The most dramatic innovation in making factories more efficient and controlling workers was the assembly line

 can-making machinery 1885

• assembly and disassembly lines were used some in food processing in the late 19th century, particularly after the refrigerated railway car made possible transportation of meat slaughtered in Chicago and other midwestern cities
• once the American System of Manufacture was in use, assembly increasingly became the bottleneck, eg. in bicycle-making
• automobiles began to catch on in the 1890s
• early automobiles were made by craft methods, but there was some interest in low cost automobiles mostly for recreation (like the bicycle), and the way to get cost down was clearly mass production

• designed a low cost, reasonably sturdy and powerful car that was a big success--the Model T in 1908 cost $850
• Ford focused on wanting to expand his market by lowering the cost of his car
• his engineers came up with the idea of the assembly line using moving conveyor belts and it was introduced into Model T production in 1913
• instead of one worker assembling a magneto in 29 separate steps, 29 different workers put on one part each.  When the system was fully implemented productivity increased by a factor of 3 or 4.

 Magneto assembly line at Ford, 1913

• the assembly line dramatically reduced the cost of manufacturing a Model T--time to assemble a complete chassis dropped from 12 man-hours to 1.5 man-hours.
• why?  the conveyor belt controls the speed of work, the worker spends no time moving the parts from station to station, the factory is carefully designed to make sure that each worker has all parts necessary at the right time, any worker who is not efficient is obvious because of the build-up of parts at his station
• Ford sought to bring all the steps of automobile manufacture into one giant factory complex
• He also sought to reduce costs by making cars as identical as possible--early Model Ts were made in several colors but starting in 1913 black was the only color offered (until 1926).  There were however a few different body types for different purposes.

 1926 Model T Runabout

• Ford dramatically reduced the price of the car, to $290, but he also shared the benefits with workers, doubling wages to $5 a day in 1914.  He had to--turnover had reached over 300% a year

• it was hard for other companies to reduce their costs as low as Ford even when they introduced the assembly line
• Ford's approach was very capital-intensive
• but Ford made a key mistake, choosing lower costs and refusing to make major changes to the Model T.  He made 15 million Model Ts before production was shut down in 1927.
• GM introduced the annual model change
• still, economies of scale had became a key business strategy