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Ford Motor Company is an American automaker and the world's fifth largest automaker based on worldwide vehicle sales. Based in Dearborn, Michigan, a suburb of Detroit, the automaker was founded by Henry Ford, on June 16, 1903. Ford Motor Company would go on to become one of the largest and most profitable companies in the world, as well as being one of the few to survive the Great Depression. The largest family-controlled company in the world, the Ford Motor Company has been in continuous family control for over 110 years. Ford now encompasses two brands: Ford and Lincoln. Ford once owned 5 other luxury brands, they were Volvo, Land Rover, Jaguar, Aston Martin and Mercury. But over time those brands were sold to other companies and Mercury was discontinued.
Henry Ford's initial foray into automobile manufacturing was the Detroit Automobile Company, founded in 1899. The company floundered, and in 1901 was reorganized as the Henry Ford Company. In March 1902, after falling out with his financial backers, Ford left the company with the rights to his name and 900 dollars.
Henry Ford himself turned to an acquaintance, coal dealer Alexander Y. Malcomson, to help finance another automobile company. Malcomson put up the money to start the partnership "Ford and Malcomson" and the pair designed a car and began ordering parts. However, by February 1903, Ford and Malcomson had gone through more money than expected, and the manufacturing firm of John and Horace Dodge, who had made parts for Ford and Malcomson, was demanding payment. Malcomson, constrained by his coal business demands, turned to his uncle John S. Gray, the president of the German-American Savings Bank and a good friend. Malcomson proposed incorporating Ford and Malcomson to bring in new investors, and wanted Gray to join the company, thinking that Gray's name would attract other investors. Gray was not interested at first, but Malcomson promised he could withdraw his share at any time, so Gray reluctantly agreed. On the strength of Gray's name, Malcomson recruited other business acquaintances to invest, including local merchants Albert Strelow and Vernon Fry, lawyers John Anderson and Horace Rackham, Charles T. Bennett of the Daisy Air Rifle Company, and his own clerk James Couzens. Malcomson also convinced the Dodges to accept stock in lieu of payment.
On June 16, 1903, the Ford Motor Company was incorporated, with 12 investors owning a total of 1000 shares. Ford and Malcomson together retained 51% of the new company in exchange for their earlier investments. When the total stock ownership was tabulated, shares in the company were: Henry Ford (255 shares), Alexander Y. Malcomson (255 shares), John S. Gray (105 shares), John W. Anderson (50 shares), Horace Rackham (50 shares), Horace E. Dodge (50 shares), John F. Dodge (50 shares), Charles T. Bennett (50 shares), Vernon C. Fry (50 shares), Albert Strelow (50 shares), James Couzens (25 shares), and Charles J. Woodall (10 shares).
At the first stockholder meeting on June 18, Gray was elected president, Ford vice-president, and James Couzens secretary. Despite Gray's misgivings, the Ford Motor Company was immediately profitable, with profits by October 1, 1903 of almost $37,000. A dividend of 10% was paid that October, an additional dividend of 20% at the beginning of 1904, and another 68% in June 1904. Two dividends of 100% each in June and July 1905 brought the total investor profits to nearly 300% in just over 2 years; 1905 total profits were almost $300,000.
However, there were internal frictions in the company that Gray was nominally in charge of. Most of the investors, both Malcomson and Gray included, had their own businesses to attend to; only Ford and Couzens worked full-time at the company. The issue came to a head when the principal stockholders, Ford and Malcomson, quarreled over the future direction of the company. Gray sided with Ford. By early 1906 Malcomson was effectively frozen out of the Ford Motor Company, and in May sold his shares to Henry Ford. John S. Gray died unexpectedly in 1906, and his position as Ford's president was taken over by Ford himself soon afterward.
Ford was subject to lawsuits or threats there of from the Association of Licensed Automobile Manufacturers early in its history. The Association claimed patent rights to most gasoline-powered automobiles. After several years of legal wrangling, the Association eventually dropped its case against Ford in 1911.
During its early years, the company produced a range of vehicles designated, chronologically, from the Ford Model A (1903) to the Model K and Model S (Ford's last right-hand steering model) of 1907. The K, Ford's first six-cylinder model, was known as "the gentleman's roadster" and "the silent cyclone", and sold for US$2800; by contrast, around that time, the Enger 40 was priced at US$2000, the Colt Runabout US$1500, the high-volume Oldsmobile Runabout US$650, Western's Gale Model A US$500, and the Success hit the amazingly low US$250.
In 1908, Henry Ford introduced the Model T. Earlier models were produced at a rate of only a few a day at a rented factory on Mack Avenue in Detroit, Michigan, with groups of two or three men working on each car from components made to order by other companies (what would come to be called an "assembled car"). The first Model Ts were built at the Piquette Road Manufacturing Plant, the first company-owned factory. In its first full year of production, 1909, about 18,000 Model Ts were built. As demand for the car grew, the company moved production to the much larger Highland Park Plant, and in 1911, the first year of operation there, 69,762 Model Ts were produced, with 170,211 in 1912. By 1913, the company had developed all of the basic techniques of the assembly line and mass production. Ford introduced the world's first moving assembly line that year, which reduced chassis assembly time from 12 1⁄2 hours in October to 2 hours 40 minutes (and ultimately 1 hour 33 minutes), and boosted annual output to 202,667 units that year After a Ford ad promised profit-sharing if sales hit 300,000 between August 1914 and August 1915, sales in 1914 reached 308,162, and 501,462 in 1915; by 1920, production would exceed one million a year.
These innovations were hard on employees, and turnover of workers was very high, while increased productivity reduced labor demand. Turnover meant delays and extra costs of training, and use of slow workers. In January 1914, Ford solved the employee turnover problem by doubling pay to $5 a day cutting shifts from nine hours to an eight hour day for a 5 day work week (which also increased sales; a line worker could buy a T with less than four months' pay), and instituting hiring practices that identified the best workers, including disabled people considered unemployable by other firms. Employee turnover plunged, productivity soared, and with it, the cost per vehicle plummeted. Ford cut prices again and again and invented the system of franchised dealers who were loyal to his brand name. Wall Street had criticized Ford's generous labor practices when he began paying workers enough to buy the products they made.
While Ford attained international status in 1904 with the founding of Ford of Canada, it was in 1911 the company began to rapidly expand overseas, with the opening of assembly plants in Ireland (1917), England and France, followed by Denmark (1923), Germany (1925), Austria (1925), and Argentina (1925), and also in South Africa (1924) and Australia (1925) as subsidiaries of Ford of Canada due to preferential tariff rules for Commonwealth countries. By the end of 1919, Ford was producing 50 percent of all cars in the United States, and 40% of all British ones; by 1920, half of all cars in the U.S. were Model Ts. (The low price also killed the cyclecar in the U.S.) The assembly line transformed the industry; soon, companies without it risked bankruptcy. Of 200 U.S. car makers in 1920, only 17 were left in 1940.
It also transformed technology. Henry Ford is reported to have said, "Any customer can have a car painted any color that he wants so long as it is black." Before the assembly line, Ts had been available in a variety of colors, including red, blue, and green, but not black. Now, paint had become a production bottleneck; only Japan Black dried quickly enough, and not until Duco lacquer appeared in 1926 would other colors reappear on the T.
In 1915, Henry Ford went on a peace mission to Europe aboard a ship, joining other pacifists in efforts to stop World War I. This led to an increase in his personal popularity. Ford would subsequently go on to support the war effort with the Model T becoming the underpinnings for Allied military vehicles, like the Ford 3-Ton M1918 tank, and the 1916 ambulance.
The Ford oval trademark was first introduced in 1907. The 1928 Model A was the first vehicle to sport an early version of the Ford script in the oval badge. The dark blue background of the oval is known to designers as Pantone 294C. The Ford script is credited to Childe Harold Wills, Ford's first chief engineer and designer. He created a script in 1903 based on the one he used for his business cards. Today, the oval has evolved into a perfect oval with a width-to-height ratio of 8:3. The current Centennial Oval was introduced on June 17, 2003 as part of the 100th anniversary of Ford Motor Company.
In 1919, Edsel Ford succeeded his father as president of the company, although Henry still kept a hand in management. While prices were kept low through highly efficient engineering, the company used an old-fashioned personalized management system, and neglected consumer demand for improved vehicles. So, while four-wheel brakes were invented by Arrol-Johnson (and were used on the 1909 Argyll), they did not appear on a Ford until 1927. (To be fair, Chevrolet waited until 1928.) Ford steadily lost market share to GM and Chrysler, as these and other domestic and foreign competitors began offering fresher automobiles with more innovative features and luxury options. GM had a range of models from relatively cheap to luxury, tapping all price points in the spectrum, while less wealthy people purchased used Model Ts. The competitors also opened up new markets by extending credit for purchases, so consumers could buy these expensive automobiles with monthly payments. Ford initially resisted this approach, insisting such debts would ultimately hurt the consumer and the general economy. Ford eventually relented and started offering the same terms in December 1927, when Ford unveiled the redesigned Model A, and retired the Model T after producing 15 million units.
On February 4, 1922 Ford expanded its reach into the luxury auto market through its acquisition of the Lincoln Motor Company from Henry M. Leland who had founded and named the company in 1917 for Abraham Lincoln whom Henry Leland admired. The Mercury division was established later in 1938 to serve the mid-price auto market between the Ford and Lincoln brands.
Ford Motor Company had built the largest museum of American History in 1928, The Henry Ford. Henry Ford would go on to acquire Abraham Lincoln's chair, which he was assassinated in, from the owners of Ford's Theatre. Abraham Lincoln's chair would be displayed along with John F. Kennedy's Lincoln limousine in the Henry Ford Museum & Greenfield Village in Dearborn, known today as The Henry Ford. Kennedy's limousine was leased to the White House by Ford.
In 1928, Henry Ford negotiated a deal with the government of Brazil for a plot of land in the Amazon Rainforest. There, Ford attempted to cultivate rubber for use in the company's automobiles. After considerable labor unrest, social experimentation, and a failure to produce rubber, and after the invention of synthetic rubber, the settlement was sold in 1945 and abandoned.
During the great depression, Ford in common with other manufacturers, responded to the collapse in motor sales by reducing the scale of their operations and laying off workers. By 1932, the unemployment rate in Detroit had risen to 30% with thousands of families facing real hardship. Although Ford did assist a small number of distressed families with loans and parcels of land to work, the majority of the thousands of unskilled workers who were laid off were left to cope on their own. However, Henry Ford angered many by making public statements that the unemployed should do more to find work for themselves.
This led to Detroit's Unemployed Council organizing the Ford Hunger March. On March 7, 1932 some 3,000 - 5,000 unemployed workers assembled in West Detroit to march on Ford's River Rouge plant to deliver a petition demanding more support. As the march moved up Miller Road and approached Gate 3 the protest turned ugly. The police fired tear gas into the crowd and fire trucks were used to soak the protesters with icy water. When the protesters responded by throwing rocks, the violence escalated rapidly and culminated in the police and plant security guards firing live rounds through the gates of the plant at the unarmed protesters. Four men were killed outright and a fifth died later in hospital. Up to 60 more were seriously injured.
In May 1929 the Soviet Union signed an agreement with the Ford Motor Company. Under its terms, the Soviets agreed to purchase $13 million worth of automobiles and parts, while Ford agreed to give technical assistance until 1938 to construct an integrated automobile-manufacturing plant at Nizhny Novgorod. Many American engineers and skilled auto workers moved to the Soviet Union to work on the plant and its production lines, which was named Gorkovsky Avtomobilny Zavod (GAZ), or Gorki Automotive Plant in 1932. A few American workers stayed on after the plant's completion, and eventually became victims of Stalin's Great Terror, either shot or exiled to Soviet gulags. In 1933, the Soviets completed construction on a production line for the Ford Model-A passenger car, called the GAZ-A, and a light truck, the GAZ-AA. Both these Ford models were immediately adopted for military use. By the late 1930s production at Gorki was 80,000-90,000 "Russian Ford" vehicles per year. With its original Ford-designed vehicles supplemented by imports and domestic copies of imported equipment, the Gorki operations eventually produced a range of automobiles, trucks, and military vehicles.
During the first 27 months of World War II, when the U.S. was neutral (to December 1941), Ford was hesitant to participate in the Allied military effort. Ford insisted that peaceful trade was the best way to avoid war. The Ford subsidiary in Germany had a subsidiary in Germany. In 1936, a Ford executive visiting Germany was informed by a Nazi official that Ford's Cologne plant manager was a Jew (he had one grandparent who was Jewish), prompting discussions at Ford offices in both Germany and the U.S. Heinrich Albert, Ford's Germany-U.S. liaison, insisted that the manager be fired. The manager was replaced by Robert Schmidt, who would play an important role in Germany's war effort.
Henry Ford had said war was a waste of time, and did not want to profit from it. He was concerned the Nazis during the 1930s might nationalize Ford factories in Germany. Ford nevertheless established a close collaboration with Germany's Nazi government before the war—so close, in fact, that Ford received, in July 1938, the Grand Cross of the German Eagle medal from the regime. Ford's outspoken anti-semitism, including his newspaper, The Dearborn Independent, which published The Protocols of the Elders of Zion also lent credence to the view that he sympathized with the Nazis. In the spring of 1939, the Nazi government assumed day-to-day control of many foreign-owned factories in Germany. However, Ford's Dearborn headquarters continued to maintain a 52% ownership over its German factories but with no voice or control or financial reward. Ford factories contributed significantly to the buildup of Germany's armed forces. Ford negotiated a resource-sharing agreement that allowed the German military to access scarce supplies, particularly rubber. During this same period, Ford was hesitant to participate in the Allied military effort. In June 1940, after France had fallen to the Wehrmacht, Henry Ford personally vetoed a plan to build airplane engines for the Allies.
The company enthusiatically supported the war effort after Pearl Harbor, making it a major component of the "Arsenal of Democracy" that President Roosevelt had promised would mobilize industrial resources to win the war. Henry, aged 76 and early senile, played a minor role even though he had 55% ownership of the company stock. His son Edsell Ford, the company president and owner of 42% of the stock, had never been a pacifist like his father and now made all the decisions.
The company produced 390,000 tanks and trucks, 27,000 engines, 270,000 Jeeps, over 8000 B-24 Liberators, and hundreds of thousands of parts, gun mounts, and machine tools for the war effort. It ranked third among corporations in the value of wartime production contracts.
The Company's new Willow Run factory was designed for the production of B-24 bombers although the production line was initially characterized by bungling and incompetence. Ford's efforts benefited the Allies as well as the Axis. After Bantam invented the Jeep, the US War Department handed production over to Ford and Willys.
The Treasury Department investigated Ford for alleged collaboration with German-run Ford plants in occupied France, but did not find conclusive evidence. After the war, Schmidt and other Nazi-era managers kept their jobs with Ford's German division. In the United Kingdom, Ford built a new factory in Trafford Park, Manchester during WWII where over 34,000 Rolls-Royce Merlin aero engines were completed by a workforce trained from scratch.
In 1943, a despondent Edsel Ford died of stomach cancer. Henry decided then to resume direct control of the company, but this proved a very poor idea as he was 78 years old and suffering from heart problems and atherosclerosis. His mental state was also questionable, and there was a very real possibility that the company would collapse if he died or became incapacitated. The Roosevelt Administration had a contingency plan in place to nationalize Ford if need be so that they wouldn't lose vital military production.
At this point, Ford's wife and daughter-in-law intervened and demanded that he turn control over to his grandson Henry Ford II. They threatened to sell off their stock (amounting to half the company's total shares) if he refused. Henry was infuriated, but there was nothing he could do, and so he gave in. When Henry II, who came to be called affectionately "Hank the Deuce," assumed command, the Company was losing US$9 million a month and in financial chaos.
Henry Ford died of a brain hemorrhage on April 7, 1947. Mourners passed by at a rate of 5,000 each hour at the public viewing on Wednesday of that week at Greenfield Village in Dearborn. The funeral service for Henry Ford was held at the Cathedral Church of St. Paul in Detroit on Thursday April 9, 1947. At the funeral service, 20,000 people stood outside St. Paul's Cathedral in the rain with 600 inside, while the funeral had attracted national attention as an estimated seven million people had mourned his death (according to A&E Biography).
Ernest R. Breech, head of Bendix Aviation, was hired in 1946, and became first Executive Vice President, then Board Chairman in 1955. Henry II served as President from 1945 to 1960, and as Chairman and CEO from 1960 to 1980. In 1956, Ford became a publicly traded corporation. The Ford family maintains about 40% controlling interest in the company, through a series of Special Class B preferred stocks. Also in 1956, following its emphasis on safety improvements in new models, Motor Trend awarded the company its "Car of the Year" award.
In 1946, Robert McNamara joined Ford as manager of planning and financial analysis. He advanced rapidly through a series of top-level management positions to the presidency of Ford on 9 November 1960, one day after John F. Kennedy's election. The first company head selected outside the Ford family, McNamara had gained the favor of Henry Ford II, and had aided in Ford's expansion and success in the postwar period. Less than five weeks after becoming president at Ford, he accepted Kennedy's invitation to join his cabinet, as Secretary of Defense.
Ford introduced the iconic Thunderbird in 1955 and the Edsel brand automobile line in 1958, following a US$250 million research and marketing campaign, which had failed to ask questions crucial for the marque's success. The Edsel was cancelled after less than 27 months in the marketplace in November 1960. The corporation bounced back from the failure of the Edsel by introducing its compact Falcon in 1960 and the Mustang in 1964. By 1967, Ford of Europe was established.
Lee Iacocca was involved with the design of several successful Ford automobiles, most notably the Mustang. He was also the "moving force," as one court put it, behind the notorious Pinto. He promoted other ideas which did not reach the marketplace as Ford products. Eventually, he became the president of the company, but clashed with "Bunkie" Knudsen as well as Henry II and ultimately, on July 13, 1978, he was fired by Henry Ford II, despite the company's having earned a $2.2 billion profit for the year. Chrysler soon hired Iacocca, which he returned to profitability during the 1980s.
In 1942, Elsa Iwanowa, who was then 16-years-old and a resident of Rostok in the Soviet Union, and many other citizens of countries that were occupied by the Wehrmacht were transported in cattle cars to the western part of Germany, where they were displayed to visiting businessmen. From there Iwanowa and others were forced to become slave laborers for Ford's German subsidiary, which had become separated from the Dearborn headquarters as a result of the U.S. declaration of war. "On March 4, 1998, fifty-three years after she was liberated from the German Ford plant, Elsa Iwanowa demanded justice, filing a class-action lawsuit in U.S. District Court against the Ford Motor Company." In court, Ford admitted that Iwanowa and many others like her were "forced to endure a sad and terrible experience"; Ford, however, moved to have the suit dismissed on the grounds that it would be best redressed on "a nation-to-nation, government-to-government" basis. In 1999, the court dismissed Iwanowa's suit. At about the same time, a number of German companies, including GM subsidiary Opel, agreed to contribute $5.1 billion to a fund to compensate the surviving slave laborers. After being the subject of much adverse publicity, Ford, in March 2000, agreed to contribute $13 million to the compensation fund.
In 1979 Philip Caldwell became Chairman, succeeded in 1985 by Donald Petersen. Harold Poling served as Chairman and CEO from 1990 to 1993. Alex Trotman was Chairman and CEO from 1993 to 1998, and Jacques Nasser served at the helm from 1999 to 2001. Henry Ford's great-grandson, William Clay Ford Jr., is the company's current Chairman of the Board and was CEO until September 5, 2006, when he named Alan Mulally from Boeing as his successor.
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In April 2000 the Ford Motor Company announced its recapitalization plan distributing about half of its $24 billion cash hoard, and paying a $10 billion special dividend, and the issuance of additional stock to the Ford family, to provide more flexibility for the Ford family in terms of estate planning. In 2000 Ford's cash hoard was the largest of any company in the world.
As of 2006, the Ford family owned about 5% of Company shares outstanding.
In December 2006, Ford announced it would mortgage all assets, including factories and equipment, office property, intellectual property (patents and blue oval trademarks), and its stakes in subsidiaries, to raise $23.4 billion in cash. The secured credit line is expected to finance product development during the restructuring through 2009, as the company expects to burn through $17 billion in cash before turning a profit. The action was unprecedented in the company's 103 year history. At the end of 2012 Ford Motor Company's cash balance was $22.9 billion and was listed as ten on the list of U.S. non-financial corporation sector's top ten cash kings by Moody's Investors Service in their March 2013 annual report on Global Credit Research.
Throughout its history, the company has faced a wide range of criticisms. Some have accused the early Fordist model of production of being exploitative, and Ford has been criticized as being willing to collaborate with dictatorships or hire mobs to intimidate union leaders and increase their profits through unethical means.
Ford refused to allow collective bargaining until 1941, with the Ford Service Department being set up as an internal security, intimidation, and espionage unit within the company, and quickly gained a reputation of using violence against union organizers and sympathizers.
Ford was also criticized for tread separation and tire disintegration of many Firestone tires installed on Ford Explorers, Mercury Mountaineers, and Mazda Navajos, which caused many crashes during the late 1990s and early 2000s (decade). It is estimated that over 250 deaths and more than 3,000 serious injuries resulted from these failures. Although Firestone received most of the blame, some blame fell on Ford, which advised customers to under-inflate the tires in order to reduce the risk of vehicle rollovers.
Other accusations were that the company collaborated with the German Nazi regime. All the Ford facilities in Nazi Germany were under the full control and financing of the German government. The profits were kept in Germany. In 1943 the Company wrote off all its holdings in Germany as a total loss, and never reclaimed them after the war. The German Ford company used slave labor in Cologne between 1941 and 1945 and produced military vehicles such as trucks, planes, and ships. Many of these allegations were made in a series of United States lawsuits in 1998. The lawsuit was dismissed in 1999 because the judge concluded "the issues...concerned international treaties between nations and foreign policy and were thus in the realm of the executive branch."
Defenders of the company argue that the Ford German division, Fordwerke, had been taken over by the Nazi government after it rose to power, claiming that it was not under the company's control. Although Ford's initial motivations were anti-war, the plants in Allied countries were heavily involved in the Allied war effort after the outbreak of war.
Ford's Argentine subsidiary was accused of collaborating with the Argentine 1976–1983 military dictatorship, actively helping in the political repression of intellectuals and dissidents that was pursued by said government. No result was proven and the company denied the allegations.
In a lawsuit initiated in 1996 by relatives of some of the estimated 600 Spanish citizens who disappeared in Argentina during the "Dirty War", evidence was presented to support the allegation that much of this repression was directed by Ford and the other major industrial firms. According to a 5,000-page report, Ford executives drew up lists of "subversive" workers and handed them over to the military task-forces which were allowed to operate within the factories. These groups allegedly kidnapped, tortured and murdered workers—at times allegedly within the plants themselves. The company denied the allegations.
In a second trial, a report brought by the CTA, and the testimonies of former Ford workers themselves, claimed that the company's Argentine factory was used between 1976 and 1978 as a detention center, and that management allowed the military to set up its own bunker inside the plant. The company denied the allegations.
In September 1971 the Ford Motor Company launched the Pinto for the North American market. Through early production of this model it emerged that design flaws could result in fuel tank explosions when the vehicle was subject to a rear-end collision. Some sources even allege this safety data was available to Ford prior to production, but was ignored for economic reasons. Either way, a major scandal followed with the leaking to San Francisco magazine Mother Jones of the notorious "Ford Pinto Memo", an internal Ford cost-benefit analysis showing that the cost of implementing design changes to the subcompact's fuel system was greater than the economic cost of the burn injuries and deaths that could be prevented by doing so. Subsequently some have played down the importance of this case, as Pinto explosion fatality estimates range widely from 27 to 900, with the lowest figures being allegedly in line with comparable fatality statistics for other car models.
In the related Ford Pinto product liability case Grimshaw v. Ford Motor Co., 119 Cal. App. 3d 757 (4th Dist. 1981) the California Court of Appeal for the Fourth Appellate District reviewed Ford's conduct and upheld compensatory damages of $2.5 million and punitive damages of $3.5 million against Ford. Of the two plaintiffs, one was killed in the collision that caused her Pinto to explode, and her passenger, 13-year-old Richard Grimshaw, was badly burned and scarred for life.