This was written in 1996 when no one saw the eventual meltdown of the US auto industry. In fact, it looked like they might just keep on chugging along without a speed bump in the road.
In June of 1996, the celebration began of the 100th anniversary of the American automobile industry. A commission of academics, museum curators, business leaders and marketers put together a well financed plan to launch a year long series of major national events and programs.
Parades, museum exhibits, special editions of magazines like Scientific American, educational materials reaching 35 million school children, a U. S. stamp and coin, commemorative license plates and more will combine to extol the auto industry's glory to the American public.
It is clearly a story worth telling.
The story begins in 1896, when the Duryea brothers founded the American auto industry. They were the first ones to actually build a production run of automobiles. Like several others they had previously assembled "one off" prototypes and put their experiments on the road. But when their 13 matching "motor wagons" rolled out of their shop, and into the hands of eagerly waiting customers, they showed the world that auto production was possible.
Not much of a beginning, but their efforts launched the industry that today employs nearly one in seven Americans. It is the largest segment in the manufacturing sector, accounting for over 1 million jobs. It uses 40% of the machine tools, 20% of aluminum, 20% of glass, 12% of steel and makes more semiconductors than Silicon Valley.
Since Frank Duryea first tooled around Springfield, Massachusetts, he's been joined by about 170 million licensed drivers who buy more than 8 million new cars and more than 4 million new trucks every year. That's a total of over 12 million new vehicles coming on the road every year.
These 12 million new vehicles join the ranks of the almost 190 million autos, buses and trucks already in service.
Their drivers spend over $400 billion annually to purchase and operate their vehicles. Every year, this represents more than 10% of the country's total personal consumption.
The Duryeas could go door to door to advertise their wares, today Automobile companies annually spend nearly $5.5 billion trying to reach their customers. Incidentally, nearly $120 million goes to cable television. This does not take into account the money spent by tire manufacturers, oil companies, insurance agencies and other related industries. It is clear that the automobile has truly become the engine of our economy.
It is nearly impossible to believe that an industry that barely managed to produce 13 wobbly, noisy, and unreliable vehicles could grow to encompass the world's largest manufacturing concerns. It is a dramatic story of trial and error. It is the story of people bitten by the bug of progress who invented solutions to monumental problems and competed savagely with each other. We'll find out who the great and lesser shapers of this industry were -- what they loved -- who they hated and why they did what they did. Some were sinners and some saints, but all lived dramatic lives that continue to affect us today and will affect our world long into the next century.
The Story:
The story of the development and impact of the American automobile industry breaks down into seven chapters or segments.
Segment One: The Pioneers
1894 -- 1914
Many people contributed to the development of the motorcar but a few pioneers stand out for their role in establishing the industry. Carl Benz kicks it off in Germany. The Duryea brothers launch the American answer. The fever spreads and soon inventors in Buffalo, Cleveland, Hartford, Indianapolis, St. Louis and Detroit are vying to turn their towns into America's motor city.
Many try and most fail to make more than just a few vehicles. But it is a period of unprecedented growth when the systems for mass production begin to be put in place. The Spindletop oil field is discovered in Texas and America becomes the greatest producer of petroleum. Inexpensive gasoline is available and cars become cheaper to operate. Public attitude changes from skepticism, to acceptance, to desire. The Dodge brothers become suppliers. Henry Leland starts Cadillac. Walter Chrysler is running Buick. Ransom Olds becomes the first mass producer. Henry Ford starts his company and vows to make cars available to everyone with his Model T. William Durant takes a group of failed companies and cobbles together an outfit he calls General Motors.
In ten short years, the first moving assembly line is pumping out Model T's --- the nature of work is forever altered. Detroit is the undisputed "Motor City."
Segment Two: Glory Days -- The World's Our Oyster
1914 -- 1929
By 1914, Henry Ford's revolutionary moving assembly line cuts the time it takes to make a car from thirteen hours to ninety three minutes. Increased production lowers unit costs and Ford passes on the savings to his customers. The Model T's price drops from $850 to $360. His share of the market zooms from 9% to over 48%. At the same time he doubles wages in his plant to $5.00 a day and turns his workers into buyers. This triggers a riot as people clamor to get a job with Ford and helps to set off a mass migration to Detroit.
By 1920, Detroit's population doubles to a million people and Henry Ford is a folk hero. While the urban landscape is forever altered farmers also love their flivvers. The isolation of farm life could drive you mad but now farmers can go to town, to church, send their kids to school, visit a neighbor and still be home in time to do their chores. Billy Durant adopts a different strategy with General Motors. Ford made one car for everyone, Durant made many different types of cars and hoped anyone could find something that suited them.
Both approaches worked and Ford and General Motors began to consolidate their leadership. They set up operations in dozens of foreign countries and they can truly claim to be the car makers for the world. These lions were roaring loudly during the twenties but trouble loomed.
Segment Three: Depression and Design
1929 -- 1940
With the stock market collapse, in 1929, came the inevitable drop in auto production. Production was down 37% and employment dropped 30%. While some said, "prosperity was just around the corner," it was going to be an awfully long walk. Few manufacturers whose operations were marginal in the 1920's would survive the Depression. Ironically, some of the most beautiful cars ever produced were made at this time. This was the last gasp for the custom coach builders but they turned out stunning work for buyers of Duesenbergs, Pierce Arrows, Cadillacs, Packards, Chryslers and Lincolns.
General Motors strategy of a wide array of products gave customers an option as they became downwardly mobile. Chrysler had learned his trade at GM and his low priced Plymouth division kept him solvent but Ford was a shambles. His one car for all just didn't work anymore --- he was behind the curve. Although his V8 engine appealed to bank robbers like Clyde Barrow, overall his cars lacked the sophistication people demanded. That combined with his increasingly idiosyncratic management style nearly doomed the company.
As employment declined assembly line speed increased and people became more and more just machine tenders. Auto work was boring, dirty and unsatisfying and due to depressed wages not as lucrative as it had once been. Dissatisfaction spawned labor unrest and the birth of the unions. The United Auto Workers battled police and armed company thugs. But the Federal Government had enacted laws that supported the workers' right to organize unions. Borrowing a tactic from Europe, a series of sit-down strikes were launched and the UAW brought GM to the bargaining table. Settlement was reached just as the Depression was vanishing and production was ratcheting back up. Cars began to sell again and people were called back to work. But the recovery was cut short --- America was going to war and Detroit got drafted.
Segment Four: Arsenal of Democracy
1940 -- 1945
The resurgence of American industry started slowly in the 1940's just as the country began to supply war materials to the Allies. When Roosevelt introduced Lend Lease in 1940 the auto companies were pressed into service. But after ten years of slow auto sales Detroit was reluctant to jump in completely. In 1941, the automakers made over three million cars and wanted to continue a "Guns and Butter" approach. Unfortunately, the needs of war necessitated that civilian production halt and in February of 1942 the last Ford rolled off the line.
From then on the automakers led the way. With ball bearings, bombers, bayonets, trucks, tanks, machine guns, ammo and of course Jeeps --- Detroit turned America into the Arsenal of Democracy. The Axis couldn't compete with the sheer material advantage the Allies enjoyed with the muscle of American industry.
Life on the home front was forever altered. Women ventured out into the work force never to return home. A new sense of freedom, of the possibilities of travel, of romance and careers invaded the culture. Barriers began to drop for women and minorities. When the war ended the future looked bright for everyone.
Segment Five: Boom, Boom, Boom
1945 -- 1974
Factory workers had stashed away over $140 million in War Bonds and wanted to cash them in on the luxuries and necessities that weren't available during the War. Over seven million returning GI's went to College on the G. I. Bill of Rights and helped to lay a strong cornerstone for an affluent middle class. While six per cent of the women who took war time jobs went home to become full time house keepers, many kept their jobs and added incomes to their growing families.
These growing families needed four million new homes right after the War and people wanted a shiny new car to go with their new lives. It was a time of insatiable demand. The factories in Europe and Japan were devastated. Detroit's only problem was building enough for the car hungry nation. It was an era of unbounded confidence and growth.
Suburbs blossomed around the country and President Eisenhower instituted a national interstate road system that insured even more expansion. We became a car culture. When Holiday Inns, McDonalds and shopping centers popped up along America's roadside the nation became franchised and our experiences standardized.
The Big Three manufacturers consolidated their hold on the automarket as the remaining independents scrambled to find a niche. But the powerful, flamboyant, befinned cars of GM, Ford and Chrysler just dominated the market. By the 1960's the two remaining small producers had merged into American Motors. It was just a matter of time before AMC would disappear.
The 1960's saw Detroit enter the decade with supreme confidence. Power was everything and their muscle bound engines were in tune with the yearnings of the emerging youth culture. Ronny and the Daytonas sang about their GTO and everyone was having fun until "Daddy took the T-Bird away." But cracks in the facade started to appear.
As the Vietnam War split the country apart and young people questioned the validity of all institutions --- Detroit began to feel the ground shake under them. Seismic shifts were underway. Ralph Nader launched the consumer movement. Rachel Carson promoted the environment. E. F. Schumacher declared that small was beautiful. Campus radicals decried the evils of capitalism. The Germans and the Japanese began to invade the American market with their small, fuel efficient and high quality cars. And the U. S. Government, responding to public pressure, started to impose safety and emissions standards.
Car sales continued to climb into the early part of the 1970's but trouble loomed. Detroit complied with the new regulations and hoped that the fires of rebellion would burn out. Instead, like the Buddhist Monks who set themselves on fire to get the attention of South Vietnam's government, Ford's Pintos were igniting. A potent symbol of Detroit's failure to adequately respond to a changing world and a harbinger for the future.
Segment Six: The Decline of the American Empire
1974 -- 1984
The American auto industry was under siege. Power, size, style and comfort had been its mantra but now the public demanded economy and quality.
The Organization of Petroleum Exporting Countries had imposed an oil embargo and almost overnight gas lines were a fixture across America. Detroit's gas guzzlers were dinosaurs headed for extinction.
For consumers, there was a solution many hadn't considered before --- a Japanese car. The Honda Civic was like the Model T. It was small, simple, inexpensive and fuel efficient. And it differed from the typical American car in one very important way --- it was well made.
When the oil started to flow again, Detroit was offered a reprieve. Sales climbed until 1979 but then a recession sent buyers fleeing. GM's sales fell by 30% and things were just as bad at Ford and Chrysler. Chrysler had to beg for a government bailout to survive. While Detroit was hanging on in the luxury end of the market they were getting killed in the low-price market. Chevrolet went from 3,250,000 cars sold in 1979 to 1,675,000 cars in 1982 --- a 50% drop. All of the Big three were shutting down factories and laying people off. It just didn't seem like Detroit could do anything right. The auto leaders blamed the Japanese, the consumers, the government, their employees, and the media for their fate. But it wasn't until they recognized, to paraphrase the cartoon character Pogo, "I have met the enemy and it is me," that progress could be made.
Segment Seven: Resurgence and the Future
1984 -- 1996
By the mid-1980's many had written off Detroit. They believed that the decline was inevitable and that the bloated management, outdated products, wasteful methods and careless quality spelled doom.
But in the boardrooms, the executive offices, the shop floors and union halls the American auto industry was asking the hard questions and taking the painful steps to reform. The American spirit began to revive.
But it wouldn't happen without some pain. Chrysler continued to teeter on the brink of destruction and Ford had only enough money in its coffers for one last shot at the Brass ring.
The chutzpah of Lee Iacocca kept Chrysler going and the trimmed company took on a siege mentality that started to get things moving.
Ford had to gamble and let a group of young stylists move ahead with their plans for an aerodynamic car. In 1984, when the new car was introduced -- the Taurus signaled more than a styling revolution. Its quality was decent and Ford was able to build these cars in about the same amount of time that the much vaunted Japanese could build their cars. Finally, America's car makers could say they were close to "World Class."
A year later, when Chrysler executives unveiled the Mini-Van they invented a new car segment. Once again, Detroit was leading the way.
Not all was well though. Across town, the number one car maker, General Motors was still adrift. Its leader, Roger Smith, once Wall Street's darling, just didn't get it. He became more famous than GM's cars when filmmaker Michael Moore made him the subject of his satirical send up of American business, "Roger and Me."
Under Smith's leadership GM's share of the market declined from over 50% to 30%. Yet he claimed a turnaround was just ahead. As car sales stalled, he launched a massive factory building spree that exhausted GM's $85 billion treasury and bankrupted its employee pension fund. Instead of spending money on new products, he convinced the board to buy robots, an aerospace company and Ross Perot's computer service company. When his replacement, Bob Stempel failed to repair the damage of Roger's reign --- the board acted. They fired Stempel, demoted his team and put in their own slate of managers. The boardroom coup sent shock waves through every oak paneled office in the Fortune 500. If it could happen at GM, no one was safe.
Within a short time, the boards of IBM, Sears and others acted to take back control from the employee managers. It was a revolution in corporate governance. But did it mean that GM would make cars that people would buy? While it will take more time to tell, GM has reported its first profit in over five years and it is still the largest corporation in the world. But executives admit it still has a long way to go. This candidness is a good sign that the blinders are off and progress is underway.
Chrysler is humming. Its styling department is turning out one hit after another and they've installed a real "car guy" in the president's office.
Ford is switching over to a "team style" operation, allowing people to wear casual clothes everyday and trying to maintain its momentum.
For all the Big Three, it has been a wrenching and painful decade but the rewards are beginning to be felt. There is a new pride and a feeling that they've made it through their trials and become stronger, leaner, smarter and better prepared for an exciting future.
Plans are underway for electric cars, cars outfitted with radar to aid crash avoidance, the use of high impact plastic for body panels that will eliminate rust, the use of holograms instead of pen and paper for car design and many other tantalizing ideas that will take us for a ride in the 21st century. What that future will actually look like is anybody's guess.
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