The standardization that effects large economies for the consumer results in profits of such gross magnitude to the producer that he can scarcely know what to do with his money. But his effort must be sincere, painstaking, and fearless. Cutting out a half-a-dozen models is not standardizing. It may be, and usually is, only the limiting of business, for if one is selling on the ordinary basis of profit—that is, on the basis of taking as much money away from the consumer as he will give up—then surely the consumer ought to have a wide range of choice.
Standardization, then, is the final stage of the process. We start with consumer, work back through the design, and finally arrive at manufacturing. The manufacturing becomes a means to the end of service.
It is important to bear this order in mind. As yet, the order is not thoroughly understood. The price relation is not understood. The notion persists that prices ought to be kept up. On the contrary, good business—large consumption—depends on their going down.
And here is another point. The service must be the best you can give. It is considered good manufacturing practice, and not bad ethics, occasionally to change designs so that old models will become obsolete and new ones will have to be bought either because repair parts for the old cannot be had, or because the new model offers a new sales argument which can be used to persuade a consumer to scrap what he has and buy something new. We have been told that this is good business, that it is clever business, that the object of business ought to be to get people to buy frequently and that it is bad business to try to make anything that will last forever, because when once a man is sold he will not buy again.
Our principle of business is precisely to the contrary. We cannot conceive how to serve the consumer unless we make for him something that, as far as we can provide, will last forever. We want to construct some kind of a machine that will last forever. It does not please us to have a buyer's car wear out or become obsolete. We want the man who buys one of our products never to have to buy another. We never make an improvement that renders any previous model obsolete. The parts of a specific model are not only interchangeable with all other cars of that model, but they are interchangeable with similar parts on all the cars that we have turned out. You can take a car of ten years ago and, buying to-day's parts, make it with very little expense into a car of to-day. Having these objectives the costs always come down under pressure. And since we have the firm policy of steady price reduction, there is always pressure. Sometimes it is just harder!
Take a few more instances of saving. The sweepings net six hundred thousand dollars a year. Experiments are constantly going on in the utilization of scrap. In one of the stamping operations six-inch circles of sheet metal are cut out. These formerly went into scrap. The waste worried the men. They worked to find uses for the discs. They found that the plates were just the right size and shape to stamp into radiator caps but the metal was not thick enough. They tried a double thickness of plates, with the result that they made a cap which tests proved to be stronger than one made out of a single sheet of metal. We get 150,000 of those discs a day. We have now found a use for about 20,000 a day and expect to find further uses for the remainder. We saved about ten dollars each by making transmissions instead of buying them. We experimented with bolts and produced a special bolt made on what is called an "upsetting machine" with a rolled thread that was stronger than any bolt we could buy, although in its making was used only about one third of the material that the outside manufacturers used. The saving on one style of bolt alone amounted to half a million dollars a year. We used to assemble our cars at Detroit, and although by special packing we managed to get five or six into a freight car, we needed many hundreds of freight cars a day. Trains were moving in and out all the time. Once a thousand freight cars were packed in a single day. A certain amount of congestion was inevitable. It is very expensive to knock down machines and crate them so that they cannot be injured in transit—to say nothing of the transportation charges. Now, we assemble only three or four hundred cars a day at Detroit—just enough for local needs. We now ship the parts to our assembling stations all over the United States and in fact pretty much all over the world, and the machines are put together there. Wherever it is possible for a branch to make a part more cheaply than we can make it in Detroit and ship it to them, then the branch makes the part.
The plant at Manchester, England, is making nearly an entire car. The tractor plant at Cork, Ireland, is making almost a complete tractor. This is an enormous saving of expense and is only an indication of what may be done throughout industry generally, when each part of a composite article is made at the exact point where it may be made most economically. We are constantly experimenting with every material that enters into the car. We cut most of our own lumber from our own forests. We are experimenting in the manufacture of artificial leather because we use about forty thousand yards of artificial leather a day. A penny here and a penny there runs into large amounts in the course of a year.
The greatest development of all, however, is the River Rouge plant, which, when it is running to its full capacity, will cut deeply and in many directions into the price of everything we make. The whole tractor plant is now there. This plant is located on the river on the outskirts of Detroit and the property covers six hundred and sixty-five acres—enough for future development. It has a large slip and a turning basin capable of accommodating any lake steamship; a short-cut canal and some dredging will give a direct lake connection by way of the Detroit River. We use a great deal of coal. This coal comes directly from our mines over the Detroit, Toledo and Ironton Railway, which we control, to the Highland Park plant and the River Rouge plant. Part of it goes for steam purposes. Another part goes to the by-product coke ovens which we have established at the River Rouge plant. Coke moves on from the ovens by mechanical transmission to the blast furnaces. The low volatile gases from the blast furnaces are piped to the power plant boilers where they are joined by the sawdust and the shavings from the body plant—the making of all our bodies has been shifted to this plant—and in addition the coke "breeze" (the dust in the making of coke) is now also being utilized for stoking. The steam power plant is thus fired almost exclusively from what would otherwise be waste products. Immense steam turbines directly coupled with dynamos transform this power into electricity, and all of the machinery in the tractor and the body plants is run by individual motors from this electricity. In the course of time it is expected that there will be sufficient electricity to run practically the whole Highland Park plant, and we shall then have cut out our coal bill.
Among the by-products of the coke ovens is a gas. It is piped both to the Rouge and Highland Park plants where it is used for heat-treat purposes, for the enamelling ovens, for the car ovens, and the like. We formerly had to buy this gas. The ammonium sulphate is used for fertilizer. The benzol is a motor fuel. The small sizes of coke, not suitable for the blast furnaces, are sold to the employees—delivered free into their homes at much less than the ordinary market price. The large-sized coke goes to the blast furnaces. There is no manual handling. We run the melted iron directly from the blast furnaces into great ladles. These ladles travel into the shops and the iron is poured directly into the moulds without another heating. We thus not only get a uniform quality of iron according to our own specifications and directly under our control, but we save a melting of pig iron and in fact cut out a whole process in manufacturing as well as making available all our own scrap.
What all this will amount to in point of savings we do not know—that is, we do not know how great will be the saving, because the plant has not been running long enough to give more than an indication of what is ahead, and we save in so many directions—in transportation, in the generation of our power, in the generation of gas, in the expense in casting, and then over and above that is the revenue from the by-products and from the smaller sizes of coke. The investment to accomplish these objects to date amounts to something over forty million dollars.