Part 4 (2/2)

Even before the asseh labor turnover: The coent in the business With the coinally as ”Fordisue By the close of 1913, Ford had to hire nearly a thousand people every time it wanted to find another hundred permanent workers, and such was the success of its cars that it needed to expand the work force almost constantly

To solve the problem and to thwart a unionization drive launched in the summer of 1913 by the Industrial Workers of the World, in 1914 Henry Ford introduced as to be his second great industrial innovation: a 5 wage for an eight-hour day, about 15 percentrate in the auto industry and well e nationwide, for as often a shorter day's work

”In underpaying eneration of underfed children ill be physically and eneration of workers weak in body and spirit who, for this reason, will be inefficient when they come into industry It is industry ill foot the bill”

The rhetoric was high-blown, as it often ith Ford, but the calculation was cold-blooded as well Instead of a revolving employment door, the company now had men lined up for work; and it had a work force that, with diligence and thrift, could afford the product they were”Purchasers,” Ford once explained, ”are made, not born”

The five-dollar-day, Ford was later to write, ”was one of the finest cost-cutting moves we ever ave him eventhe new pay scale, Ford fired up to nine hundred Greek and Russian Orthodox employees who had stayed away fronated by the Julian calendar, according to their tradition To the rest of the coe was siiance

To assure that its flow-production systele 15- restroom time On the job, men were forbidden to lean on machines, sit, squat, whistle, talk, or smoke To make sure they complied, company ”spotters” patrolled the factory floor Soon workers were learning to co their lips, a form of ventriloquism that beca straw bosses, workers developed frozen expressions that came to be known as the ”Fordization” of the face

Neither Henry Ford nor his company stopped at the factory floor Productive labor required a proper hoave Ford and his men the entree to attack both Officially called a ”profit sharing arrangee plan split compensation into a base hourly rate of 34 cents an hour or 272 for an 8-hour day and an additional ”profit-sharing” rate of 285 cents an hour To qualify for the latter, workers had to perform satisfactorily both on and off the production line, and thathuman quality standards as strict and as strictly enforced as the standards iated a series of rules ood workers but what it considered good citizens Workers were expected to show thrift, to live in a proper house (in particular, a house that didn't take in boarders), to have no outside sources of inco wife), to not associate with nor allow their children to associate with the wrong kind of people (union syress toward learning English in the case of irant laborers, to neither drink nor suilty of no ”ood physical h its newly created Sociological Department, Ford sent counselors out to advise workers and the families on how best to meet the require bonus; on the side, the counselors acted as spies, reporting back on those who see away from the secular faith

About two in five Ford workers were disqualified from the plan in its early months; if they failed to o and their escrowed profit share was donated to charity Within two years, the disqualification ratio had shrunk to about one in four, but the extrain value By 1918, warti power of Ford's 5 day down to 280 in 1914 dollars, and Henry Ford hi less about the moral content of his work force than about union activity in his factories The Socialization Department later renamed the Education Department was disbanded in 1921 and its records were burned In its place arose the Ford Service Departs and laborspies under the leadershi+p of an ex-boxer na Ford an open shop

By then, too, Henry Ford could call the shots any way he wanted to Ford succeeded in buying out the last non-faan, he sat atop a tightly held, vertically integrated industrial behee; branch plants around the world, including asseland, iron lass manufacturers, and a railroad, and fleet of shi+ps to move the cars to markets anywhere Possessed of almost infinite wealth and power no rip so ht Ford now set out to becoan had overseen the massive transfer of European capital to the United States By the early 1920s,through his books and frequent interviews, Ford began to export back to Europe an entire philosophy of doing business Labor should be rationalized through mechanization, work should be divided and specialized, and workers bought off with high wages to perform the dull, repetitious tasks expected of theement needed to be centralized, control needed to be hierarchical, and corporations should be vertically integrated wherever possible, e a circle of subcontractors to help stabilize inevitable cyclical demand Standardization and reater profits To protect all of the above, unionization needed to be fought with every available tool Collectively, these and other tenets of the Fordist philosophy came to represent the new industrial order that would do for the better part of the century

Henry Ford was no less quiet in his views on broader international affairs An outspoken opponent of America's entry into World War I, he once promised to spend half his fortune if it could shorten the war by a single day More practically, but perhaps only slightly more so, he set sail for Europe in late 1915 aboard a Ford-sponsored ”Peace shi+p” bound for Scandinavia and the Netherlands with technical advisers, delegates to a peace conference, and a largely skeptical press pool When Ford became sick and had to lay up in Oslo, the mission fell apart

Back home, he formed a trade school and donated money to build a hospital, both named after him He dabbled with educational theory as well, set up a series of rural shops where far water power, and threw his support behind a variety of ”wholeso meat consumption in favor of soybean meal All of it made news because no one in Ae a national figure

Ford ran for the United States Senate in 1918, as a De by less than five thousand votes By 1920, Ford for President clubs were springing up across the nation Whatever the reality of Ford's 5 a day wage and whatever the truth of everyday life inside and outside the factory for a Ford eic with the public: Ford was seen as another Great E azine in the su president, Warren Harding The presidential boom ended when Ford announced in October 1924 that he would back Calvin Coolidge, who had succeeded to the presidency upon Harding's death, but Ford's popularity was barely diminished In 1926, he announced the establishment of a radical five-day eek for his employees Three years later, in late Noveh the economy, Ford responded to a Herbert Hoover request not to loages by actually raising therand gesture with draconian cuts: As o on the eve of his new ”depression-beating wage,” and those that remained were required to fulfill production quotas nearly 50 percent higher than the pre-salary-boost quotas By the late 1920s, though, Ford had s: After nearly two decades of doures have ever doe that Alfred Sloan and his General Motors were about to eat his lunch

The Model T wasn't the first car Henry Ford produced: Models A, B, C, F, K, N, R, and S preceded it, sohttiht be the last car the Ford Motor Company ever made Behind Ford's obstinance lay both a philosophy and a rock-hard commit and refining production methods, the unit cost will continuously fall, and the product will sell itself Sloan had a different philosophy: Flood the e the inally every year and substantially every three years, and spendto create consumer demand, and the public will beat a path to your door By 1927, there was no denying that Sloan and GM were on to so

In 1921, Ford had outsold GM's bottom-of-the-line Chevrolet the closest coin, but as the 1920s wore on, demand for automobiles shi+fted from first-time purchases to replace comfort, style, anda bare-bones car built for rough turn-of-the-century roads, and he was still counting on the Ford na buyers in Under the leadershi+p of former Ford executive Willianed Heavily proap with Ford until by 1926 one Chevy was selling for every two Model Ts The next year, on May 27, 1927, Model T production was halted and Ford plants closed while a successor was designed and the factories retooled to produce it A little more than six months later, on December 2, 1927, the Model A was introduced

To pro than the company had spent collectively over the 19-year lifespan of the Model T (Thanks to the sale ofthat tient financial practices, Ford Motor Company had some 700 million in surplus cash hich to launch the Model A) The can worked Ford recaptured the lead from GM in total car sales but for the rest of his life, Ford would resent the necessity of advertising

”We are no longer in the autoru everything, and Ford's own i fast

”Ford talks like a Socialist,” one Wall Street operator had complained to another in a popular joke of the mid-1920s ”Yes,” the other answered, ”but he acts like one of us, and he gets aith it” As the Roaring'20s lireat autonore

On the labor front, Ford's increasingly violent reactions to atteainst the new spirit of the tier March by union-an, police fired at point-blank range on the de a New York Tirapher shot in the head Ten years earlier, the public h, deprivation was everywhere, and the public was beco more aware of the price Ford workers had had to pay for the ”New Prosperity” that had been visited upon them Henry Ford ”is hated by nearly everyone who has ever worked for him, and at one time orshi+pped by nearly everyone who has not,” the social critic Jonathan Leonard wrote that year Note the phrase ”at one tience as the auto sales leader was only temporary as well For all the hullabaloo that surrounded the Model A's arrival, it was highly conventional car in both its looks and its antic stride in 1932 when it introduced the Model 18 V-8, with its single-unit cast engine block, the prototype for decades of engines to follow, but Ford and its founder had e: Even in hard times, buyers were interested in style, comfort, and convenience

Internationally, Henry Ford was to beco The Dearborn Independent, a azine backed financially by Ford and edited by Willia theup in America after World War I, and one of thethe scurrilous, Russian-born, anti-Jewish tract The Protocols of the Elders of Zion Ford's own contributions to the Dearborn azine were collected into the book The International Jehich, like The Protocols, charged Jeith plotting the destruction of Christian civilization Across the ocean, Ford found increasing favor with the leader of Germany's National Socialist Party and his minions The leader of the Hitler youth movement would testify after the war that he learned to hate Jews not fros of Henry Ford Ford is also the only American to win plaudits in Hitler's Mein Kampf To underscore his ad with the Third Reich's Grand Cross of the Suprele to the automaker on the occasion of his 75th birthday, in July 1938, and Ford was glad to receive both Addled by a severe stroke earlier that year, he had become convinced that Franklin Roosevelt was a war merchant controlled by GM and the Duponts

Not nearly so generous in his life as John D Rockefeller and Andrew Carnegie had been, Henry Ford in death would give away billions of dollars through the Ford Foundation, and the Foundation itself would save his heirs over 300 million in federal inheritance taxes In tienerous support of a variety of liberal and social-welfare prograht well have loathed would help buff the ie of the automaker and rescue him from the consequences of ht lie the final irony of a very conflicted and conflicting life: A product, Henry Ford always felt, should be able to sell itself

10

ROBERT WOODRUFF

The Brand's the Thing

HE INDUSTRIAL REVOLUTION CREATED WHAT HAD never existed before in such profusion in huned to do al and serve almost every need The co neell: a ly, as the nineteenth century spilled over into the twentieth one, the media became the medium between the two

Between 1830 and the start of the Civil War, the nuazines and newspapers in circulation in the United States grew sixfold, to more than five thousand titles Literacy was on the rise, along with the population If the war brought severe deprivation to the South even buttons and nails beca wore on in the North it stirowth and introduced new sources of raw materials With the Union restored, war production was converted to the production of consuoods, and as that happened, the modern print advertisean; every slogan sought to influence choice; and the reater the need to exert influence over it became The combination, needless to say, was a publisher's best friend In 1867 advertising expenditures of all sorts reached about 50 million in the United States Thirteen years later, by 1880, that figure was cli past 200 million, and by 1900 it had topped half a billion dollars By the end of the nineteenth century, populara hundred pages of ads in a single issue Two decades later, a new advertising medium, radio, would blanket the nation just as choice had moved into overdrive Radio attracted over 10 million in ads in 1928; in 1929, total ad expenditures for all media outlets approached 35 billion

By then, too, the advertising industry had found one of its most messianic practitioners -a man as to be the most successful brand-builder of the twentieth century A college dropout, he would take a product uishable froanizational genius into the lobal product the world has ever known His name was Robert Woodruff His product was Coca-Cola And here's one tangible measure of his success: The Coca-Cola Company went public in 1928 at 40 a share, 5 years after Woodruff had taken over a moribund 40-year-old business Seven decades later, in 1998, one of those original 40 shares, assurown to 68 million, an annualized rate of return of about 25 percent Possessed of a considerable ainal shares himself, Robert Woodruff enjoyed the ride By the tie 95, Woodruff had donated a total of 200 million to the school he dropped out of in 1909: Emory University

Little about Robert Woodruff's childhood augured great success Born into a wealthy Atlanta household, Woodruff and his two younger brothers suffered under the iron fist of a do, puritanical father who appears to have banned fun from the hos at Coca-Cola would wonder years later if he had ever finished a book Woodruff flunked out of Boys' High School and was sent off to Georgia Military Acade He fared no better there as a student and showed no greater inclination to concentrate in or out of the classroom, but at his father's insistence he entered Eia, in the fall of 1908 He was to last there one semester ”I do not think it advisable for hie this term,” the Emory president wrote Woodruff's father ”He has never learned to apply hiether with very frequent absences, makes it ie 19, Robert Woodruff found hi sand for the General Pipe and Foundry Co nowhere in a hurry Fourteen years later, when the 33-year-old Woodruff was offered the presidency of Coca-Cola at 36,000 a year, he was already earning 75,000 annually and had a 250,000-a-year offer on the table to become president of Standard Oil What happened in between? Life proved a better educator than schools, and a better foru around in a succession of jobs including purchasing agent for an ice coh an Atlanta acquaintance as southeastern salesman for the White Motor Company, and there he learned that, whatever his faults as a student, he could sell al to als, Woodruff developed an unerring instinct for what he called ”the man of consequence,” the one who could close the deal Born to the manor if not exactly raised that way, he also possessed a confidence and co with top brass that many of his competitors lacked

Woodruff left White for the duration of World War I to serve in the US Ordnance Departlect his former and future enificantly to White's botto the war years Nor did Woodruff's success or his abilities go unnoticed by his disapproving father When Ernest Woodruff put together a syndicate to buy the Coca-Cola Company in 1919 for 25 round floor, which he did at 5 a share in the private offering (Woodruff also ot in on the action as well, an act of friendshi+p that feathered Cobb's nest luxuriously in his later years) And when the ht proved unable to meet expectations, Ernest Woodruff and his syndicate partners again called on Robert, this tiht direction

As an Atlantan, Woodruff knew the product well CocaCola had been around since 1886 when a local patentmedicine blender namedJohn Stith Peged brass kettle in his own backyard As a Methodist, Woodruff ht have known coke even better His Sunday school teacher growing up was Asa Candler, the Atlanta entrepreneur who bought the company in 1891 for 2,300 and took the soft drink nationwide four years later About the soft-drink business itself, Woodruff cheerfully acknowledged that he didn't know anythingknows about Sunday” But as a sales hi up a product with a clear utility trucks s, they connect markets and custo for sale a product that absolutely no one needed

Robert Woodruff deserves credit for far ns he so insisted on Difficult in many ways as a boss he hated to be alone, and would often call his executives at the last moment to coht Woodruff was nonetheless a talent picker par excellence The ranks of his top aides were filled with foria Tech football players in whom Woodruff had spotted business potential and with one-ti Arthur Acklin, an IRS agent who had co to dun Coca-Cola for back taxes

Where taxes were the issue, Woodruff also could play hardball with the best of thee tried to impose a Depression-era business tax that would have cut into Coca-Cola's profits, Woodruff reincorporated the coton, Delaware For a decade, until the Georgia legislature backed off the tax, coke the quintessential Atlanta company wasn't really that at all

Like other corporations in the increasingly science- and ave the in 1927, Mark Pendergrast writes in his thorough and entertaining history of the company, For God, Country & Coca-Cola, the co fifteen thousand retail outlets to determine the exact ratio between sales volume and traffic flow, so that sales teams would know nearly to the minute how much attention to lavish on each spot where coke was sold They followed that up with a survey of forty-two thousand soda-fountain customers to track the relationshi+p between initial purchase of the product and a follow-up choice of coke

Woodruff applied the principles of science internally as well Under Asa Candler and his relations, Coca-Cola had run less by dictate than by instinct Under Woodruff, there were rules and procedurepractices to the servicing of dispensers, the color of trucks, the uniforms worn by the drivers, the way a Coca-Cola was poured at the soda fountain, and the presentation and punctuation of the tradeo themselves had been the work of John Peht the two uppercase Cs would look good in ads) coke's bottlers were historically an independent lot, but even there Woodruff did his best to bring order and predictability coke lore is resplendent with tales of his efforts, including the story about Woodruff's visit to a particularly filthy and disreputable looking bottling plant

”The Boss summoned the owner and told him he'd better clean up his operation by the next day, or he would soon find hirast recounts

”'But Mr Woodruff,' the bottler protested, 'it don't do no good to clean up The next day it'll just look like this again' There was a moment of tense silence as Woodruff slowly and deliberately took his cigar out of hisholes into the bottler 'You wipe your ass, don't you?' Woodruff said With that, he replaced the cigar and left”

Apocryphal? Quite possibly, but one suspects that Woodruff and his inner circle would have happily encouraged the legend Better than anyone else of their generation, they understood the iets built both externally, through custoes, and internally, through the myths a company tells itself about itself