(NOTE: Before I begin, please note I am not here to debate the products of, nor the morals or business practices of Henry Ford. I just want to make a small point.)
Ford Model T on Bourbon Street. It's all good.
Gayle asked me to go out car-shopping with her last week, and that got me to thinking about automobiles, and Michigan, and Michigan automobile manufacturers, which got me -inevitably -around to thinking about Henry Ford.
You probably don’t remember -actually, I wasn’t around, either -but at the time Henry Ford began manufacturing cars, they were expensive. An automobile was a luxury item, something the common man and woman might lust after, but something they probably couldn’t afford.
Ford set out to change that.
According to the Marketing Mojo Department of Useful Factoids, when the Model T sold for $575 in 1912, it cost more than the prevailing average annual wage in the United States.
Ford continually sacrificed profit margins to lower the sticker cost and to increase sales. Profits per car fell from $220 in 1909 to $99 in 1914 as Ford slashed prices. But sales exploded as the Model T’s sticker price lowered to where it was in reach of the middle classes. Ford Motor Company’s net income rose from $3 million in 1909 to $25 million in 1914.
In 1914, Ford also instituted a minimum wage, as well as a profit-sharing plan. He theorized that by retaining more employees he would lower costs and a happier workforce would be more productive. Between 1914 and 1916, the company’s profits more than doubled, ending up at $60 million.
So why bring this up? Well, there is no denying that Mr. Ford Sr. had his faults, but it seems to me that by keeping the needs of both his customers and employees in mind -not sacrificing one group to satisfy the other -old Henry did pretty well for himself and his company.
Could be a lesson in there for all of us.
Price is everything.
I don’t care how good your product is, if no one buys it, it still worthless.