Parte 1 first revolution [modalità compatibilità]

Automotive industryAutomotive industry

From crisis to restructuring From crisis to restructuring From crisis to restructuring From crisis to restructuring Rewriting the rules of Rewriting the rules of automotiveautomotive industryindustry

Ten per cent or more…Ten per cent or more…

�� AutomobileAutomobile industryindustry accountsaccounts forfor tentenperper centcent oror moremore ofof eacheach nation’snation’s grossgrossnationalnational productsproducts

By Masters Division By Masters Division -- Facoltà di Facoltà di Economia di TorinoEconomia di Torino

European by birth, American by European by birth, American by adoptionadoption

Although the automobile was invented in Although the automobile was invented in Europe, mass production as the basis of Europe, mass production as the basis of mass marketing was developed andmass marketing was developed andmass marketing was developed andmass marketing was developed andestablished in United Statesestablished in United States


First revolutionFirst revolutionTheThe FordFord systemsystem becamebecame thethe fundamentalfundamental

paradigmparadigm forfor productionproduction systemsystem inin thethe USUSautomobileautomobile industryindustryandand waswas thenthen transferredtransferred toto advancedadvancedandand waswas thenthen transferredtransferred toto advancedadvancednations,nations,includingincluding thosethose inin Europe,Europe, JapanJapan andandotherother AsianAsian nations,nations, andand adaptedadapted toto thethecurrentcurrent statestate..


Second revolutionSecond revolution

In the US, mass production inherited from In the US, mass production inherited from the Ford system was followed by a more the Ford system was followed by a more marketing oriented marketing oriented paradigm shiftparadigm shift …..…..created by A.P. Sloan of General Motors, created by A.P. Sloan of General Motors, which respond better to a which respond better to a mature marketmature market ..


ThirdThird revolutionrevolution

�� InIn contrastcontrast toto thethe massmass productionproduction model,model,thethe automobileautomobile industryindustry inin Japan,Japan, whichwhichwaswas thethe lastlast toto joinjoin thethe developeddeveloped nations,nations,gatheredgathered massmass productionproductiongatheredgathered massmass productionproductionmanufacturingmanufacturing techniquestechniques fromfrom bothboththethe EuropeanEuropean andand USUS system,system, butbutgeneratedgenerated aa productionproduction systemsystemdifferentdifferent fromfrom bothboth ..


Lean productionLean production

�� ThisThis isis calledcalled thethe JapaneseJapanese productionproductionsystemsystem oror justjust--inin--timetime (JIT)(JIT)mmanufacturinganufacturing ..

�� AA furtherfurther developmentdevelopment basedbased ofof thisthis�� AA furtherfurther developmentdevelopment basedbased ofof thisthissystemsystem isis leanlean manufacturingmanufacturing

�� whichwhich tooktook shapeshape byby absorbingabsorbing automotiveautomotiveproductproduct developmentdevelopment systemssystems andandsuppliersupplier systemssystems ofof keiretsukeiretsu companiescompanies..


Alcune delle pubblicazioni Alcune delle pubblicazioni utilizzateutilizzate


First revolutionFirst revolution

HenryHenry FordFord andand FordismFordism


A market for entertainmentA market for entertainment

When Henry Ford entered the carWhen Henry Ford entered the car--making making business in 1899, the optimal business in 1899, the optimal manufacturing strategy was to concentrate manufacturing strategy was to concentrate production on production on a small quantity of a small quantity of production on production on a small quantity of a small quantity of relatively expensive products and sell relatively expensive products and sell them at a high markup.them at a high markup.


Marketing geniusMarketing genius

�� HenryHenry Ford’sFord’s marketingmarketing geniusgenius waswas totorecognizerecognize thatthat thethe desiredesire toto ownown aa carcar waswasnearlynearly universaluniversal..

�� …… earlyearly producersproducers assumedassumed thatthat thethe marketmarket waswasprimarilyprimarily forfor thethe recreationalrecreational andand leisureleisurepurposespurposes ofof thethe wealthywealthy..primarilyprimarily forfor thethe recreationalrecreational andand leisureleisurepurposespurposes ofof thethe wealthywealthy..

�� FordFord howeverhowever believedbelieved thatthat aa vastvast marketmarketexistedexisted amongamong poorerpoorer peoplepeople forfor ananinexpensiveinexpensive vehiclevehicle

�� HeHe sawsaw thatthat thethe keykey toto makingmaking inexpensiveinexpensivevehiclesvehicles waswas toto changechange thethe productionproduction processprocess..


HENRY FORD I


Ford Motor Co. at lastFord Motor Co. at lastHenryHenry Ford’sFord’s firstfirst twotwo tentativetentative toto setset upup aa carmakercarmaker companycompany failedfailed..

�� DetroitDetroit AutomobileAutomobile CompanyCompany ,, establishedestablished inin 18991899,, builtbuilt aa couplecoupleofof dozendozen vehiclesvehicles beforebefore closingclosing inin 19001900..

�� ReorganizedReorganized asas thethe HenryHenry FordFord CompanyCompany inin 19011901,, thethe firmfirm failedfailedagainagain withinwithin aa yearyear.. FordFord himselfhimself claimedclaimed thatthat hishis financialfinancial backersbackersagainagain withinwithin aa yearyear.. FordFord himselfhimself claimedclaimed thatthat hishis financialfinancial backersbackershadhad givengiven upup onon himhim tootoo quickly,quickly, whilewhile hishis criticscritics chargedcharged thatthat hehewaswas moremore interestedinterested inin racingracing carscars thanthan inin buildingbuilding themthem..

�� TheThe FordFord MotorMotor CompanyCompany ,, HenryHenry Ford’sFord’s thirdthird andand ultimateultimatesuccessfulsuccessful attemptattempt toto makemake cars,cars, waswas foundedfounded inin 19031903..


From Model N to Model TFrom Model N to Model T

�� At the end of a long dispute, Henry Ford could At the end of a long dispute, Henry Ford could concentrate on building concentrate on building an inexpensive caran inexpensive car , , beginning with the fourbeginning with the four--cylinder cylinder Model NModel Nintroduced in 1906 at a price of 600 dollars. introduced in 1906 at a price of 600 dollars.

�� Model N Model N was greeted enthusiastically and Ford was greeted enthusiastically and Ford sales rose to 10.000 in 1908. sales rose to 10.000 in 1908.

�� The successor to the Model N, The successor to the Model N, Model TModel T , was , was priced at 650 dollars on its introduction on 1909. priced at 650 dollars on its introduction on 1909.


FORD MODEL N (anno 1902)


FORD MODEL T (anno 1914)


Mass production at Highland ParkMass production at Highland Park

�� FordFord beganbegan productionproduction atat aa newnew plantplant atatHighlandHighland Park,Park, Michigan,Michigan, onon NewNew Year’sYear’s DayDay19111911

�� TheThe HighlandHighland ParkPark complexcomplex waswas knownknown asas thethe�� TheThe HighlandHighland ParkPark complexcomplex waswas knownknown asas thetheCrystalCrystal PalacePalace ,, asas 7575%% ofof thethe buildingbuilding façadefaçadewaswas glassglass..

�� AfterAfter installinginstalling thethe movingmoving assemblyassembly lineline inin 19131913,,FordFord finallyfinally hithit thethe 500500 dollarsdollars targettarget.. InIn itsitslastlast yearyear ofof production,production, inin 19271927,, ModelModel TT couldcouldbebe purchasedpurchased forfor 290290 dollarsdollars


HIGLAND PARK (primo stabilimento Ford)


To River RougeTo River Rouge

�� Model T production hit an all time peak Model T production hit an all time peak of 1,6 million in 1924. of 1,6 million in 1924. 67.000 workers 67.000 workers were employed at Highland Park in 1925.were employed at Highland Park in 1925.

�� …. …. but the plant’s days were numbered.but the plant’s days were numbered.�� …. …. but the plant’s days were numbered.but the plant’s days were numbered.�� WhenWhen Model T production ended in Model T production ended in

1927, 1927, Highland Park closed and the Highland Park closed and the assembly line itself was moved toassembly line itself was moved to Ford’s Ford’s River Rouge complexRiver Rouge complex


Folk heroFolk hero

Henry Ford became an instant celebrity in Henry Ford became an instant celebrity in the US on January 5 1914 when he the US on January 5 1914 when he announced that announced that -- he would pay his workers 5 dollars a he would pay his workers 5 dollars a -- he would pay his workers 5 dollars a he would pay his workers 5 dollars a day, reduce the work day from 9 to 8 day, reduce the work day from 9 to 8 hours, hours, -- and hire several thousand additional and hire several thousand additional workers to staff a third shiftworkers to staff a third shift


Autocrat and despotAutocrat and despot

�� Success with mass production and Model Success with mass production and Model T had given Henry a T had given Henry a belief in the belief in the absolute infallibility of his judgmentabsolute infallibility of his judgment . . Ford criticized teachers, bankers and Ford criticized teachers, bankers and Ford criticized teachers, bankers and Ford criticized teachers, bankers and lawyers. lawyers.

�� He wanted to kick out all the doctors from He wanted to kick out all the doctors from the Henry Ford Hospital and replace them the Henry Ford Hospital and replace them with chiropractors.with chiropractors.


The best managers go awayThe best managers go away

�� Most of the Ford Motor Company talented Most of the Ford Motor Company talented executives departed during the late 1910s executives departed during the late 1910s and early 1920s, including most of those and early 1920s, including most of those that had been instrumental for the that had been instrumental for the that had been instrumental for the that had been instrumental for the company’s early success.company’s early success.

�� Thereafter Henry Ford became a despot Thereafter Henry Ford became a despot who wielded absolute, arbitrary authority who wielded absolute, arbitrary authority over his company.over his company.


AdmiredAdmired in Soviet in Soviet UnionUnion

�� Ford’s mass production revolution was Ford’s mass production revolution was widely admired and emulated in the Soviet widely admired and emulated in the Soviet Union. Union.

�� Lenin and Trosky thought of Ford not as a Lenin and Trosky thought of Ford not as a capitalist but as a revolutionary. capitalist but as a revolutionary. capitalist but as a revolutionary. capitalist but as a revolutionary.

�� Ford tractors had a key role in improving Ford tractors had a key role in improving Soviet agricultural productivity. Soviet agricultural productivity.

�� Ford rejected Soviet government request to Ford rejected Soviet government request to build a factory there, having determined that it build a factory there, having determined that it could not be profitablecould not be profitable


GrandGrand CroixCroix

�� HenryHenry FordFord admiredadmired thethe enterprise,enterprise, orderlinessorderlinessandand industrialindustrial skillskill ofof thethe GermanGerman ThirdThird ReichReich ..

�� OnOn hishis seventyseventy--fifthfifth birthday,birthday, JulyJuly 3030 19381938,, oneonemonthmonth beforebefore ofof thethe MunichMunich Pact,Pact, FordFord acceptedacceptedthethe GrandGrand CroixCroix ofof GermanyGermany byby thethe GermanGerman vicevicethethe GrandGrand CroixCroix ofof GermanyGermany byby thethe GermanGerman viceviceconsulconsul inin frontfront ofof aa cheeringcheering crowdcrowd inin DearbornDearborn..


Ford cease to holdFord cease to hold

�� During the 1930s Henry Ford turned over During the 1930s Henry Ford turned over responsibility responsibility for running his mass production for running his mass production empire to Henry empire to Henry BennetBennet a boxer with connection a boxer with connection to organized crime. to organized crime. to organized crime. to organized crime.

�� BennetBennet beat up workers suspected of union beat up workers suspected of union sympathies, sympathies, prevented them talking to each prevented them talking to each other and monitored their trips to the bathroom.other and monitored their trips to the bathroom.

�� BennetBennet power exceeded even that of Henry power exceeded even that of Henry Ford’s son, Ford’s son, EdselEdsel, , who had the title of company who had the title of company president.president.


Bennet’s takeover Bennet’s takeover

Bennet’s takeover Bennet’s takeover �� Ford believed that his son Edsel was not Ford believed that his son Edsel was not

tough enough tough enough to stand up to competitors, Union to stand up to competitors, Union organizers and government regulators, whereas organizers and government regulators, whereas Bennet got things done in a hurry, especially Bennet got things done in a hurry, especially Bennet got things done in a hurry, especially Bennet got things done in a hurry, especially disagreeable task, like as firing union disagreeable task, like as firing union sympathizer.sympathizer.

�� When fortyWhen forty--ninenine--yearsyears-- old Edsel died in 1943, old Edsel died in 1943, the old man returned as president at age eighty, the old man returned as president at age eighty, but in realitybut in reality Bennet’s takeover of the Bennet’s takeover of the company was by then nearly completed.company was by then nearly completed.


Market share fellMarket share fell

�� Many Americans fed up with Henry Ford’s Many Americans fed up with Henry Ford’s ignorant pronouncements and brutal treatment ignorant pronouncements and brutal treatment of workersof workers refused to buy Ford cars.refused to buy Ford cars.

�� Ford’s market share fell from 51% in 1924 to Ford’s market share fell from 51% in 1924 to 20% in 1942. 20% in 1942. It was in third place behind GM It was in third place behind GM and Chrysler when production was halted three and Chrysler when production was halted three month after the Japanese attack on Pearl month after the Japanese attack on Pearl Harbor.Harbor.


Henry IIHenry II

�� By threatening to sell their company stock, By threatening to sell their company stock, the elder Henry’s wife and Edsel’s widow the elder Henry’s wife and Edsel’s widow finallyfinally forced the old man in 1945 to turn forced the old man in 1945 to turn over the presidency of the company to over the presidency of the company to over the presidency of the company to over the presidency of the company to young Henry II young Henry II (Edsel’s oldest son, (Edsel’s oldest son, twentytwenty--sixsix--years old). years old).


HENRY FORD II


The endThe end

�� Minutes after becoming president, armed Minutes after becoming president, armed with a gun,with a gun, Henry walked into Bennet’s Henry walked into Bennet’s office and fired him from the company.office and fired him from the company.

�� Two years later, Henry Ford died.Two years later, Henry Ford died.


From Ford to FordismFrom Ford to Fordism

By revolutionazing industrial productionBy revolutionazing industrial productionFordism made the automobile Fordism made the automobile

-- affordable for most American families affordable for most American families and brought decent wages to workers and brought decent wages to workers -- and brought decent wages to workers and brought decent wages to workers in the automotive industry.in the automotive industry.


..but it failed to detect..but it failed to detect

�� FordFord MotorMotor CompanyCompany stumbledstumbled badlybadlywhenwhen itit failedfailed toto detectdetect changeschanges ininconsumerconsumer attitudeattitude duringduring thethe 19201920ss..

�� ItsIts marketmarket shareshare slippedslipped fromfrom oneone--halfhalf toto�� ItsIts marketmarket shareshare slippedslipped fromfrom oneone--halfhalf totooneone forthforth..

�� FordFord haha soldsold mostmost AmericanAmerican familiesfamilies theirtheirfirstfirst motormotor vehicle,vehicle, butbut GeneralGeneral MotorsMotorssoldsold themthem theirtheir secondsecond ,, thirdthird andandsubsequentsubsequent vehiclesvehicles..


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Parte 1 first revolution [modalità compatibilità]