Freedom's Forge (6 page)

“Speed produces nothing in manufacturing,” Knudsen liked to say—which was one reason he eschewed the complicated time-and-motion studies of production gurus like William Taylor. “Accuracy is the only straight line to great production.”
⁵²
Knudsen was moving automobile production out of the workshop mentality and into modern manufacturing.

With Knudsen in charge, Chevrolet made a sharp U-turn. Sales jumped from 72,000 to almost a quarter million cars and trucks in
1922, and the company that had lost $8.6 million when Knudsen stepped in showed a net income of $11.2 million.
⁵³
Pierre S. du Pont smiled, announced to Sloan that he would now be president of GM, and retired to his enormous home in Longwood Gardens to tend his orchids and figs.

The next year, Chevy sales and income jumped again. But there was more to come. In January 1924 two thousand of the company’s dealers met at the Palmer House in Chicago. Knudsen was there, and as he walked through the lobby into the ballroom, dealers came up to shake his hand and slap the back of the man who had saved their livelihoods and given their cars a future.

Knudsen made to sit at the head table, but his sales manager, Dick Grant, caught him by the arm.

“Mr. Knudsen,” he said, “you just can’t sit there and expect me to do all the talking. You’re the boss, so you have to say something to these people.”

Knudsen had never given a public speech in English in his life. He struggled to his feet before the cheering throng, his mind a complete blank. In desperation he glanced back at Grant. “What do I say to them?” he whispered.

“Whatever you’ve got in your head,” Grant hissed back encouragingly, his hand cupped against the side of his mouth.

Knudsen stared out across the sea of humanity, studded with waiters clearing dishes and the steady updrift of cigar smoke.

Then suddenly he raised both hands over his head, his index fingers extended.

“I vant vun for vun!!” he shouted in his thick Danish accent, and then abruptly sat down.
⁵⁴

At first there was a stunned silence. Then those who understood the message whispered it to others, and soon the entire room knew what Knudsen had meant. He wanted one Chevrolet to sell for every Ford Model T. It was the first open challenge by a car company to Ford’s sales supremacy, and the dealers loved it. Pandemonium broke loose. They cheered, they stamped their feet, they pounded the tables. Some stood on their chairs as they roared their approval. “Vun for vun” spread through the company and became the new battle cry for Chevrolet.
Dealers, managers, and even workers were sensing that Knudsen was about to push them toward another major breakthrough.

And they were right.

The experts call it “flexible mass production”: a manufacturing process that allows for constant modification and change. This was the
second
revolution William Knudsen introduced to the auto industry, after the continuous assembly line he developed at Ford. Flexible mass production was embodied in the idea of the annual model. Billy Durant’s consumer-driven car culture was about to become reality.
⁵⁵

At first Sloan resisted it. The notion of having to redesign a perfectly fine car every year seemed wildly extravagant, and expensive. “We are all against yearly models,” Sloan confessed at the end of July 1925. But he added, “I don’t see just what can be done about it.”
⁵⁶

This was because Knudsen had already started the process with that year’s coming model. Even more important, by bringing in the dealers to tell him what customers wanted and how Chevrolet could make a better car, Knudsen had thrust the consumer deep into the production equation. The presumption was that by gratifying consumer preferences, as well as constantly improving engineering performance, GM could sell a new Chevy even to someone who already owned one—and who in turn would come to expect better and bigger changes the next year. The consumer culture’s “cult of the newer” was about to spread into the industrial economy—and Sloan wasn’t about to stand in the way if the idea also pulled the rest of his General Motors into the black.

Sloan gave the nod. The new Chevrolet would be launched in September 1925, to be available the following year. It’s the pattern all auto companies have followed, from that day to this. The 1926 Chevrolet was so much a hit that it slashed the Chevy-to-Model-T sales ratio from thirteen to one to two to one. The goal of “vun for vun” didn’t seem so far-fetched after all.
⁵⁷

Yet all this would have been moot if Knudsen didn’t know how to deliver the goods, by a rapid systematic retooling of the assembly line. “All old machines were discarded,” as Knudsen later described, “new
heavy type standard machines (not single purpose) were installed, and fixtures strengthened as to withstand the spring, which is the greater factor [in causing inaccuracies] than wear.”
⁵⁸
Now Knudsen could set lower limits on the precision done by his grinders and borers and other tools, which meant less waste and more savings in raw materials.

It also meant his workers and managers could meet changes faster, because their tools were ready to adapt to new engineering demands. Knudsen focused Chevy’s satellite plants in Toledo, Detroit, and Bay City, Michigan, on specialty subassemblies and pushed final assembly out to places like St. Louis and Oakland, California, with a branch of Fisher Body at each. In effect, he had turned Sloan’s decentralization principle into a way to mobilize the entire division more efficiently.
⁵⁹

Knudsen’s next car, the 1927 Chevrolet, was an even bigger hit. More than a million cars were sold, and the impact was felt all the way to Dearborn. It was the ’27 Chevy that finally forced Henry Ford to abandon the Model T for a new car, the Model A.
⁶⁰
Eight years earlier Knudsen had told the old man he could make the changeover in under six months. Without Knudsen, Ford was compelled to shut down production for almost a year—a year that gave Knudsen room to spring his next big surprise.

It came when General Motors announced that the new 1929 Chevrolet would sport the first six-cylinder engine for a low-priced car, instead of the usual four. Knudsen and his engineers had been planning out the change almost two years earlier. They had even lengthened the wheel base of the 1928 model by six inches in order to accommodate the future bigger motor. A pilot plant was set up in Saginaw, while Flint continued to make the four-cylinder job. Over September and October, they made almost two hundred of the new engines, before moving every machine tool, jig, and fixture out to Flint—and ordering enough extra to produce six thousand engines a day.
⁶¹

By December Flint was making two thousand a day, and Knudsen could sit back at last, knowing they would be up to speed with the new year. The result was that a couple of weeks after the inauguration of President Herbert Hoover, as customers across the country crowded into showrooms to look at the revolutionary six-cylinder Chevrolet, not one had to wait for the model or the color they wanted.
⁶²

Few new cars ever quite produced the sensation that the ’29 Chevy did, then or afterward. It came in no less than eight different models (from the two-door coupe to the four-door Cabriolet with a rumble seat in the back) and could drive at seventy miles per hour all day—the first low-priced American car to do so. Best of all, thanks to Knudsen’s careful economies, it cost no more than the four-cylinder ’28 model: $495 for the coupe, and $695 for the standard four-door version.

Knudsen’s 1929 Chevrolet was the direct ancestor of the modern automobile. It was also the last to be introduced before the Depression. Its success enabled GM to weather the next several years of economic storms, as the slogan “Vun for vun” became a reality. In 1929 Knudsen could look at sales of an unprecedented 1.3 million cars and trucks; only Ford with his new Model A did better. Ford still held a lead in 1930, the year the Depression first began to bite. But Knudsen’s former boss then fell to number two in 1931, and Chevrolet would outsell Ford every year—except for 1935 and 1945—until Ronald Reagan’s second term, in 1986.
⁶³

Knudsen had won. There’s a picture of him and a trio of Chevrolet engineers admiring their new model for 1932. For once Knudsen isn’t wearing his hat. Instead, he is smiling a smile of quiet satisfaction. He had ample reason to be pleased, not just because the ’32 Chevy, except for its lack of automatic transmission and air-conditioning and a V-8 engine, was pretty much the same automobile Americans would be making and driving for the next forty years, but also because Knudsen had built product improvement into the manufacturing process in a way that could go on ad infinitum. It was the bedrock of customer loyalty.

Sloan was blunt about why. “We want to make you dissatisfied with your current car,” he told Chevy customers, “so you will buy a new one.” But there was a more profound truth underlying flexible mass production. Companies could now change how a product was made—or even introduce a new product—in rapid response to either changing market demands or to new technology, without breaking a single stride. This was true whether they were making cars or radios—or later, tanks, planes, and radar sets.

In 1936 Sloan’s GM was selling more cars than it had before the
Depression. In 1937 it was selling more. By giving Knudsen and Chevrolet their lead, he had made General Motors the largest industrial corporation in the world.

Sloan knew he had received another gift. This was Knudsen himself, the quiet gentle giant who had spawned one manufacturing revolution and replaced it with another. Sloan had gotten him cheap for six thousand dollars a year, arguably the best bargain since the original sale of Manhattan Island.

On May 3, 1937, Sloan became chairman of GM and made Bill Knudsen his successor as president. The ceremony described by
The Detroit News
was simple and understated. Knudsen and Sloan shook hands in the directors’ room as the cameras flashed. In the background was the president’s leather-bound chair, high backed, specially upholstered, austere, and commanding. Then Knudsen sat down—in a regular chair at the foot of the table.
⁶⁴

Centralization equals regimentation. Decentralization equals free enterprise. By 1937 the Sloan-Knudsen formula had saved GM. In three years it would have to save the world.

The Six Companies partners at Hoover Dam, 1935. Henry Kaiser is third from left. Steve Bechtel stands on the extreme left; Harry Morrison is third from right.

BEFORE AMERICANS COULD
buy cars, they had to have roads to drive them on. That was where Henry Kaiser came into the picture.

“Picture” is the appropriate word in talking about Henry Kaiser. Born deep in upstate New York in 1882, he grew up with the dream of becoming the Thomas Edison of photography. The image of Edison for
most Americans is the one left over from newsreels in the twenties: the white-haired deaf old man who invented the electric lightbulb and the phonograph.

For American boys of an earlier generation, however, there was a different and more daring Edison. This was Edison the lonely child his parents and neighbors had treated as a hopeless dummy. He was the misunderstood boy genius who had risen up, Horatio Alger–like, from his small-town background to create a thousand and one miraculous inventions with nothing more than his own talent, a pencil, and a few bent wires—and grew up to humble every adult who had once dismissed him as a dull problem child.

If being a problem child was proof of genius, Henry Kaiser filled the formula to overflowing.

He was the youngest child of a German immigrant shoemaker, a hardworking precise man who appreciated the virtues of the quiet, orderly life he had made for himself in the village of Whitesboro, New York. Franz Kaiser’s exuberant little boy embodied the opposite. When he was hardly more than a toddler, Henry would spend the day hiding under the house and then, when his parents’ fears about their missing boy had reached near panic, burst through the front door with whoops of laughter.
¹

At school he was worse. Henry was geared to drive his teachers crazy: restless, hilarious, relentlessly curious, always looking for ways to evade or bend the rules. Today he would be a candidate for Ritalin. Back then thirteen-year-old Henry Kaiser took destiny into his own hands. Many years later, when he was the most widely recognized industrialist in the world and stories circulated about his family being too poor to keep him in school, Kaiser was abruptly frank about what happened. “I thought I was ready to lick the world single-handed,” he told an interviewer in 1946, “so I dropped out.”
²