Henry Ford and Fordism are closely associated with the mass production and consumption model that characterized the 20th century, particularly in the automobile industry.
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The Mindset and Method of H. Ford
An American industrialist at the beginning of the century, Henry Ford was born in 1863 and passed away in 1947. Ford became famous for introducing assembly line work into his factories, adapting Taylor’s principles of rationalization to the automobile. In this sense, he continued Taylor’s work: once work is broken down into small tasks, it can be mechanized on the assembly line.
This took the logic of strict control of labor a step further. Now, it’s the machine itself, through the movement of conveyor belts carrying parts, that dictates the pace of work and production to humans. The 20th-century industrial model developed from the Fordist mode of production, which significantly contributed to global economic growth.
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Fundamentally, the goal was to reduce elementary operating times by rationalizing them through advanced mechanization that synchronized production flows.
A second principle established a strict hierarchy between design, production organization, and sales, following an upstream control principle: goods produced in large quantities and at low costs always found buyers, even if their quality was not necessarily considered excellent.
Ultimately, the Fordist mode of production developed in line with the spirit of the famous liberal law of markets elaborated by J.-B. Say, which posits that supply creates its own demand. The Fordist mode of production indeed aimed at reducing prices to foster mass consumption.
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If H. Ford was often called a visionary and left such a mark on the global production system, it’s because he showed innovation in mass production organization while contributing to raising the purchasing power of workers in industrial enterprises.
The Principles of the Fordist Model
The concept of the Fordist production organization model gained prominence due to its pragmatic and innovative nature at the beginning of the century. Three main innovations introduced by Ford in the American automobile construction can be distinguished.
The Assembly Line
Ford continued Taylor’s work by emphasizing the horizontal division of labor. This division, a factor in the simplification of work, meant endless repetition of the same actions for the basic worker.
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Moreover, Ford quickly introduced mechanization into his factories. While Taylor proposed rationalizing tools and work activities, Ford increasingly used machines. By substituting capital for labor, he gradually replaced living labor with dead labor. Within production units, the circulation of parts ensured by conveyors enabled continuous flow production.
The assembly line work principle is based on the idea that it’s no longer the worker who moves around the product they are making, but the product that moves along the assembly line in front of a series of workers stationed at their workstations. This mechanization had the advantage of eliminating a large part of manual handling work through the automatic movement of parts.
It also facilitated stricter inventory management. Ultimately, assembly line work led to workers losing control over the pace of their work, as the assembly line now dictates the rhythm to follow.
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The Principle of Standardization of Production Goods
The goal was to achieve large-scale industrial production using interchangeable and standardized parts. Increased production through improved productivity also led to lower unit production costs and, therefore, economies of scale.
Following this logic, the first car produced in large series, the Ford Model T, could be marketed at a competitive price thanks to achieving economies of scale. This led H. Ford to a famous saying: “You can have any color as long as it’s black.”
The Five-Dollar-a-Day Principle
Starting from January 1, 1914, Ford innovated in terms of wages by nearly doubling the wages of the time through the introduction of a daily wage of five dollars. Faced with some labor instability in the factories, the aim was to retain workers through an attractive remuneration system for the time.
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The second objective pursued by this remuneration system was to enable workers to gradually acquire the cars they produced by increasing their purchasing power. In this perspective, one can say that Ford’s fundamental idea was to combine mass production with mass consumption. In this sense, Ford workers can also be considered potential customers.
It’s the development of mass production combined with mass consumption that created the conditions for economic growth for most of the 20th century.
Scope and Limits of the Fordist Production Model
The logic of Fordism primarily revolves around increasing productivity in production units. This translates concretely into three complementary effects: lowering selling prices, raising wages, and increasing profits. This mechanism favored the emergence of mass production stimulated by the development of mass consumption. Ford’s genius at the time was to have this vision, even before Keynes, of the need to act on the purchasing power of workers with stable employment contracts to boost the national economy.
It’s important to emphasize the significance of the wage relationship associated with Fordism. In many countries, strong labor conflicts typically lead to a wage compromise on a dual level. Within companies, unions accept management prerogatives in terms of organization, technology, and product policy, in exchange for financial benefits, either in direct wages or in social benefits.
At the industrial sector or national level, the negotiation of collective agreements codifies the general principles of wage development that then spread to the rest of the economy, if only through the full employment prevailing at the time. In other words, the Fordist wage compromise combines acceptance of rationalization, mechanization of production, and the institutionalization of a stable wage formula guaranteeing an increase in living standards in line with productivity.
However, the economic crisis, highlighted by the two successive oil shocks of 1973 and 1979, revealed the inability of the Fordist model to adapt to new rules of competitive environments and the emerging global landscape. Companies gradually sought to develop automation and robotics to increase productivity and eliminate the most arduous tasks.
The imperative of competitiveness encouraged them to lower production costs by employing low-skilled labor and initiating a movement of relocation to countries with lower labor costs.
This Fordist logic of mass production of standardized goods and the pursuit of economies of scale no longer corresponded to market requirements in the 1980s. Rapid changes in the demand for industrial products, in volume and variety, and the reduction of production lead times sometimes led to an inability to keep up with these changes.
The excessive weight of hierarchy and the complexity of organizations resulted in management burdens that were incompatible with market responsiveness imperatives. Finally, the Fordist model focused too much on reducing production costs, while at the same time, new consumer expectations emerged regarding quality, safety, variety of offerings, and service-related product offerings.
For all these reasons, awareness of the limitations of this organizational model emerged in the 1980s in the face of the adversity posed by new Japanese competition based on different organizational principles. These Japanese industrial companies managed to solve the problem of mass production of differentiated and high-quality goods at competitive and rapidly declining costs.
They showed the West that it was possible to produce in small series without intermediate stocks with high levels of quality and productivity.
Conclusion
In conclusion, the success of companies like Toyota, for example, is based on a few innovations in organization as well as internal structures. These will lead Western countries to adapt their production model by integrating research and development, production, and marketing functions. These industrial developments will also encourage group work based on project management and the mobilization of skills requiring more qualified employees, as well as active worker participation in improving quality and productivity.
Gradually, Western industry will promote autonomy within work teams, employee responsibility, and the taking of initiatives and responsibilities in pursuit of greater organizational flexibility and improved responsiveness with a view to increasing competitiveness.”