The Rise and Fall of the US "Automobeel" Industry - Quareness Series (23rd "Lecture").
The automobile (or motor car as we sez in dis part o' de world) was initially "perfected" in Germany and France toward the end of the 1800s by such as Nicolaus Otto, Gottlieb Daimler, Carl Benz and Emile Levassor. And it's fair to say that the first modern motor car in all essentials was the 1901 Mercedes, designed by Wilhelm Maybach for Daimler Motoren Gesellschaft, with its 35 horsepower engine weighing in at only 14 lbs (or a stone as we sez in dese parts) per hp and it achieving a speed of 53 mph, be the hokey. But as late as 1909, with the most integrated automobile factory in Europe, Daimler employed some 1,700 workers to produce fewer than 1,000 cars per year. Back then the superiority of European design was evident in the sharp contrast between this first Mercedes model and Ransom E. Olds's 1 cylinder, 3 horsepower, tiller steered, curved dash Oldsmobile of 1901-1906, which was seen as merely a motorised horse buggy. However, the humble Olds sold for only $650, putting it within reach of middle class America, and the 1904 Olds output of 5,508 units surpassed any car production previously accomplished.
During the 20th century's first 10 years, the central problem of automotive technology was reconciling the advanced design of the 1901 Mercedes with the moderate price and low operating expenses of the Olds. And this turned out to be overwhelmingly an American achievement. Messrs J. Frank and Charles E. Duryea, two bicycle mechanics from over in Springfield in Massachusetts, had designed the first successful American gasoline automobile in 1893, then won the first American automobile race in 1895, and went on to make the first sale of an American made gasoline car the next year. In 1899 some 30 American manufacturers produced 2,500 motor vehicles and some 485 companies entered the business over the next decade. It was 1908 when Henry Ford introduced the Model T and William C. Durant founded General Motors. The new firms operated in an unprecedented seller's market for an expensive consumer goods item. With its vast land area and a hinterland of scattered and isolated settlements, the United States had a far greater need for automotive transportation than the nations of Europe. Great demand was also ensured by a significantly higher per capita income and more equitable income distribution than in European countries.
Given the American manufacturing tradition, it was kinda inevitable that cars would be produced
in larger volume and at lower prices than in Europe. The absence of tariff barriers between the
States encouraged sales over a wide geographic area. Cheap raw materials and a chronic
shortage of skilled labor early on, encouraged the mechanisation of industrial processes in the
United States. This in turn required the standardisation of products and resulted in the volume
production of such commodities as firearms, sewing machines, bicycles and many other items.
In 1913, the US produced some 485,000 of the world total of 606,124 motor vehicles. The Ford
Motor Company greatly outpaced its competitors in reconciling state-of-the-art design with
moderate price. The Cycle and Automobile Trade Journal described the 4 cylinder, 15 hp, $600
Ford Model N (1906-1907) as “the very first instance of a low-cost motorcar driven by a gas
engine having cylinders enough to give the shaft a turning impulse in each shaft turn which is
well built and offered in large numbers” (be the hokey...again). After being deluged with orders,
Ford installed improved production equipment and after 1906 was able to make deliveries of 100
cars a day. Encouraged by this success, the bould Henry determined to build an even better “car
for the great multitude”. And so it came to pass when the 4 cylinder, 20 hp Model T, made its
debut in October 1908, selling for $825. Its 2 speed planetary transmission made it easy to drive
and features such as its detachable cylinder head made it easy to repair. Its high chassis was
designed to clear the bumps in rural roads. Vanadium steel made the Model T a lighter and
tougher car, and new methods of casting parts (especially block casting of the engine) helped
keep the price down. Committed to large-volume Model T production, Ford innovated modern
mass production techniques at his new plant at Highland Park, Michigan which opened in 1910
(although he did not introduce the moving assembly line until 1913-1914). By 1912 the Model T
runabout was selling for $575, less than the average annual wage in the United States. By 1927
(when it was finally withdrawn from production) its price had been reduced to $290 for the coupe, 15 million units had been sold, and mass personal “automobility” had become a reality.
Yeehaw!!
Ford's mass production techniques were quickly adopted by other American automobile
manufacturers. (European car makers did not begin to use them until the 1930s.) The heavier
outlays of capital and larger volume of sales that this necessitated, ended the era of easy entry
and freewheeling competition among many small producers in the American industry. The
number of active automobile manufacturers dropped from 253 in 1908 to only 44 in 1929, with
about 80% of the industry's output accounted for by Ford, General Motors, and Chrysler (formed
from Maxwell in 1925 by Walter P. Chrysler). Most of the remaining independents were wiped out
in the Great Depression, with just Nash, Hudson, Studebaker and Packard hanging on for a while
only to collapse in the post-World War II period.
As for the Model T which was intended to be “a farmer's car” that served the transportation
needs of a nation of farmers, inevitably its popularity began to wane as the country urbanised
and as rural regions got out of the mud with passage of the 1916 Federal Aid Road Act and the
1921 Federal Highway Act. And inevitably also, the Model T (which had remained basically
unchanged long after it was technologically obsolete) owners began to trade up to larger, faster,
smoother riding and more stylish cars.
The demand for basic transportation which had been met by the Model T tended increasingly during the 1920s to be filled from the backlog of used cars piling up in dealers' lots as the market became saturated. By 1927 the demand for new cars from first-time owners and multiple-car purchasers combined was being exceeded by the replacement demand and given the incomes of the day, automakers could no longer count on an expanding market. Back in 1916 installment sales had been initiated by the makers of moderately priced cars to compete with the Model T, and by 1925 about 75% of all new cars were bought on this basis. Although a few expensive items such as pianos and sewing machines had been sold in this manner before 1920, it was mostly installment sales of automobiles during the '20s that established the purchasing of expensive consumer goods on credit as a middle class habit and a mainstay of the American economy.
Market saturation coincided with technological stagnation - in both product and production technology, innovation was becoming incremental rather than dramatic. By the late 1920s the basic differences that distinguished post World War 2 models from the Model T were in place e.g. the self starter, the closed all steel body, the high compression engine, hydraulic brakes, syncromesh transmission and low pressure balloon tires (or tyres as we call 'em hereabouts).
The remaining innovations like the automatic transmission and drop frame construction came in
the 1930s. And with some exceptions, cars were made much the same way in the early 1950s as
they had been in the 1920s.
To meet the challenges of market saturation and technological stagnation, General Motors under the leadership of Alfred P. Sloan Jr., during the 1920s and '30s innovated planned obsolescence of product and put a new emphasis on styling as exemplified in the largely cosmetic annual model change (with a planned triennial major restyling to coincide with the socalled economics of "shelf life" and annual minor face liftings in between). The goal was to make consumers dissatisfied enough to trade in and up to a more expensive new model long before the useful life of their present cars had ended (yes indeedy clearly the logic and lifeblood of consumerist capitalism lay in stimulating unnecessary "needs" which cannot be satisfied for long after the point of "consumption"). For Sloan “the primary object of the corporation was to make money, not just to make motorcars.” He believed that it was necessary only that GM's cars be “equal in design to the best of our competitors ... it was not necessary to lead in design or to run the risk of untried experiments.” Thus engineering was subordinated to the dictates of stylists and cost cutting accountants. General Motors became the archetype of a rational corporation run by a technostructure.
Sloanism replaced Fordism as the predominant market strategy in the industry and Ford lost the
sales lead in the lucrative low priced field to Chevrolet in 1927 and '28. By 1936 GM had claimed
43% of the US market and Ford with 22% had fallen to third place behind Chrysler with 25%.
Although the Great Depression saw a collapse in automobile sales, Sloan could boast of GM that
“in no year did the corporation fail to earn a profit.” In fact GM retained leadership of the industry until 1986 when Ford eventually surpassed it in profits.
The automobile industry had played a critical role in producing military vehicles for the First
World War. During World War 2, in addition to turning out several million military vehicles,
American automobile manufacturers made some 75 essential military items, most of them
unrelated to the motor vehicle. These materials with a total value of $29 billion amounted to 20%
of the nation's war production. And because the manufacture of vehicles for the civilian market
ceased in 1942 and tires as well as gasoline were severely rationed, motor vehicle travel fell
dramatically during the war years. Cars that had been nursed through the depression long after
they were ready to be junked were patched up further, ensuring great pent up demand for new
cars at the war's end. In fact the Big 3 in Detroit carried Sloanism to its illogical conclusion in the
postwar period when models and options proliferated, and every year cars became longer and
heavier, more powerful, more bedecked with gadgets, and more expensive to purchase and
operate - following the truism that large cars are more profitable to sell than small ones.
Engineering was subordinated to the questionable aesthetics of non functional styling at the
expense of economy and safety. And quality deteriorated to the point that by the mid 1960s
American made cars were being delivered to retail buyers with an average of 24 defects per unit, many of them safety related. Moreover, the higher unit profits that Detroit made on gas guzzling “road cruisers” were harvested at the social costs of increased air pollution and a drain on dwindling world oil reserves.
The era of the annually restyled road cruiser ended (i) with the imposition of federal standards of automotive safety in 1966, emission of pollutants in 1965 and 1970, and energy consumption in
1975, (ii) with escalating gasoline prices following the oil shocks of 1973 and 1979, and (iii)
especially with the mounting penetration of both the US and world markets firstly by the German
Volkswagen “bug” (a modern Model T) and then by Japanese fuel efficient, functionally designed and well built small cars. After peaking at a record 12.87 million units in 1978, sales of American made cars fell to 6.95 million in 1982, as imports increased their share of the US market from 17.7% to 27.9%. Japan became the world's leading auto producer in 1980, a position it continues to hold. In response, the American automobile industry in the 1980s underwent a massive organisational restructuring and technological renaissance. Managerial revolutions and cutbacks in plant capacity and personnel at GM, Ford and Chrysler resulted in leaner, tougher firms with lower break even points, enabling them to maintain profits with lower volumes in increasingly saturated and competitive markets. Manufacturing quality and programs of employee motivation and involvement were given high priority. The industry in 1980 undertook a 5 year program of plant modernisation and retooling costing €80 billion. Functional aerodynamic design replaced styling in Detroit studios, as the annual cosmetic change was abandoned. Cars became smaller, more fuel efficient, less polluting and safer. Product and production were being increasingly rationalised in a process of integrating computer aided design, engineering and manufacturing.
The automobile was a key force for change in 20th century America. During the 1920s the
industry became the backbone of a new consumer goods oriented society. By the mid 1920s it
ranked first in value of product, and in 1982 it provided a remarkable 1 out of every 6 jobs in the
US. In the 1920s the "automobeel" became the lifeblood of the petroleum industry, one of the
chief customers of the steel industry, and the biggest consumer of many other industrial
products. The technologies of these ancillary industries, particularly steel and petroleum, were
revolutionised by its demands. The motorcar stimulated participation in outdoor recreation and
spurred the growth of tourism and tourism related industries such as service stations, roadside
restaurants and motels. The construction of streets and highways (one of the largest items of
government expenditure) peaked when the Interstate Highway Act of 1956 inaugurated the
largest public works program in history. The automobile ended rural isolation and brought urban
amenities to rural America (including better medical care and schools) while paradoxically the
farm tractor made the traditional family farm obsolete. The "modern" city (both in the US and
much of elsewhere) with its surrounding industrial and residential suburbs can reasonably be
deemed a product of the automobile and trucking.
As the social commentators might say, the "automobeel" changed the architecture of the typical
American dwelling, altered the conception and composition of the urban neighborhood and freed homemakers from the narrow confines of the home, and no other historical force has so
revolutionised the way Americans work and live and play. So there. In 1980 a whopping 87.2% of
US households owned one or more motor vehicles, 51.5% owned more than one, and fully 95%
of domestic car sales were for replacement. Americans had/have become truly auto dependent.
But though car ownership is virtually universal in the good ole US of A, the motor vehicle no
longer acts as a progressive force for change. New forces such as the electronic media, the
laser, the computer and the robot have been charting the future. A period of American history
that can appropriately be called the Automobile Age began melding into a new Age of Electronics
at the relatively young age of 83.
As for us non Americans, the swing to the car era for the masses has tended to be an even more
rapid affair, but like for a lot of material developments many of us seem to be still caught in
trying to catch up. For example it's said that Europeans may have a far greater interest in
experiencing and preserving Steinbeck's famous American mother road Route 66 (born in 1926)
than the Stateside brothers - in the latter's relatively "youngish in a hurry" mass mind that ole
relic (in truth "a lesson in the growing and fading of things") likely started to lose relevance a
long time ago, beginning in 1956 with the dawning of Interstates and officially dead and buried by 1985. As the fella said..."nostalgia ain't what it used to be".
It's possible that the time of mass motorised private transport may for many reasons be drawing
to a close to be replaced in time by a lot more "virtual" travel. If so the earliest mass signs are
likely to manifest in the US market with a substantial falling off in projected American power and
influence on the international stage as well as a waning of the power of Oil and a fading of the
call of the open road.
Sean.
Dean of Quareness.
October, 2012.