USA > Michigan > Wayne County > Detroit > The city of Detroit, Michigan, 1701-1922, Vol. I > Part 58
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2,630,509
Value of product . ..
857,839
5,382,212
6,240,051
In 1917 the report of the Michigan commissioner of labor listed twenty-three companies in Detroit and suburbs which assembled ears, employing, at the time of inspection, 92,772 people in factory and office. There were also 132 companies whose sole or principal business was the making of automobile parts and accessories and their employes numbered 43.804, making a total of 136,576 in this metropolitan district dependent upon this industry alone. They, with their families would make a good sized city of themselves. The number of ears produced was 1,100,000, with a value of $SS0,000,000.
It is difficult to grasp these figures of themselves. An illustration or two may help. A million cars on parade, at a distance of only 50 feet from the front of one car to the front of the next, would make a procession 9,470 miles long. If transported on steam railroads they would fill 114,21S large freight cars, making a train 969 miles long. Taking an average working day of ten hours and working 300 days in the year, there is an average production of a car every eleven seconds.
In 1904, when the auto industry first appeared in the census reports, it contributed a little more than one-thirtieth to the city's industrial population and a little over one-twentieth to its manufactured product. Five years later, 1909, it had about one-sixth of the employes and more than one-fourth of the product. Four years later yet it contributed more than two-fifths of the em- ployees and about one-half of the product. It now gives employment to just · about as many workers as all other industries in Detroit combined. It is also a high priced article, its value being nearly double that of all other manufactured products combined. The Ford Company has at some periods had over 40,000 men on its payroll at one time, three others employ over 10,000 and seventeen others between one thousand and 6,000 each. Detroit makes about sixty pereent in number of all the automobiles made in the country, though as it is peculiarly the home of the low priced car, the value of the product falls a good deal less than that pereentage.
The rapid and immense growth of the automobile industry in Detroit was not accidental. The chief honor for this development goes to the men of Southern Michigan who had the courage and ambition to take hold of the new idea and see it through. Although many other eities had equal facilities as a. shipping port, Detroit was the possessor of other advantages which aided materially in the growth of the business of automobile making. Michigan was, at the earlier stages, manufacturing more marine gas engines than any other state in the country, and Detroit itself had more expert gas engine workers than any other city. It was not necessary to import or to train this important class of skilled workers. They were already at hand. Michigan surpassed every other state in the manufacture of carriages, buggies and wheels. Its workers in this line could immediately adapt their plants to the making of any style of body or tonneau required for the automobile. Detroit and the
Packard
PACKARD MOTOR CAR COMPANY
MAXWELL MOTOR COMPANY
569
CITY OF DETROIT
three other Michigan cities of Pontiac, Lansing and Flint supplied, for the first three years, nearly all the bodies used here without the erection of a single additional plant for that purpose. It was a faet established by careful inquiry that Michigan could then make auto bodies for sixty percent of the cost of like bodies made in eastern eities. Again, Detroit is the center of the malleable iron manufacture in this country, and this material entered largely into the making of the first ears. Old plants in Detroit and two other eities were equipped for supplying the springs needed. The city was well supplied with manufactories of copper and brass, which could readily turn their machinery to the production of those auto parts that are made of these metals. It was therefore possible for the first manufacturers to obtain the essential parts of an auto as required. It should be added also that Detroit is the home of fine color work for painting, and a fine and durable gloss finish is an essential to all first class autos. Finally, Detroit is a good distributing point for the whole central, southern and western trade of the country. Capital, energy and fore- sight, assisted by these advantages naturally brought the rest. It was the most noticeable ease in the history of the city where intelligent enterprise seized upon opportunity.
It is not alone in the manufacturing end of the automobile business that Detroit has excelled. No other business in the city has ever been so well adver- tised and no other has ever employed as many or as energetie or ingenious salesmen. Detroit cars have been displayed in nearly every publie exhibition in this country and many in Europe. They have been entered in every speed and endurance test and ears have been sent on private tours under almost all conceivable conditions. If there was a rough road anywhere that a car could "negotiate," some adventurous Detroiter has made the attempt and published the results.
Not only has this country been thoroughly explored, but foreign countries have been invaded. The distribution of Detroit-made ears has been world wide. Proximity to this country pointed out Canada, Mexico and the West Indies as natural markets. Sales have been made in France, the original home of the auto ear, and in England and Germany, although the manufacturers of those countries make the greatest efforts to keep the markets in their own hands. Spain, Italy and onee Russia furnished better markets. Norway, Sweden and Denmark have been good purchasers. Of the British dependencies, India, Burmah, Australia, New Zealand and South Africa have all furnished customers. Sales have been made in Yucatan, a number of the South American states, China, Siam, Japan, Siberia, the Hawaiian Islands and the Philippines. There is hardly any country with passable roads that has not seen the Detroit auto ear speeding over them. Even such out of the way places as Montenegro, Iceland and the Faroe Islands have been mentioned in the Government reports as destinations of American-made ears.
Most of the direet exports of ears from this customs distriet go to Canada and England. Their total value in 1904 was $162,529 and they did not pass the half million mark till 1909. The next year there were above $2,000,000 and continued increasing until in 1917 and 1918 they were about $20,000,000. In the fiscal year ending June 30, 1920, they amounted to $48,612,000. Exports to other countries, except as they are redistributed from England, go mostly through the Atlantic and Pacific seaboard ports, and do not appear on the books of the local custom house. Their amount is not definitely known but
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CITY OF DETROIT
it is very large. During the war the shipments of Detroit-made trucks, ambu- lances and messenger cars to the front in France assumed immense proportions. A very common sight during the freight congested winter of 1917-18 was long lines of khaki-covered Packard trucks starting under their own power to Phil- adelphia and Baltimore, thence to be shipped to France. Many of them carried loads and they made better time to the seaboard than they could have done if shipped as freight over the steam roads. They met a grave European need and solved a serious transportation problem at the same time.
A concise tabular statement is interesting as showing the successive steps in the growth of this industry as nearly as they can be ascertained. In 1907 the number of cars put out was 15,700. The figures for subsequent years with the number of men employed and the value of the product foot up about as follows:
Year
Employes 7,250
No. of Cars 18,200
Value S 22,600,000
190S .
1909
17,437
45,500
59,536,000
1910
29,243
114,100
134,587,000
1911
45,585
130,000
152,000,000
1912
57,293
150,000
165,000,000
1913
67,432
283,000
208,000,000
1914
60,835
330,000
264,000,000
1915
81,594
455,000
350,000,000
1916
120,000
959,000
600,000,000
1917
135,000
1,000.000
650,000,000
1919
136,000
1,100,000
SS0,000,000
During the latter part of 1917 and nearly the whole of 1918 the automobile companies were engaged in making munitions and other war materials, which is described in a later paragraph of this chapter. Several months in 1919 were required to return fully to the normal type of production.
In The Detroiter of January 21, 1922, Mr. William Stocking wrote:
"Up to the present time, 1920 ranks as the banner year in automobile production, registration and export. An exhaustive canvass made by the Cleve- land Trust Company showed 7,092,990 cars carried over from 1919 and 2,205,197 produced in this country in 1920. There were 100 imported and 180,207 exported. This leaves 9,118,000 used at some time during the year. Of these something less than half a million were retired during the twelve months. The total number under registration at the end of the year is given by another authority at 8,914,197, of which 7,957,501 were passenger cars and 956,693 commercial. The proportion of commercial cars, including the various grades of trucks, recently produced is larger than that, reaching as high as one in five of the total production.
"Of the cars produced in 1920 the Fords numbered 1,027,677, or 46% of the whole. The Detroit companies together made 5Sc% of the whole. During the first ten months of the year almost every auto and accessory company was working with full force. The time since then has told a different story. There was a tremendous drop in production in November and December of 1920, a revival in the first part of 1921 and another drop in the latter part of that year. Aside from the Fords, which maintained a high rate of production during the summer months, the total was probably not 50 per cent of that for 1920. The exact figures are not yet available.
571
CITY OF DETROIT
"The direct exports of automobiles and parts from this district for the first ten months of 1920 aggregated $48,559,665 in value. In the corresponding period of 1921 they were only $16,370,157. In the first eleven months of 1920 the total exports in this line from the whole country were $274,614,127; in 1921 only $76,387,435. The collapse of the foreign market has been a large con- tributing cause to the depression here.
"The most notable incident of the year in this industry is the great, almost spectacular, reduction in the prices of cars. The cuts commenced in the latter part of 1920 and have continued from time to time almost down to the present. The reduction has affected every company and almost every make of car. It is believed that this movement has reached its limit and that no further reduc- tions can be expected.
"Among local incidents of interest to the industry in the course of 1921 was the completion of the immense construction improvements commenced by Morgan & Wright and Dodge Brothers in 1920. In the latter part of the year the General Motors Company fitted up for office and general use the unfinished portions of its colossal structure at Grand Boulevard and Cass.
"Respecting the prospects of the industry for 1922 there are varying opin- ions. One good authority in New York recently ventured the following forecast : 'The progress of the automobile industry in 1922 will require careful watching. Two features especially call for close consideration. One is the fact that profits will be smaller owing to the reduction in car prices through keen competition. To what extent the reduced selling prices will be offset by the institution of economics and lowered production costs remains to be seen. Another uncertain element is represented by the probability that the demand for cars is not likely to be equal to the combined plant capacity of the country. This will mean that certain cars of established popularity are likely to profit at the expense of others of less reputation. Some of the motor companies undoubtedly will have a prosperous year. Others may have hard sledding.'
"At the New York exhibition the prediction generally accepted was for production of 1,500,000 cars in 1922. In this city a fair year's business is con- fidently anticipated. The second week in January over 50,000 men were added to the payrolls of the automobile factories. The preparations now about completed for the exhibition, January 21-28, indicate a disposition to push the market to its utmost."
Such cars as the Ford, Packard, Cadillac, Dodge, Paige and Maxwell have been perhaps the most notable successes in the field at Detroit. Half a dozen other companies have been prosperous, but the automobile business has not been all profit. In the number of companies incorporated there have been many more failures than successes. The failures have generally come in the attempt to build up a market for a car which did not meet public favor. There have been only a very few cases where a company once well established has been obliged to retire from the field, although at times more than one of them has been on the very brink of financial disaster.
The benefits of the industry to Detroit and Michigan are many and varied. Not the least of these is the impetus which it has given to the good roads move- ment. The automobile manufacturers, working with such associations as the Detroit Automobile Club, have done everything within their power to create for this county and state a road system of excellence. There are other auto- mobile towns in Michigan, but Detroit's interest in the business is much greater
572
CITY OF DETROIT
than that of all the rest combined. According to the report of the state labor commissioner the number of persons employed in the industry here in 1917 was 135,000. The number similarly employed in the five other automobile cities was as follows: Flint, 18,262; Lansing, 7,875; Pontiac, 5,747; Jackson, 4,683; making a total of 36,567. In Flint, Pontiac and Lansing, this business accounted for much more than half the whole number of industrial employes.
The foregoing paragraphs have treated the industry as a general topic. It is the province of a dignified publication in itself to present the vastness of detail covering the organization, development and scope of each of the auto- mobile companies which are operating and have operated in Detroit and Wayne County. One writer has said: "Very little has the record of the auto- mobile been touched. In all of the books on Michigan history, copious treatement is given the money represented by our agriculture, our himber interests, our salt industry, our furniture output, our mining product; yet this giant industry, which far overtops them all, not only in money values but in its far-reaching influence, is dismissed in this manner: 'Automobiles are made in many cities, ete., etc.'" This statement is very true, for the automobile industry awaits its historian. The builders have not had time to keep records; they have been crowded to keep pace with their own industry. Even at this early day in the business, the historian finds conflicting statements as to the pioneers of the work, the making of the motor cars, and thousands of other details. This generation of founders has not yet passed away and it is from them that the true history must be compiled in its tremendous seope. In this chapter dealing with the manufacturing history of Detroit it has been the purpose to collect sufficient facts of the automobile history to build a substantial framework upon which the future historian may lay his structure of facts, figures and anecdote concerning Michigan's greatest industry. In presenting some of the concrete faets concerning the larger companies now in the field, we begin with the Cadillac as the pioneer of the now existing group.
The inception of the Cadillac motor car dates back to June, 1902, when · several of Detroit's prominent citizens and capitalists, Clarence A. Black, Lem W. Bowen, William H. Murphy, A. E. F. White, and a few others, with Henry M. Leland, organized the Cadillac Automobile Company. At once the company proceeded with preparations to make cars on a hitherto unknown scale. The company purchased the plant of the old Detroit Motor Company and in 1903 the works were considerably enlarged to meet the demands of the new institution. In this way they were equipped for business in every way except the manufacture of motors. The Leland & Fauleoner Manufacturing Company was then a company with a high reputation for making marine and automobile motors, as well as high efficiency machinery, gears, etc. Their cooperation was seeured and a contract made for the manufacture of 3,000 Cadillae single-cylinder engines, a very large contract for the time. Before the close of the year 1902 a number of ears were built and tested. The following year about 2,000 ears were made and sold. The remainder of the 3,000 motors were used within a few months and a second large order placed.
In April, 1904, the company suffered a disastrous loss by fire, in which a considerable portion of the plant was destroyed. Not disheartened, however, the officials immediately began the rebuilding of their plant and within one week the shipping of cars was resumed. The company continued the man- ufacture of one-cylinder cars for about five years and produced in all about
573
CITY OF DETROIT
20,000 machines of this type. In the meantime, in 1905, the company placed its first four-cylinder ear on the market.
In 1905, the interests of the Cadillac Automobile Company and the Leland & Faulconer Manufacturing Company had become so closely identified that a consolidation of the two was effected under the name of the Cadillac Motor Car Company, and the general management of the new concern was assumed by Henry M. Leland, assisted by his son, Wilfred C. Leland, who was elected secretary. The company was incorporated with an authorized capitalization of $1,500,000. The old company had been incorporated for $300,000. The business is now controlled by the General Motors Corporation.
In 1906 a new model was added to the line and another in 1907. A new era in the matter of production began in 1908, when the new model, known as the Cadillac "Thirty," to be sold for $1,400, was placed upon the market. This model was variously refined and enlarged from time to time. In 1914 the new Cadillac "Eight" appeared and in many respects has been the most popular model ever presented by that company. There are a number of other models which have met with success.
Mr. Henry M. Leland was succeeded in the general managership of the company by Wilfred C. Leland about July 1, 1909.
In 1921 the new plant of the Cadillac Motor Car Company, located at 2860 Clark Avenue and consisting of eight buildings, was occupied. This replaced the old plant, which consisted of some seventy-seven old type strue- tures scattered about Detroit. The largest of the new buildings is the manu- facturing unit, S00 feet long and 600 feet wide, having a floor space of 970,000 square feet. This building is so arranged that raw materials can be brought into one end of the building and the completed chassis run out from the other end under their own power. Other buildings are the assembly building, admin- istration building, heat treating, storage, oil storage and salvage buildings. All are of four stories in height and combined total 2,100,000 square feet of floor space. Forty-six acres of ground are provided for the plant and the area is bounded by Michigan, Seotten, Clark and Trombley Avenues.
FORD MOTOR COMPANY
The Ford Motor Company came into existence on June 16, 1903. Twelve years before this, Henry Ford, as an employe of the Edison Company, began his experimental work on gasoline-driven motor cars, but on account of the lack of gasoline engine parts here he construeted the car with his own hands. He required two years to do this, but the car would run, whereupon five more years were spent experimenting and building up a second car. During this period no effort was made to commercialize his invention. Both the Henry Ford Automobile Company and the Detroit Automobile Company were formed at this time, but niether company survived.
In 1902, Henry Ford formed a copartnership with A. Y. Maleomson, coal dealer, and from this partnership there finally emerged the Ford Motor Com- pany, now the world's largest automobile manufactory. The basis of this partnership was the agreement made by Mr. Maleomson to pay all the ex- penses of the company up to $3,000. A one-story structure at the Mack Avenue crossing of the inner belt line was rented as a factory and production begun. The $3,000 soon disappeared and an additional $4,000 had been fortheoming from Malcomson before results were obtained. Then the quest for more stock-
574
CITY OF DETROIT
holders began and the search was a difficult one. Capital appeared to be searce. At last a few venturesome investors were unearthed and Ford and Maleomson held 51 percent of the stock for their invention and original invest- ment rights. John F. and Horace E. Dodge, then operating a machine shop in Detroit, subscribed for $5,000 worth of stock each, the money to be paid out of profits on 650 chassis which they contracted to manufacture. John W. Anderson and Horace H. Rackham, law partners, who drew up the papers when the company was organized, threw in $5,000 each. John S. Gray was persuaded to invest $10,000, with the presidency of the company as an added incentive. James Couzens, at that time a clerk in Malcomson's coal office, managed to raise $2,500, which he put into the company, and was made seere- tary and business manager. Albert Strelow was another $5,000 investor.
The venture was a success from the very start. Five months after the organization of the company, a dividend of 2 percent was paid; a month later a 10 percent dividend was declared; in January, 1904, there came a 20 percent dividend and six months another of 68 percent. By the end of the first year the stockholders had received back every dollar they had invested. Despite the unprecedented dividends there were those of the stockholders who desired to withdraw. In 1906 Mr. Maleomson withdrew from the company, and received $175,000 for his share. Strelow later sold his stock to Couzens for $25,000, this stock having netted him 400 percent.
About the time of the purchase of the Malcomson stock, when Henry Ford gained control of the company, the factory on Maek Avenue became inadequate for the increasing production. A modern three-story factory building was then put up on Piquette Avenue and Beaubien Street and in 1906 the offices and machinery were moved therein. The value of this move is shown by the fact that in 1906 there were only about 1,600 cars made, while in 1907 the output reached 8,423. The present plant, greatly enlarged to meet the tremen- dous growth of the business, was constructed on what was formerly a race track in Highland Park. The site of the plant covers something over 300 aeres, with about 90 acres of floor space under roof.
About this time there began the series of litigations known as the Selden patent suit, which was one of the first legal difficulties encountered by the Ford company. The patents upon which this suit was based were those of George B. Selden, the inventor of the first gasoline motor car, and which were owned by the Electric Vehicle Company of Hartford, Connecticut. These owners claimed that the patents covered every kind of gasoline-driven vehicle. After litigation extending from 1905 until 1911, the Ford Motor Company was released from the Selden patent claims by the New York court of appeals, which reversed a former decision of a lower court in favor of the patentees. Henry Ford's first car figured in the suit and helped to win it, for by actual demonstration it was shown that the Ford ear was running in the streets under its own motive power before the Selden patent was granted.
In 1914 there was inaugurated the first profit-sharing plan of the Ford Company, when it was announced that the company would share $10,000,000 in profits with the employes. The result was a storm of applications for posi- tions. The employment offices of the company were subjected to a mass attack of thousands of people anxious to be on the payroll of a company which should do such an unheard of thing as to share profits with the employes. The expe- dient of a fire-hose was necessary at one time to relieve the congestion. In
-
FORD MOTOR COMPANY
MOTOR INICIOIM PAINIV
FORD MOTOR COMPANY
Vol. 1-37
579
CITY OF DETROIT
September, 1914, a balance sheet of the business was published and it showed a surplus of $50,000,00C and $27,000,00C in cash on hand or in banks. Even as the published figures astounded the financial world, the innovation of profit- sharing was declared by rival companies to be impractical. However, it worked, then and frequently in subsequent years.
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