A Short History of Manufacturing as a Business

In the spring of 1913, by the usual account, workers at the Ford Motor Company's Highland Park plant north of Detroit began assembling the flywheel magneto, a small part of the Model T's ignition, on a moving line. Until then each magneto had been built at a bench by one worker. Now the part slid past a row of workers, each of whom added a few pieces, and the time per unit fell sharply. Engines and transmissions followed. Late in 1913 the chassis itself was pulled by rope, then by chain, past stationary workers who each fitted a few parts. The time to assemble a chassis is commonly reported as falling from about twelve hours to about an hour and a half.

Ford did not invent the assembly line. Meatpackers had used moving disassembly lines, and arms makers had developed interchangeable parts decades earlier. Ford's contribution was the combination at scale: parts that fitted without hand-filing, machine tools laid out in the order of the process, a product designed for one configuration and a line that brought the work to the worker and set the pace mechanically. The jobs were monotonous and fast, and labour turnover in 1913 is commonly cited at several hundred per cent a year. On 5 January 1914 Ford announced the $5 day, a combination of wages and profit-sharing reported at roughly double the going rate, for workers who met conditions on their home lives that the company's Sociological Department checked. It is often read as a productivity investment rather than generosity: the cost of hiring and training thousands of replacements had become larger than the cost of keeping the workers.

The economics were the learning curve and fixed cost at their purest. Ford passed much of the saving to customers, and the Model T's list price is reported to have fallen from about $850 at launch to under about $300 by the mid-1920s as volume rose towards about two million cars a year. Every price cut sold more cars, and every extra car spread the plant's cost further. Then customers wanted variety, which a system built for one product could not give them. In 1927 Ford stopped its plants for months to retool for the Model A (reported), and General Motors, which had built a different kind of company, took the lead. The most efficient factory in the world had been optimised for a product the market was leaving.