manufacturing and Transformed Transportation." National Geographic 44, no. 4 (October 1923): 337–414.

Sloan, Alfred P., Jr. My Years with General Motors. New York: Doubleday, 1972.

Smith, Philip Hillyer. Wheels within Wheels: A Short History of American Motor Car Manufacturing. New York: Funk & Wagnalls, 1968. By someone who actually lived the history.

"Toyota's New Bombshell." World Press Review 42, no. 6 (June 1995): 33.

Womack, James P., Daniel T. Jones, and Daniel Roos. The Machine That Changed the World: How Japan's Secret Weapon in the Global Auto Wars Will Revolutionize Western Industry. New York: Maxwell Macmillan International, 1990.

Kirk H. Beetz

See also Air Pollution ; Assembly Line ; Ford Motor Company ; General Motors ; Mass Production ; Steam Power and Engines ; United Automobile Workers of America ; and vol. 9: Ford Men Beat and Rout Lewis .