Henry Ford

Consider This -- Henry Ford's Proven Lessons for American Industry

June 14, 2009
In their quest to understand lean and quality principles, manufacturers need look no further than to the father of the automobile production system.

"Six Sigma's Growing Pains" (May 2009) underscores the perception that Six Sigma is little more than an expensive designer label for plain vanilla quality techniques that have been around for decades or even longer: techniques that delivered overwhelmingly superior results under Henry Ford's leadership during the first part of the 20th century. We would currently know the Toyota production system as the Ford production system had not the deaths and retirements of key Ford personnel disrupted the corporate culture.

Taiichi Ohno made no secret of the fact that he learned most of his methods from Ford, and the books that Ford wrote between 1922 and 1930 describe lean manufacturing very explicitly. "My Life and Work" (1922) has a detailed description of the benefits of just-in-time manufacturing as well as the need to eliminate variation in delivery time to make it work smoothly. It also summarizes effective labor relations in one sentence: "It ought to be the employer's ambition, as leader, to pay better wages than any similar line of business, and it ought to be the workman's ambition to make this possible." If General Motors' executives and union leaders had read this book, they would probably not need taxpayer assistance to stay in business.

Ford also claimed to have done what Dr. Eliyahu M. Goldratt's "The Goal" shows to be impossible: run a balanced factory at close to 100% capacity. He achieved this by suppressing variation in production and material transfer time to essentially nothing. Ford also describes design for manufacture, error proofing, motion efficiency, elimination of restrictive job classifications, and almost every other component of a world-class lean manufacturing system.

Lean manufacturing and Six Sigma do not present an either-or choice because both systems use the same well-recognized quality improvement techniques. Taguchi's robust design technique may be a key feature of the Six Sigma toolbox, but Henry Ford was well aware of the negative impact of variation on any job. Had Taguchi's methods been available to him, he doubtlessly would have used them to reduce the effect of process variation if he could not get rid of the variation itself. The language of upper management is the language of money, though, and the bottom lines of the Ford system and Six Sigma speak for themselves.

Ford's production chief Charles Sorensen described how the company's minority stockholders made out "in round numbers" when Ford bought them out in 1919. Somebody who bought a dollar's worth of Ford stock in 1903 walked away with $2,500 in 1919. This corresponds to an annual compounded gain of 63%, and it does not even account for dividends. Ford also quadrupled his workers' wages in 20 years (a compounded annual growth rate of 7.2%). The postwar depression of 1918 had little perceptible effect on the company's fortunes, thus demonstrating that Ford's methods worked even under very unfavorable economic conditions.

Six Sigma has not, in contrast, demonstrated that it can stand up to bad economic conditions. Motorola moved its cellphone manufacturing operations to Mexico in 2001: "We're moving our manufacturing to lower-cost facilities so that we can be more competitive" (Fortune, January 16, 2001). Most General Electric household appliances are made offshore. Maytag, which registered LeanSigma as a service mark, also closed U.S. manufacturing facilities and moved operations offshore. Ford believed (and proved) that effective use of the American worker's time made his or her relatively high wages irrelevant, so he would have regarded these three examples as prima facie evidence that Six Sigma is far overrated. Ford's system worked across the board, it worked all the time, and it worked in every industry to which he applied it. The ability of a single farmer to feed more than 100 people comes directly from Ford's mechanization of agriculture.

This does not mean there is anything wrong with the contents of the Six Sigma toolbox. Mikel Harry's and Richard Schroeder's "Six Sigma, The Breakthrough Management Strategy Revolutionizing The World's Top Corporations" (2000) cites standardization and best practice deployment as central elements of Six Sigma, but they were centerpieces of Henry Ford's system more than eight decades earlier. There is also no doubt that Six Sigma can deliver results in situations for which its measurement-intensive methods (e.g. gap analysis) are designed.

Relying on Common Sense

Ford's system, in contrast, relied heavily on common sense and on the frontline manufacturing worker's ability to identify improvement opportunities even where no measurable "gap" existed. If a workstation produced 100% quality but the worker had to take even two steps to move raw materials or finished goods, either the worker in question or a more experienced co-worker would realize that this was a problem; a person can be paid to make parts, but not to walk or to move parts. Metal turnings or shavings from machining operations attracted instant attention because, even in the absence of a quality "gap," the process converted some of the stock into waste instead of parts. Arnold and Faroute's "Ford Methods and the Ford Shops" stated this explicitly in 1915.

Ford threw nothing away, not even scrap wood or slag from blast furnaces, from which he could extract further value. A distillation plant that extracted saleable chemicals from the former brought in enough money to pay 2,000 workers. The latter was converted into cement or paving materials for resale. Ford paid less than nothing for the coke for his blast furnaces because the chemicals he extracted from the coal were worth more than he paid for the coal. These practices are in fact what we now know as "green manufacturing," and Ford used them in an era in which he could have legally thrown into the nearest river whatever wouldn't go up the smokestack.

The only deficiency in Ford's system was the absence of what we would now call a management system standard similar to ISO 9001:2008. Ford's standardization of work methods was meticulous but the overall system was apparently dependent on a handful of key individuals. Ford suffered a series of strokes toward the end of his life. His son Edsel predeceased him, and Sorensen retired at about the same time. Japanese industrialists were astonished several decades later when visiting Ford executives did not recognize the Toyota production system as their own.

Results speak for themselves, and those of the Ford/Toyota production system versus those of Six Sigma cannot speak more clearly. This does not make Ford/Toyota and Six Sigma an either/or choice because the techniques are mutually supporting and synergistic. It means only that it is better to rely on Henry Ford's proven engineering and management practices than on something like Six Sigma that apparently cannot stand on its own when the going gets really tough.

William A. Levinson, P.E. is the author of "Henry Ford's Lean Vision: Enduring Principles from the First Ford Motor Plant" (Taylor & Francis, 2001).

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