Three Kings’ Eve in 1914 appeared in The New York Times a surprising announcement: Henry Ford, Head of Ford Motor Company, will distribute ten million dollars among his employees throughout 1914. He will do so semi-annually and it will be an addition to the salary of each of the workers.
The figure of 10 million dollarsas Henry Ford himself would confirm to the newspaper in an edition a few days later, was an estimate. He planned to distribute that amount at the end of the year but it could rise to 12 million dollars. Or it could be less. Those 10 million represented half of the profits expected at the end of the year.
The day after the publication of the announcement, The New York Times echoed the madness: 10,000 employees showed up at the door of the Ford factory in Detroit to get a new job. That day, the company was already paying another 15,000 employees for whom entering the factory was more complicated than ever.
“I think it is better for the nation, and much better for humanity, for 20,000 or 30,000 people to be happy and well fed than for a few to become millionaires,” Ford himself assured the journalist who went to cover the news.
The announcement caused such commotion at the time that many changed jobs to form lines on the Ford Model T assembly line, as explained at the beginning of that same article in which the case of a 16-year-old boy who changed fields from the factory is told.
But it also raised eyebrows among the competition to the point that it was questioned whether the owner of the company was not engaging in some type of anti-competitive action, they state in Barrons. “If Ford wants to have fun, so be it. He can afford it. Others can’t,” noted rival automaker Joseph J. Cole on Five Dollar Day.
Five Dollar Day
On Three Kings’ Day 1914, the day following the appearance of the aforementioned advertisement in The New York Timeshe Detroit Free-Press He referred to it as “Five Dollar Day”.
This exemplified that Ford would pay at least five dollars to its employees with this new measure, double what it had been doing until now. As we said and as Henry Ford himself tried to explain in the article in The New York Times, It was not a salary increase. The worker continued to earn the same amount but, he calculated, this is what he would earn if a dividend of 10 million dollars was distributed among everyone.
Ford was asked if he was a “socialist” for distributing profits among his employees, which was immediately denied. But he presented his theory: if workers performed at a good level, they should enjoy part of those benefits. And if they had the incentive to win it, they would work better. Furthermore, no exceptions were made, the sweeper and the person in charge of his line would collect the dividends that corresponded to them. That is, a payment strategy for objectives without distinctions.
What Henry Ford discovered is that chain assembly was essential to impose his car on the competition. The higher the production volume, the lower the cost for the brand and the lower the cost for the customer. If the worker was attracted by the salary, there were more possibilities of attracting workers and continuing to feed the production chain.
The result is that in a market where no one else could produce their cars at that rate and price, the Ford Model T became the best-selling car in the world. In fact, It is still among the 10 best-selling cars in history despite the fact that the production process has been perfected to the point of satiety.
Car mass production completely changed the industry. He fordism It laid its foundations by rewarding workers. Much has been written about it, about Henry Ford’s intention to create a new middle class and for them to be the consumers of the products they manufactured.
In Forbes They cast doubt on this theory repeated over time. By increasing the money to be received, they explain, what Henry Ford intended was to establish a workforce committed to the company and with a very low turnover. Employment was tough and in 1913 alone more than 52,000 people passed through the company despite the fact that 13,000 people worked in the factory. This high turnover prevented the assembly line from operating at full capacity because replacements had to be found and employees had to be retrained.
They even claim that the assembly line came to a standstill due to the number of employees who left their jobs in search of a different job even though at that time charging just over two dollars was already good money. Doubling them and growing them to five dollars was a promise that was difficult to believe but also difficult to reject.
Forbes He points out that Ford even hired people who went to employees’ homes to certify that the worker was behaving “in the American way.” That is to say, he kept himself from bad company and from getting drunk outside of office hours. And alcoholism was one of the biggest problems that the company’s assembly line was dealing with. Whether or not the corresponding part of the bonus was delivered depended on the verdict of these people.
What they explain in this medium is that the theory that Ford wanted its own employees to buy its products is not true because, simply, it would have a very small impact on the company’s final accounts, but they do highlight that, sometimes, the quickest way to reduce costs is to increase salary costs, as paradoxical as it may sound.
They say that John R. Lee, Ford’s advisor, defended his position by pointing out that “a man who comes from a well-balanced home, who does not fear for the basic necessities of life of those he cares for, who does not live in constant fear of losing his position through no fault of his own, It is the most powerful economic factor that we can use in the form of a human being.
Attracted by a more stable work environment or by the promise of a salary incomparable to others in the market, the truth is that these workers produced millions of units that they sold to their own workers but, above all, they sold to several million others for whom Henry Ford only had one proposal:
Any customer can have a car painted any color they want, as long as it is black.
A phrase that, they say in Diariomotorwas not entirely true either.
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