And he did go.... He never dared to look around. He did not shut off on the curves. He simply let that car go—and go it did. He was about half a mile ahead of the next man at the end of the race!
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. I was vice-president, designer, master mechanic, superintendent, and general manager. The capitalization of the company was one hundred thousand dollars, and of this I owned 25 1/2 per cent. The total amount subscribed in cash was about twenty-eight thousand dollars—which is the only money that the company has ever received for the capital fund from other than operations. In the beginning I thought that it was possible, notwithstanding my former experience, to go forward with a company in which I owned less than the controlling share. I very shortly found I had to have control and therefore in 1906, with funds that I had earned in the company, I bought enough stock to bring my holdings up to 51 per cent, and a little later bought enough more to give me 58-1/2 per cent. The new equipment and the whole progress of the company have always been financed out of earnings. In 1919 my son Edsel purchased the remaining 41-1/2 per cent of the stock because certain of the minority stockholders disagreed with my policies. For these shares he paid at the rate of $12,500 for each $100 par and in all paid about seventy-five millions.
The original company and its equipment, as may be gathered, were not elaborate. We rented Strelow's carpenter shop on Mack Avenue. In making my designs I had also worked out the methods of making, but, since at that time we could not afford to buy machinery, the entire car was made according to my designs, but by various manufacturers, and about all we did, even in the way of assembling, was to put on the wheels, the tires, and the body. That would really be the most economical method of manufacturing if only one could be certain that all of the various parts would be made on the manufacturing plan that I have above outlined. The most economical manufacturing of the future will be that in which the whole of an article is not made under one roof—unless, of course, it be a very simple article. The modern—or better, the future—method is to have each part made where it may best be made and then assemble the parts into a complete unit at the points of consumption. That is the method we are now following and expect to extend. 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.
I had been experimenting principally upon the cutting down of weight. Excess weight kills any self-propelled vehicle. There are a lot of fool ideas about weight. It is queer, when you come to think of it, how some fool terms get into current use. There is the phrase "heavyweight" as applied to a man's mental apparatus! What does it mean? No one wants to be fat and heavy of body—then why of head? For some clumsy reason we have come to confuse strength with weight. The crude methods of early building undoubtedly had much to do with this. The old ox-cart weighed a ton—and it had so much weight that it was weak! To carry a few tons of humanity from New York to Chicago, the railroad builds a train that weighs many hundred tons, and the result is an absolute loss of real strength and the extravagant waste of untold millions in the form of power. The law of diminishing returns begins to operate at the point where strength becomes weight. Weight may be desirable in a steam roller but nowhere else. Strength has nothing to do with weight. The mentality of the man who does things in the world is agile, light, and strong. The most beautiful things in the world are those from which all excess weight has been eliminated. Strength is never just weight—either in men or things. Whenever any one suggests to me that I might increase weight or add a part, I look into decreasing weight and eliminating a part! 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.
In our first year we built "Model A," selling the runabout for eight hundred and fifty dollars and the tonneau for one hundred dollars more. This model had a two-cylinder opposed motor developing eight horsepower. It had a chain drive, a seventy-two inch wheel base—which was supposed to be long—and a fuel capacity of five gallons. We made and sold 1,708 cars in the first year. That is how well the public responded.
Every one of these "Model A's" has a history. Take No. 420. Colonel D. C. Collier of California bought it in 1904. He used it for a couple of years, sold it, and bought a new Ford. No. 420 changed hands frequently until 1907 when it was bought by one Edmund Jacobs living near Ramona in the heart of the mountains. He drove it for several years in the roughest kind of work. Then he bought a new Ford and sold his old one. By 1915 No. 420 had passed into the hands of a man named Cantello who took out the motor, hitched it to a water pump, rigged up shafts on the chassis and now, while the motor chugs away at the pumping of water, the chassis drawn by a burro acts as a buggy. The moral, of course, is that you can dissect a Ford but you cannot kill it.
In our first advertisement we said:
Our purpose is to construct and market an automobile specially
designed for everyday wear and tear—business, professional, and
family use; an automobile which will attain to a sufficient speed to
satisfy the average person without acquiring any of those breakneck
velocities which are so universally condemned; a machine which will
be admired by man, woman, and child alike for its compactness, its
simplicity, its safety, its all-around convenience, and—last but
not least—its exceedingly reasonable price, which places it within
the reach of many thousands who could not think of paying the
comparatively fabulous prices asked for most machines.
And these are the points we emphasized:
Good material.
Simplicity—most of the cars at that time required considerable skill in their management.
The engine.
The ignition—which was furnished by two sets of six dry cell batteries. The automatic oiling.
The simplicity and the ease of control of the transmission, which was of the planetary type.
The workmanship.
We did not make the pleasure appeal. We never have. In its first advertising we showed that a motor car was a utility. We said:
We often hear quoted the old proverb, "Time is money"—and yet how few business and professional men act as if they really believed its truth.
Men who are constantly complaining of shortage of time and lamenting the fewness of days in the week—men to whom every five minutes wasted means a dollar thrown away—men to whom five minutes' delay sometimes means the loss of many dollars—will yet depend on the haphazard, uncomfortable, and limited means of transportation afforded by street cars, etc., when the investment of an exceedingly moderate sum in the purchase of a perfected, efficient, high-grade automobile would cut out anxiety and unpunctuality and provide a luxurious means of travel ever at your beck and call.
Always ready, always sure.
Built to save you time and consequent money.
Built to take you anywhere you want to go and bring you back again on time.
Built to add to your reputation for punctuality; to keep your customers good-humoured and in a buying mood.
Built for business or pleasure—just as you say.
Built also for the good of your health—to carry you "jarlessly" over any kind of half decent roads, to refresh your brain with the luxury of much "out-doorness" and your lungs with the "tonic of tonics"—the right kind of atmosphere.
It is your say, too, when it comes to speed. You can—if you choose—loiter lingeringly through shady avenues or you can press down on the foot-lever until all the scenery looks alike to you and you have to keep your eyes skinned to count the milestones as they pass.
I am giving the gist of this advertisement to show that, from the beginning, we were looking to providing service—we never bothered with a "sporting car."
The business went along almost as by magic. The cars gained a reputation for standing up. They were tough, they were simple, and they were well made. I was working on my design for a universal single model but I had not settled the designs nor had we the money to build and equip the proper kind of plant for manufacturing. I had not the money to discover the very best and lightest materials. We still had to accept the materials that the market offered—we got the best to be had but we had no facilities for the scientific investigation of materials or for original research.
My associates were not convinced that it was possible to restrict our cars to a single model. The automobile trade was following the old bicycle trade, in which every manufacturer thought it necessary to bring out a new model each year and to make it so unlike all previous models that those who had bought the former models would want to get rid of the old and buy the new. That was supposed to be good business. It is the same idea that women submit to in their clothing and hats. That is not service—it seeks only to provide something new, not something better. It is extraordinary how firmly rooted is the notion that business—continuous selling—depends not on satisfying the customer once and for all, but on first getting his money for one article and then persuading him he ought to buy a new and different one. The plan which I then had in the back of my head but to which we were not then sufficiently advanced to give expression, was that, when a model was settled upon then every improvement on that model should be interchangeable with the old model, so that a car should never get out of date. It is my ambition to have every piece of machinery, or other non-consumable product that I turn out, so strong and so well made that no one ought ever to have to buy a second one. A good machine of any kind ought to last as long as a good watch.
In the second year we scattered our energies among three models. We made a four-cylinder touring car, "Model B," which sold for two thousand dollars; "Model C," which was a slightly improved "Model A" and sold at fifty dollars more than the former price; and "Model F," a touring car which sold for a thousand dollars. That is, we scattered our energy and increased prices—and therefore we sold fewer cars than in the first year. The sales were 1,695 cars.
That "Model B"—the first four-cylinder car for general road use—had to be advertised. Winning a race or making a record was then the best kind of advertising. So I fixed up the "Arrow," the twin of the old "999"—in fact practically remade it—and a week before the New York Automobile show I drove it myself over a surveyed mile straightaway on the ice. I shall never forget that race. The ice seemed smooth enough, so smooth that if I had called off the trial we should have secured an immense amount of the wrong kind of advertising, but instead of being smooth, that ice was seamed with fissures which I knew were going to mean trouble the moment I got up speed. But there was nothing to do but go through with the trial, and I let the old "Arrow" out. At every fissure the car leaped into the air. I never knew how it was coming down. When I wasn't in the air, I was skidding, but somehow I stayed top side up and on the course, making a record that went all over the world! That put
"Model B" on the map—but not enough on to overcome the price advances. No stunt and no advertising will sell an article for any length of time. Business is not a game. The moral is coming.
Our little wooden shop had, with the business we were doing, become totally inadequate, and in 1906 we took out of our working capital sufficient funds to build a three-story plant at the corner of Piquette and Beaubien streets—which for the first time gave us real manufacturing facilities. We began to make and to assemble quite a number of the parts, although still we were principally an assembling shop. In 1905-1906 we made only two models—one the four-cylinder car at $2,000 and another touring car at $1,000, both being the models of the previous year—and our sales dropped to 1,599 cars.
Some said it was because we had not brought out new models. I thought it was because our cars were too expensive—they did not appeal to the 95 per cent. I changed the policy in the next year—having first acquired stock control. For 1906-1907 we entirely left off making touring cars and made three models of runabouts and roadsters, none of which differed materially from the other in manufacturing process or in component parts, but were somewhat different in appearance. The big thing was that the cheapest car sold for $600 and the most expensive for only $750, and right there came the complete demonstration of what price meant. We sold 8,423 cars—nearly five times as many as in our biggest previous year. Our banner week was that of May 15, 1908, when we assembled 311 cars in six working days. It almost swamped our facilities. The foreman had a tallyboard on which he chalked up each car as it was finished and turned over to the testers. The tallyboard was hardly equal to the task. On one day in the following June we assembled an even one hundred cars.
In the next year we departed from the programme that had been so successful and I designed a big car—fifty horsepower, six cylinder—that would burn up the roads. We continued making our small cars, but the 1907 panic and the diversion to the more expensive model cut down the sales to 6,398 cars.
We had been through an experimenting period of five years. The cars were beginning to be sold in Europe. The business, as an automobile business then went, was considered extraordinarily prosperous. We had plenty of money. 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. I have never found it necessary to strain them, because, inevitably, if you give attention to work and service, the resources will increase more rapidly than you can devise ways and means of disposing of them.
We were careful in the selection of our salesmen. At first there was great difficulty in getting good salesmen because the automobile trade was not supposed to be stable. It was supposed to be dealing in a luxury—in pleasure vehicles. 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. In the beginning we had not paid much in the way of salaries. We were feeling our way, but when we knew what our way was, we adopted the policy of paying the very highest reward for service and then insisting upon getting the highest service. Among the requirements for an agent we laid down the following:
