The man who created the middle class to sell her cars

April 7, 1947

Henry Ford dies at the age of 83. Founder of Ford Motor, the second richest man in the United States after Rockefeller, the man who changed America, revolutionized industrial production and introduced the car to the masses. Much has been said about Henry Ford. What few realize is that he was the creator of the modern way of life as we know him today.

In the early 20th century, the car was a matter exclusively for the rich. Most models were complex machines that required a chauffeur with knowledge of their systems to move.

Henry Ford, then, was not the one who built the first car, but he was determined to build a simple, reliable, and affordable vehicle that could be driven by the average American. The result was the Model T and the assembly line, two innovations that revolutionized American society and changed the world we live in.

The Model T made its market debut in 1908, selling for $ 825. In the first year, more than 10,000 such cars were sold. And four years later, when the price dropped to $ 575, sales skyrocketed. By 1914, Ford had a 48% share of the car market.

The “key” to Ford’s ability to sell an affordable car was the development of the assembly line that reduced construction costs. Again, Ford was not the first to think of the assembly line. But he was the one who perfected it. Thus, it was able to reduce the construction time of the Model T from 12.5 hours to less than 6 hours. From the now-abandoned Ford plant on Woodward Avenue in Highland Park, Michigan, more than 9,000 Model Ts a day came out in 1925.
$ 5 a day

In January 1914 it froze in Detroit. Nevertheless Thousands of Americans lined up outside the Ford plant to look for work. The reason; Henry Ford made them an offer they could not refuse: $ 5 a day for eight hours of factory work.

It was more than double the daily wage of factory workers at that time. Five dollars in 1914 would be equivalent to $ 120 in today’s money. And for the workers, it was one of those moments that defined the 20th century.

Of course, Ford was a tough businessman. He did not give his workers $ 5 a day out of kindness. He did it to stabilize his staff.

By 1914, Ford had perfected the assembly line. Treadmills carried small parts to the workers, instead of them going where they needed to do some work. All they had to do was stand in their place and perform a certain move.

His problem now was the workforce. At that time, the factories were suffering from the many absences and constant changes of workers. It was a job that everyone hated, and so most people sooner or later decided not to show up at the factory again.

Ford did not need highly qualified employees. All he wanted was to do the same, repetitive movement over and over again, for hours and days.

And he bet that by increasing his wages, he would achieve a more reliable workforce. He was right, as the results were beyond all expectations.

Productivity skyrocketed, with Ford Motor doubling its profits in less than two years. Ford himself would say afterwards that the pay rise was the best cost-cutting move he has ever made.

The double benefit

But his decision to raise wages to $ 5 (while reducing working hours from 9 a.m. to 8 a.m. today) had a double benefit for Henry Ford. In addition to increasing productivity, he managed to create a new middle class, earning enough (about $ 30,000 a year in current money) to be able to buy the car his factory built.

According to economists, it was the move that changed America’s economic model, creating an industrial middle class and a consumer-driven economy.

Money Review

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