Henry Ford

“ When a storekeeper buys goods at a wrong price and finds they will not move, he reduces the price by degrees until they do move. If he is wise, instead of nibbling at the price and encouraging in his customers the hope of even lower prices, he takes a great big bite out of the price and gets the stuff out of his place. Everyone takes a loss on some proposition of sales. The common hope is that after the loss there may be a big profit to make up for the loss. That is usually a delusion. The profit out of which the loss has to be taken must be found in the business preceding the cut. ”

“ Cutting out a half-a-dozen models is not standardizing. It may be, and usually is, only the limiting of business, for if one is selling on the ordinary basis of profit--that is, on the basis of taking as much money away from the consumer as he will give up--then surely the consumer ought to have a wide range of choice.
Standardization, then, is the final stage of the process. We start with consumer, work back through the design, and finally arrive at manufacturing. The manufacturing becomes a means to the end of service. ”

“ One big part of the discovery of what is "normal" in industry depends on managerial genius discovering better ways of doing things. If a man reduces his selling price to a point where he is making no profit or incurring a loss, then he simply is forced to discover how to make as good an article by a better method--making his new method produce the profit, and not producing a profit out of reduced wages or increased prices to the public.
It is not good management to take profits out of the workers or the buyers; make management produce the profits. Don't cheapen the product ”

“ We will not put into our establishment anything that is useless. We will not put up elaborate buildings as monuments to our success. The interest on the investment and the cost of their upkeep only serve to add uselessly to the cost of what is produced--so these monuments of success are apt to end as tombs. A great administration building may be necessary. In me it arouses a suspicion that perhaps there is too much administration. We have never found a need for elaborate administration and would prefer to be advertised by our product than by where we make our product. ”

“ Will there not come a point when, regardless of price, people simply will not want anything more than what they already have? And if in the process of manufacturing fewer and fewer men are used, what is going to become of these men--how are they going to find jobs and live? ”

“ Nobody anywhere can really do more than guess about the future costs of production. It is wiser to recognize that the future holds more than the past--that every day holds within it an improvement on the methods of the day before. ”

“ We may think we know how much of a commodity is produced on a certain day or in a certain month, but that does not tell us how much will be produced the next day or the next month. Likewise we do not know how much is consumed. By spending a great deal of money we might, in the course of time, get at fairly accurate figures on how much of a particular commodity was consumed over a period, but by the time those figures were compiled they would be utterly useless except for historical purposes, because in the next period the consumption might be double or half as much. ”

“ No one will deny that if prices are sufficiently low, buyers will always be found, no matter what are supposed to be the business conditions. That is one of the elemental facts of business. Sometimes raw materials will not move, no matter how low the price. We have seen something of that during the last year, but that is because the manufacturers and the distributors were trying to dispose of high-cost stocks before making new engagements. ”

“ It is the refusal of people to buy on account of price that really stimulates real business. Then if we want to do business we have to get the prices down without hurting the quality. Thus price reduction forces us to learn improved and less wasteful methods of production. ”

“ The tractor is not made in connection with the automobiles. No plant is large enough to make two articles. A shop has to be devoted to exactly one product in order to get the real economies.
For most purposes a man with a machine is better than a man without a machine. By the ordering of design of product and of manufacturing process we are able to provide that kind of a machine which most multiplies the power of the hand, and therefore we give to that man a larger role of service, which means that he is entitled to a larger share of comfort. ”

“ We believe it is possible some day to reach the point where all goods are produced so cheaply and in such quantities that overproduction will be a reality. But as far as we are concerned, we do not look forward to that condition with fear--we look forward to it with great satisfaction. Nothing could be more splendid than a world in which everybody has all that he wants. ”

“ Consumption varies according to the price and the quality, and nobody knows or can figure out what future consumption will amount to, because every time a price is lowered a new stratum of buying power is reached. ”

“ With bad transportation one has to carry larger stocks. At the time of revaluing the inventory in 1921 the stock was unduly high because transportation had been so bad. But we learned long ago never to buy ahead for speculative purposes. When prices are going up it is considered good business to buy far ahead, and when prices are up to buy as little as possible. It needs no argument to demonstrate that, if you buy materials at ten cents a pound and the material goes later to twenty cents a pound you will have a distinct advantage over the man who is compelled to buy at twenty cents. ”

“ The standardization that effects large economies for the consumer results in profits of such gross magnitude to the producer that he can scarcely know what to do with his money. But his effort must be sincere, painstaking, and fearless. ”

“ Therefore in our buying we simply get the best price we can for the quantity that we require. We do not buy less if the price be high and we do not buy more if the price be low. We carefully avoid bargain lots in excess of requirements. It was not easy to reach that decision. But in the end speculation will kill any manufacturer. Give him a couple of good purchases on which he makes money and before long he will be thinking more about making money out of buying and selling than out of his legitimate business, and he will smash. ”

“ But in any condition of unduly high prices, no matter what the real cause, the people pay the high prices because they think there is going to be a shortage. They may buy bread ahead of their own needs, so as not to be left later in the lurch, or they may buy in the hope of reselling at a profit. When there was talk of a sugar shortage, housewives who had never in their lives bought more than ten pounds of sugar at once tried to get stocks of one hundred or two hundred pounds, and while they were doing this, speculators were buying sugar to store in warehouses. ”

“ Unduly high prices are always a sign of unsound business, because they are always due to some abnormal condition. A healthy patient has a normal temperature; a healthy market has normal prices. High prices come about commonly by reason of speculation following the report of a shortage. Although there is never a shortage in everything, a shortage in just a few important commodities, or even in one, serves to start speculation. ”

“ Now, hardly any one has only one pair of shoes, and shoe making is a great industry. No, every time you can so arrange that one man will do the work of two, you so add to the wealth of the country that there will be a new and better job for the man who is displaced. ”

“ We know that, as the price has come down, the farmer, who at first used one car (and it must be remembered that it is not so very long ago that the farm market for motor cars was absolutely unknown--the limit of sales was at that time fixed by all the wise statistical sharps at somewhere near the number of millionaires in the country) now often uses two, and also he buys a truck. Perhaps, instead of sending workmen out to scattered jobs in a single car, it will be cheaper to send each worker out in a car of his own. ”

“ We used to assemble our cars at Detroit, and although by special packing we managed to get five or six into a freight car, we needed many hundreds of freight cars a day. Trains were moving in and out all the time. Once a thousand freight cars were packed in a single day. A certain amount of congestion was inevitable. It is very expensive to knock down machines and crate them so that they cannot be injured in transit--to say nothing of the transportation charges. Now, we assemble only three or four hundred cars a day at Detroit--just enough for local needs. ”

“ Therefore some men reason that the best price to sell at is the highest price which may be had. That is supposed to be good business practice. Is it? We have not found it so.
We have found in buying materials that it is not worth while to buy for other than immediate needs. We buy only enough to fit into the plan of production, taking into consideration the state of transportation at the time. If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. ”

“ It is not business. If a man buys a large stock at ten cents, he is in a fine position as long as the other man is paying twenty cents. Then he later gets a chance to buy more of the material at twenty cents, and it seems to be a good buy because everything points to the price going to thirty cents. ”

“ We have been told that this is good business, that it is clever business, that the object of business ought to be to get people to buy frequently and that it is bad business to try to make anything that will last forever, because when once a man is sold he will not buy again. ”

“ The public finds its own consumptive needs with unerring accuracy, and since we no longer make motor cars or tractors, but merely the parts which when assembled become motor cars and tractors, the facilities as now provided would hardly be sufficient to provide replacements for ten million cars. And it would be quite the same with any business. We do not have to bother about overproduction for some years to come, provided the prices are right. ”

“ The plant at Manchester, England, is making nearly an entire car. The tractor plant at Cork, Ireland, is making almost a complete tractor. This is an enormous saving of expense and is only an indication of what may be done throughout industry generally, when each part of a composite article is made at the exact point where it may be made most economically. We are constantly experimenting with every material that enters into the car. We cut most of our own lumber from our own forests. ”

“ It is considered good manufacturing practice, and not bad ethics, occasionally to change designs so that old models will become obsolete and new ones will have to be bought either because repair parts for the old cannot be had, or because the new model offers a new sales argument which can be used to persuade a consumer to scrap what he has and buy something new. ”

“ At the time of writing the price is $497. These prices are actually lower than they appear to be, because improvements in quality are being steadily made. We study every car in order to discover if it has features that might be developed and adapted. If any one has anything better than we have we want to know it, and for that reason we buy one of every new car that comes out. Usually the car is used for a while, put through a road test, taken apart, and studied as to how and of what everything is made. Scattered about Dearborn there is probably one of nearly every make of car on earth. ”

“ The parts of a specific model are not only interchangeable with all other cars of that model, but they are interchangeable with similar parts on all the cars that we have turned out. You can take a car of ten years ago and, buying to-day's parts, make it with very little expense into a car of to-day. Having these objectives the costs always come down under pressure. And since we have the firm policy of steady price reduction, there is always pressure. Sometimes it is just harder! ”

“ Any one who was foolish enough to regard the high profits of the boom period as permanent profits got into financial trouble when the drop came. However, there is a belief, and a very strong one, that business consists of a series of profits and losses, and good business is one in which the profits exceed the losses. ”

“ The small sizes of coke, not suitable for the blast furnaces, are sold to the employees--delivered free into their homes at much less than the ordinary market price. The large-sized coke goes to the blast furnaces. There is no manual handling. We run the melted iron directly from the blast furnaces into great ladles. ”

“ People do not stay put. That is the trouble with all the framers of Socialistic and Communistic, and of all other plans for the ideal regulation of society. They all presume that people will stay put. ”

“ What all this will amount to in point of savings we do not know--that is, we do not know how great will be the saving, because the plant has not been running long enough to give more than an indication of what is ahead, and we save in so many directions--in transportation, in the generation of our power, in the generation of gas, in the expense in casting, and then over and above that is the revenue from the by-products and from the smaller sizes of coke. ”

“ In our own experience a new place always opens for a man as soon as better processes have taken his old job. And what happens in my shops happens everywhere in industry. There are many times more men to-day employed in the steel industries than there were in the days when every operation was by hand. ”

“ For when were men ever really put out of work by the bettering of industrial processes? The stage-coach drivers lost their jobs with the coming of the railways. Should we have prohibited the railways and kept the stage-coach drivers? Were there more men working with the stage-coaches than are working on the railways? ”