Henry Ford: one of the most influential Americanindustrialists. Through his company Henry transformed Americanlife and in this video we’re gonna learn how he did it starting from the very beginning.
This video is brought to you by Audible anda big part of it is based on Henry Ford’s biography, which you can listen to for freeon Audible if you register for a free trial with the link in the description. You should also check out Real Engineering’svideo on the manufacturing innovations of the assembly line, which he explains masterfullyon his channel. accounts, Henry Ford should’ve beena farmer.
By all Born in Michigan barely 20 years after ithad become a state, Henry grew up at a time when farming was slow, exhausting and manual,which is why unsurprisingly he came to hate it with a passion. But whereas most people at the time didn’thave the fortune to escape what they were born into, Henry was lucky enough to get suchan opportunity. You see, the village he was born in was just8 miles west of Detroit, which was rapidly becoming an industrial center thanks to thesteam engine.
Early on in his childhood Henry encounteredtechnology, which few children his age could play around with. He’d tinker with the watches of his better-offneighbors and by the time he was twelve he could not just take them apart, but also putthem back together and repair them. His interest grew into an obsession when hegot to observe a working steam engine firsthand while on a school trip to one of the railcompanies in Detroit.
By the time Henry had become a teenager thesteam engine was already making its way into the farming community: coal-powered threshingmachines and sawmills were becoming common sight and Henry was learning how they workedand how to fix them.
At the age of sixteen he made a big leap forward,when against his father’s wishes he left his village to go work in Detroit, where anyyoung mechanic could easily find very lucrative employment. Industry in Detroit was booming and it hadbeen doing so for close to five decades.
In 1825 a canal had been dug connecting theHudson River to the Great Lakes, which at the time were effectively the western frontier. All the untapped resources that had not wayof getting out could suddenly be moved by steamboat to New York and in the span of just50 years Detroit’s population increased by a factor of ten, with vast mines in thenorth producing copper and iron and lumber mills opening up virtually everywhere. All this metal and wood sustained close toa thousand companies in Detroit alone, including the ones in which Henry would work at overthe course of the 1880s.
It is during this time that Henry by chancelearned about the gas engine from a British Magazine. It was being produced in small numbers bya German engineer, Nikolaus Otto, and it was gaining some traction in Europe, but it waspractically unheard of in America. Henry would get the chance to work on suchan engine himself in 1889 and he instantly recognized the advantages it had. Because it did not use steam, the engine wasmuch lighter: it got rid of the heavy boiler and all the water in it because it did allthe combustion internally, a much more efficient process. This also allowed the gas engine to startquickly, whereas steam engines of the time needed as much as 30 minutes to heat up thewater and generate enough steam to start working.
The gas engine was an innovation Henry fellin love with, but it was one he didn’t fully understand: after all, he had extensive experiencewith steam and metal, but almost none with electricity and the gas engine was fired byan electric spark. To obtain this missing knowledge, Henry wentto work for the local branch of the Edison Illuminating Company. It was generating electricity for over a thousandhomes in Detroit and it was doing so by using steam engines, so Henry was a natural hirefor them. Whenever the engines broke Henry had to fixthem, but whenever they were working he was free to do as he wished: it was the perfectjob that allowed him to spend his days experimenting with gas engines.
In 1893, when Henry had already been promotedto Chief Engineer at Edison, he created his first working gas engine. The idea of using the gas engine to createa horseless carriage had been around in Henry’s mind since he first laid eyes on one, butactually making that idea a reality would take years of work. Building a car in a world with no car partswasn’t easy and Henry had to figure out every detail through trial and error. It took him three years of constant effortto produce this: the Quadricycle, a simple frame with an engine powered by ethanol andfour bicycle wheels mounted onto it.
It had only two gears and neither one wasfor going in reverse, but what’s worse is that it had no cooling system to speak of,thus making overheating a constant issue. In its first year Henry made numerous improvementsto the Quadricycle, most notably adding a cooling system, and by the time he sold itin 1897 for $200 he had driven a thousand miles in it. Henry built a second Quadricycle and thena third one, always improving the design, before finally feeling confident enough in1899 to start his own company. Capitalized at $150,000, the Detroit AutomobileCompany was a very ambitious venture.
Many of the Detroit elite invested in it,including Henry’s friends from the Edison Company, and everyone was eager to see whatHenry could create with proper capital. Henry’s plan was very clever: since he personallyknew many of the industrialists in Detroit by that point, he’d try to build an automobilethey could use in their businesses. He leased a factory and planned to hire ahundred workers to make his new “delivery wagon”, as he called it. But it turned out that building such complexmachines in high numbers was much more difficult than Henry imagined. The vast majority of the parts used in themaking of the delivery wagon were produced by other companies and every time a singledelivery was late the entire factory would have no choice but to stop working.
The first delivery wagon took six months toproduce and no more than twenty were made in the first two years of the company’sexistence. By the end of 1902, the other shareholderswere sick of Henry’s lack of progress and actually voted to get rid of him.
Now, because Henry held only 15% of the companyhe had no choice but to comply and interestingly enough, the man who took over the DetroitAutomobile Company would eventually transform it into Cadillac. But that’s a story for a different time:what matters is that Henry was pushed out of his own company and had only a thousanddollars to his name. It was back to the drawing board and thistime Henry would take a very different approach. Instead of targeting businesses with expensivemachines, Henry would design a vehicle to be used by the average man.
You see, at the time virtually all cars werehigh-ticket items: they were mostly made by skilled craftsmen one at a time and more oftenthan not were designed for racing, which was rapidly becoming a favorite American activity. Henry envisioned turning the car from a statussymbol into a commodity, but doing that would not be easy and in fact it took Henry 20 differentdesign iterations before he finally got one that worked. Henry labeled his first design as the modelA and worked his way through the alphabet over the next 5 years, sustained by capitalfrom his friends and family. But what changed the most during this timeis not the car itself but the production process.
Henry learned the importance of having a reliablesupply chain when his first company failed, which is why this time around he tried gettingas many parts as possible from the same manufacturer. The one he chose will probably sound familiar:the Dodge Brothers Company, a machine shop in Detroit that would eventually evolve intothe eponymous American brand. The biggest game-changer of all, however,was Henry’s chance visit to a slaughterhouse in Chicago.
He saw there something interesting: a disassemblyline, so to speak, where multiple workers would process carcasses moving down a line. Henry figured he could use the same process,but in reverse: an assembly line. Using the money he had saved from some ofhis earlier models, which were also assembled by the Dodge Brothers, Henry was able to builda factory of his own in 1904, where he could experiment with the assembly line process.
By 1905 the Ford factory employed over 300people that built 25 cars a day, but Henry still hadn’t figured everything out: hewas producing multiple different models at the same time which prevented him from properlyusing an assembly line. Nevertheless, there was a sign of things tocome: the affordable Model N, created in 1906 became the best-selling car in the US andFord became the biggest car producer in America. It is actually during the production of thismodel that Henry would first use the assembly line process to at least partially assemblesome of his cars. It wasn’t a full moving assembly line, butnevertheless this experiment increased production by a factor of 5 in the same factory.
Logistics, of course, was another big partof Henry’s success: in 1905 he created the Ford Manufacturing Company, complete withits own factory that started making the engines and transmissions of Henry’s cars to furthereliminate any possibility of delays. But the biggest factor in Henry’s successcame from perhaps the most unexpected place: Peru. Now, this is a story you’re not gonna hearanywhere else, so listen carefully. In 1907, Henry began construction of heattreatment plant to produce vanadium steel. This alloy was new to America: in fact, fewfurnaces in the US could even reach the temperature needed to manufacture it.
The difficulty in producing it, however, wasworth it because vanadium steel was more than twice as strong as regular steel while actuallybeing lighter. Now, at the time vanadium metallurgy was cuttingedge research, but Henry had an extremely lucky connection: he was friends with thetwo brothers who owned the one vanadium mine in Peru producing 92% of the world’s supply. Joseph and James Flannery had commercializedvanadium steel in Europe and in the US by selling it to rail companies, but their Peruvianmine was producing so much vanadium that they had to do something else with it.
They sold vanadium steel to the US governmentfor the construction of the Panama Canal, but even that wasn’t enough so when theymet Henry in 1906 they immediately made him an offer: they would help him transition hisentire manufacturing process to use vanadium steel. It was their chief engineer that built theheat treatment plant for Henry in 1907 and it was their company that supplied Ford withall the vanadium it needed for its cars. The first Ford car designed with vanadiumsteel was the model T in 1908 and it was this alloy that actually made it successful. It wasn’t the cheapest car Henry had made:the model N and its upscale versions were actually cheaper. But it didn’t need to be because it wasby far the best car built at the time, much stronger than any competitor.
The sheer difference in quality was the onlymarketing Henry needed and within weeks of the Model T’s release Ford received 25,000orders for it, even though it only managed to produce 17,000 units for the entirety of1909. Henry realized just how big of a deal theModel T was which is why he built a second bigger factory in 1910 and it is there thathe would perfect the moving assembly line in 1913.
During this period production would doubleevery year: in 1910 he built 20,000 Model Ts and just six year later he was buildingover half a million.