The People's Tycoon: Henry Ford and the American Century (Vintage) (20 page)

Unwisely, Malcolmson went further. Letting his anger get the better of his judgment, he impulsively founded his own company to manufacture automobiles. In early December 1905, the Detroit
Journal
and the Detroit
Free Press
announced “Detroit's Newest Auto Company” and carried stories on the establishment of the Aerocar Company. Complete with a picture of its majority stockholder, Alex Y. Malcolmson, the accounts described the new company's capitalization of $400,000, the building of a three-story factory on Mack Avenue, and its plans to produce five hundred large touring cars for sale in 1906. Aerocar presented its advertising slogan: “The Car of Today, Tomorrow, and for Years to Come.”
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This ill-conceived move gave Ford and his allies the opening they were looking for. With Aerocar standing as a direct competitor to the Ford Motor Company, Malcolmson could no longer act to promote the wellbeing of the company he had largely financed in 1903. Thus the Ford board of directors asked for his resignation on the grounds that his creation of the Aerocar enterprise was “inimical to the best interests of the [Ford] company.” Malcolmson angrily refused and threatened a lawsuit.
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The internally divided young company now faced an outright civil war. In this battle of wills, Ford and Couzens insisted on Malcolmson's resignation and rallied support among the factory management. According to Fred Rockelman, Couzens told him “that Mr. Malcolmson was getting out of there and he was awful glad because there would be a much more cooperative group between Mr. Wills and Mr. Ford and himself.” Couzens confessed to suffering “very severe headaches” from the stress of the situation. Ford moved to bolster morale among the troops, urging stockholders, “Don't sell out. You'll be taken care of. I'll see to that.”
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After several months of unsuccessful negotiations with Malcolmson, Ford and Couzens mustered a majority to make another decisive move. In May 1906, the board of directors voted to remove Malcolmson as treasurer
of the company. Finally, hemmed in and outmaneuvered, the bitter and resentful partner agreed to sell his 255 shares in the company for the price of $175,000. Couzens' uncle, businessman A. A. Parker, helped arrange for a loan to Henry Ford at the Dime Savings Bank, which was headed by William Livingstone, Jr. Couzens endorsed the notes. Within a short time, Malcolmson's few supporters among the directors also sold their shares— Charles H. Bennett said he was no longer comfortable with “a crowd of fellows that had frozen out somebody”—and Ford and Couzens bought them as well. With the unexpected death of John Gray in the summer of 1906, the presidency of the company opened up, and the board elected Henry Ford to fill the position. Thus, by 1907, the upheaval in the company had brought about a revolution. “Managerial control had been fused with stock control,” in the words of one observer. Henry Ford owned 585 shares and directed production of the company's automobiles; James Couzens owned 110 shares and managed its business affairs; the other stockholders together held 305 shares and were content to leave the company in Ford's and Couzens' capable hands.
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Alex Malcolmson would go on to a checkered career. By September 1907, his Aerocar Company had filed for bankruptcy, and within a short time he was sued, first by a firm that had made auto engines for Aerocar, and then by representatives of the company's creditors. He recovered from this debacle to find financial success in several Detroit ventures: his old coal business, building supplies, and real estate. But by the late 1910s, Malcolmson had once again fallen on hard times. In 1919, he actually approached the Ford Motor Company, arguing that he had received insufficient compensation for his early Ford stock and asking for financial assistance. The company refused. Malcolmson suffered a nervous collapse and died in 1923. Henry Ford, in spite of the bitterness of their split many years before, served as an honorary pallbearer at Malcolmson's funeral. According to a newspaper account, as the minister eulogized Malcolmson, “Mr. Ford seemed lost in thought as if remembering the days when he was but a struggling mechanic with a vision and Malcolmson the financial colossus ready to bear his burdens.”
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Indeed, Malcolmson's ill-fated clash with Ford constituted one of the great blunders in American business history. His shares, which he sold for $175,000, would have been worth hundreds of millions of dollars only ten years later. Yet the resolution of this crisis, though drawn out and painful, had clarified the future for the Ford Motor Company. It was now evident that the self-contained, visionary mechanic from Dearborn had gained control of the enterprise that displayed his name. And he knew it. One day near the end of the Malcolmson affair, Ford asked Fred Rockelman to drive him
home. As they motored along, he confided that he had just bought out his partner. An exultant Ford, Rockelman recalled, waxed enthusiastic about the future of his motorcar and its vast social implications:

Rockelman's reaction to the idealistic outburst mirrored that of most other Ford employees. “He wanted to help people and we as the young men in the shop looked up to that,” he noted approvingly. “We could see that Mr. Ford's mind went to the farmer and the mechanic and to the people who lived in the hinterland.”
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Ford now stood in a position to realize his vision. The man who wanted farmers and mechanics driving his car had emerged as the unchallenged director of company fortunes. His friend and ally James Couzens stood second-in-command as the manager of the business operation. With Couzens' help, Ford had drawn up the blueprint for the future, and the company would rise or fall accordingly.

With a new, vigorous leadership clearly in command, the Ford Motor Company blossomed. The clearest sign of progress came with the Model N, which truly represented Henry Ford's ideas, at least in nascent form, about the efficient, rationalized production of an inexpensive, universal vehicle. The conceptualization, manufacture, and marketing of this motorcar laid the groundwork for a business explosion that would rocket the Ford name into the industrial stratosphere within a few short years.

In 1906, Henry Ford proudly informed the Detroit
Journal
that this lightweight motorcar, which carried a price tag of only $500, would change the face of American transportation. He did not mince words:

The Model N had resulted from many months of development work by Ford and his engineers. The experimental room stood next to Ford's office on the second floor of the Piquette Avenue plant, and throughout 1905 and 1906 he had directed the effort toward designing a four-cylinder car that would sell for $500. Harold Wills did yeoman work in developing this model, as did Joseph Galamb, a talented draftsman and engineer. Galamb had caught Ford's attention with his neat design drawings of the rear axle, differential, and housing for the new Model N. Impressed, Ford would frequently drop by his drafting table to offer encouragement and exchange ideas. By the fall of 1906, the manufacturing operation at the Bellevue Avenue plant was turning out a hundred engines per day, and the assembly teams at Piquette were frantically putting together the final product. Henry Ford aimed at producing more that ten thousand Model N's a year.
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As the Model N entered the market, trade magazines and newspapers carried glowing reports. The
Cycle and Automobile Trade Journal
published a nine-page article detailing every element (complete with photos and drawings) of the Model N's chassis, engine, steering, brakes, axles, and transmission. The reporter also described the forty-nine-mile test drive he took in the company of Henry Ford himself. The car performed admirably, steering smoothly and running steadily as it traversed miles of rough roads and accelerated nicely in climbing an extremely long hill with a turn halfway up. Ford commented, according to the author, that “he had never made that rise before so easily, in any car whatever.” The article concluded that the Model N was “distinctly the most important mechanical event of 1906… [and] supplies the very first instance of a low cost motor car… which is well built and offered in large numbers.”
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However proud he was of the Model N's technical features, Henry Ford based his fondness for the car on a different source. With almost religious fervor, he preached the social virtues of this dependable, inexpensive vehicle. He told colleagues, “There are a lot more poor people than wealthy people. We'll just build one car for the poor people.” This message became a mainstay of Ford Motor Company advertising for the Model N. “Henry Ford's idea is to build a high-grade, practical automobile” at a reasonable price, declared a 1906 publicity campaign, “thus raising the automobile out of the list of luxuries, and bringing it to the point where the average American citizen may own and enjoy his automobile.” Buyers responded; sales of the Model N soared to some 8,423 cars in 1906–7, over five times better than the company's previous record for a twelve-month period.
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Production of the Model N reflected the growth of the company and its increasingly large and sophisticated operation. Advertisements explained that its low cost came from mind-boggling volume in production: “We are making 40,000 cylinders, 10,000 engines, 40,000 wheels, 20,000 axles, 10,000 bodies, 10,000 of every part that goes into the car—think of it! Such quantities were never heard of before.” Much of this mass production took place at the Piquette Avenue factory. According to manager John Wander-see, “They were manufacturing everything there: blocks, connecting rods, everything but axles.” The Ford Manufacturing Company, although absorbed into the parent company in 1907, after Malcolmson's departure, also produced engines for the Ford Model N.
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In this atmosphere of growth and expanding production, Ford moved to solidify his operation. In August 1906, he took an important step by hiring Walter E. Flanders, an expert in machine tools who made Ford's acquaintance when overseeing the installation of large lathes and grinders at Piquette Avenue. Very knowledgeable about the design and management of factories, Flanders took over as production manager. He immediately began reorganizing the process of making Model N's. A large, rough-hewn, heavyset man with a great head of woolly hair, he quickly assessed the situation and began issuing orders. Flanders informed Ford and Couzens that he intended “to manage the different manufacturing departments of your companies, [and] reorganize same, on what, in my judgement, is the most economical basis of manufacture for producing commercial products at the minimum cost.”
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Flanders realigned machine placement for smoother flow and trained workers in more efficient production methods. He instituted a system whereby the workmen were given specific tasks to perform in assembling the Model N while “runners” were assigned to keep materials on hand and to supply small tools at the exact moment they were needed. He also established a schedule for monthly production, and integrated the parts-purchasing department into the larger scheme of manufacture. Along with his assistant, Thomas S. Walborn, he made Ford's factory the most efficient in Detroit. “Walter Flanders was a man of great ability,” noted a colleague at Ford. “The men believed in and worshipped him. He was a very clever individual.”
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Although Flanders stayed with Ford only a short time—he resigned in April 1908 to go into business for himself—his innovations provided a foundation for rationalized production methods. Near the end of his tenure, a move toward even greater production efficiency came when the Model N chassis was placed on a wooden truck and pushed along from one assembly station to another. A Ford employee described the process: