Business Autobiography History

My Life and Work (Summary)

by Henry Ford

In 1914, at a time when the average factory worker made about $2.34 for a nine-hour day, Henry Ford made a stunning announcement: he would pay his workers $5 a day. Pundits called it economic suicide and Wall Street called him a socialist traitor to his class. But it wasn't charity. It was the most cold-bloodedly brilliant business decision of the century, a move designed to slash crippling employee turnover and, most importantly, create a new class of consumers who could actually afford to buy the cars they were building.

Profit Is a Byproduct of Service

Ford believed a business that only makes money is a poor kind of business. The primary goal must be to serve the public by making the best possible product at the lowest possible cost. Profit, he argued, is the natural and inevitable result of achieving this service goal.

Ford continually drove down the price of the Model T, from $850 in 1908 to under $300 by the mid-1920s. Every price cut expanded the market and increased sales volume, which in turn lowered production costs further and led to even greater overall profits, proving his thesis.

The Five-Dollar Day Was a Strategy, Not Charity

Ford's famous decision to more than double wages was a calculated business move to solve a massive operational problem: employee turnover. A stable, well-paid workforce was more efficient, loyal, and productive.

Before the $5 day, Ford had to hire over 52,000 workers annually just to maintain a workforce of 14,000, a turnover rate of 370%. After the wage increase, turnover plummeted, productivity soared, and thousands of qualified applicants lined up for jobs daily.

Eliminate Waste, Not People

True efficiency isn't about making people work harder or faster; it's about eliminating wasted motion, time, and materials. This philosophy was the intellectual foundation for the moving assembly line.

Before the moving assembly line, it took one worker over 12 hours to build a car chassis. By breaking the process into 84 distinct steps and bringing the work to the worker, Ford reduced the final assembly time to just 93 minutes, a more than 700% increase in efficiency.

Be Your Own Banker

Ford deeply distrusted financiers and debt, believing they corrupted a company's core mission of service by prioritizing short-term profits. He was adamant about financing all expansion through the company's own earnings.

When minority shareholders (the Dodge brothers) sued Ford to force him to issue special dividends instead of reinvesting profits into building a new plant, Ford's solution was to buy out every single outside shareholder for $106 million, financed entirely from company profits, to regain absolute control.

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