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Archive for the ‘Automotive’ Category

Henry Ford’s Invention Inadvertently Caused the Depression

Sunday, September 6th, 2009

by: Geoff Ficke

In early 20th century America the vast majority of people living in rural areas eked out a living in agriculture. Farms were small, often sharecropped. The planting and harvesting was labor intensive and horses provided the only source of energy for mechanized tilling. The vagaries of weather and drought have always made farming difficult. Crops were mainly grown for consumption by the farmer’s family, with any extra produce bartered for needed goods.

We are all aware of the history of Henry Ford and his invention of the production line to mass-produce Model-T’s. Ford did not invent the automobile, he simply invented a method to produce cars in mass volumes and make them available for virtually anyone wishing to purchase a horse-less carriage. He also revolutionized the agriculture business with totally unforeseen consequences.

The Ford Motor Company was always seeking new avenues of distribution and business opportunities. Ford had grown up in then-rural Michigan and was immersed in the farm world of the age. In the 1920’s Ford introduced the first mass-produced farm tractor, the Fordson. The machine sold for under $400 and revolutionized farming. It quickly became cheaper and less costly to own and maintain a Fordson tractor than a horse.

Farmers quickly gravitated to the Fordson tractor. Crop yield per acre expanded exponentially. Farmers produced so much crop yield per acre that by the middle of the 1920’s we were growing far more food than the country could consume. Prices plummeted. The need for day laborers declined precipitously and rural unemployment exploded.

The collapse of crop prices, unemployment, and the Great Plains drought were significant contributors to the start of the Great Depression. The Fordson was an amazing improvement in the productivity and ability of farmers to lead more comfortable lifestyles. However, the “Law of Unintended Consequences” reared its ugly head in this instance. The creative disruption caused by this product was thrust on a market that could not adjust efficiently or quickly to its significance.

We have a seemingly similar situation occurring today. We constantly read headlines about the dying manufacturing sector in the United States. Politicians love to visit deserted factories and decry the decline of manufacturing in a wide range of formerly profitable industries. And yet, manufacturing in America is setting records for volumes produced, shipped and invoiced. How can this dichotomy exist?

As with the Fordson tractors 1920’s introduction to farmers, today’s manufacturing has evolved dramatically and created disruptive technologies. Robots, software, customized computer models, computer assisted design and modern communications mean that we produce ever more sophisticated products, in greater volumes, and at lower prices, while needing fewer workers per unit of production. The workers that are needed today require better education, and skills than the production line workers of yore.

When I was growing up in an industrial area of America in the 1960’s many of my contemporaries went to work with their fathers at the local mill or factory. These were overwhelmingly union jobs. Each of my buddies at that time thought they would be employed for life like their fathers had been. It has worked out that none are where they started, not one.

The displacement is as painful today as it was on the farm of the 1920’s. However, the benefits to society accruing from modern manufacturing technologies and systems, just like the advances in farming owing to mechanization, cannot be denied. Only the Luddites of the 19th century and there modern adherents believe life is not more comfortable today and more people have more access to more goods and services at lower prices that at any time in history.

Change is hard and often inconvenient. We live during an age of massive change unlike any time in history. The understanding of and acceptance of modern realities insure that most people will benefit from advances in technology. Those that do not want to change and accept the new order of things will be left behind.

Henry Ford did not sell the Fordson tractor to instigate the Great Depression. The product was a small, inadvertent contributing factor. The inability of markets of that day to allocate resources and find markets for the massive increases in crops harvested was a systemic failure. Today, we manufacture products that are consumed quickly and create the thirst for more inventions and technologically advances. We are all better off as a result.

What Modern Marketers Can Learn From A 100 Year Old Artisan Auto Maker

Thursday, August 20th, 2009

by: Geoff Ficke

H. F. S. Morgan launched his eponymous car manufacturing company in England in 1909. For a century, through world wars and great economic turbulence, Morgan Motor Company has produced some of the most stylish, desirable automobiles ever produced. Unless you are a classic car enthusiast, you probably have never heard of Morgan and more unfortunately probably never seen one of these magnificent machines on the road. They are exceedingly rare and that has gone a great distance in cementing the desirability of the mark.

Morgan’s initially were 3-wheeled cycle cars. The Company focused on these “trikes” because at that time the conventional automobile was heavily taxed. As the taxes were lowered, and mass manufacturing drove down the price of autos, Morgan evolved to a two seat roadster model.

Morgan’s, from their introduction, to the present day, feature a distinctively British sports car look. The cars sit exceptionally low to the road, sport lush, flowing fender lines, a long bonnet (hood) that is held in place with a leather belt and a curvy grille that has not significantly changed in 100 years. Most unusually, each hand built car is constructed on a wooden (ash) frame.

The grandson of H. F. S. Morgan runs the Company today. The principles that the founder based the brands pedigree upon are still the foundation of the enterprise. Each car is a slowly crafted work of artisan perfection. The introduction of updated models of Morgan’s has continued unabated. However, the advances in the product are always found under the hood, in the gear box or transmission. When you see a Morgan you know it is a Morgan, whether a 1948 or 1995 model.
This continuity of a classic body profile has created a cult following for Morgan’s. Despite many opportunities to expand production and sales, Morgan has remained steadfast to the founder’s vision and remains a bastion of old world craftsmanship. In 2007 the Company delivered 640 cars to purchasers around the world who had waited up to two years to have their pre-paid order filled. 163 highly specialized employees build Morgan’s in the Company’s original Malvern, England factory.

In honor of Morgan Motor Company’s 100th anniversary, the company introduced the special edition Morgan Aero 8. This coupe is one of the most stunning automobiles ever to operate on a roadway, at anytime, anyplace. This breathtaking design was built in limited production of 100 vehicles. The price was $160,000. The Aero 8 is an instant classic. Though more aerodynamic than other Morgan’s, the Aero 8 still exhibits the lines and spirit so obvious in all Morgan vintage vehicles.

We live in a world of mass market consumer products. This is good. The opportunity for more people to enjoy the basic fruits of invention and enjoy more fulfilling lifestyles has never been greater. However, the world is a much more beautiful place because products like the Morgan automobile are still produced to fill a niche need.

Product marketers can easily utilize the strategy employed so successfully, for so long, by Morgan to penetrate difficult product categories. The iconic styling cues that identify a vehicle as a classic Morgan, the customized coach work, the exclusivity of product distribution all contribute to creating more demand for these stunning cars than there is supply. This model is used in numerous other sectors of the consumer product universe to create desirability and exclusivity. I am surprised that more new businesses do not pursue a similar strategy.

A Famous Car Auction Offers Some Answers For US Auto Manufacturing Woes

Thursday, October 9th, 2008

by: Geoff Ficke

This past New Years holiday weekend, I had planned on the ritual television viewing of endless college and professional football games with my son. He is home for Christmas break from university, and the last weekend of each year we have always devoted to eating, lazing and yelling at the screen as teams with which we have no real interest slug it out in endless gridiron skirmishes. However, this year, our viewing habits were turned upside down by a re-run of a car auction.

Each January, the Barrett-Jackson Classic Automobile Auction takes place in Scottsdale, Arizona. The auction takes the better part of a week and features the most stunning car stock in the world, selling for mind numbing prices to ultra-rich celebrities and collectors. If you like cars, and as a child of the 1960’s I do, this is addictive stuff. My son and I saw very little football this weekend, as the auction ran hour after hour, a repeat of the January, 2006 auction as shown on the Speed Channel, and we were consumed.

Watching the auction was revealing on several levels: not only was the auction exciting, the cars beautiful and unique, the bidding spirited, but collectors demand for American classics overwhelmed the markets desire for all other types of collectible vehicles. Ferrari’s, Porsches and Maserati’s were offered and sold, however, all of the record sale prices were achieved by American muscle cars from the 1960’s and 1970’s.

Were ANY American automobile executives in attendance, watching on television or even aware of the insatiable demand for their historic nameplates? At a time when Ford, General Motors and Chrysler, virtually all that is left of the once mighty American auto business, are losing market share, bleeding cash and shuttering factories, the demand for once-pedestrian priced rolling stock is immense. Plymouth Barracuda, Dodge Hemi, Chevelle, Camaro, Firebird, Mustang, and dozens of other American auto models, all once widely sold and, at prices virtually every man could afford, commanded prices as high as $2 million. That is right: $2,000,000!

The re-run of the Barrett-Jackson 2006 auction underlined clearly what ails the American automobile business and what the prescription for a return to the glory days must include. The engineers and designers of the mid-20th century American cars loved the industry: They were car guys first, last, always! Their designs and performance enhancements reflected passion. Cars were more than mere mass transportation; they were statements of creativity, art and American leadership and inventiveness. Can any of these traits be applied to today’s bland, look alike, pedestrian offerings coming to us from Detroit?

Harley Earl at GM, Raymond Loewy at Studebaker, Lee Iacoca at Ford, John DeLorean at Pontiac, and Virgil Exner at Chrysler were craftsman whose designs and styling cues influence the worldwide auto design industry to this day. Can you name the lead designer of any contemporary American auto model working today? They are as faceless, and colorless as their vehicles.

The classic “baby bird”, the Ford Thunderbirds of the 1950’s, were allowed to atrophy, became gluttonous and boxy before being put to a long deserved death in the 1990’s. A few years ago, Ford announced to great fanfare that the Thunderbird would be re-offered in the original two-seat sport roadster presentation. Expectations were high for the “new baby bird”, pre-production bookings encouraging and publicity generous in anticipation of the return of this American classic.

Sadly, the car proved a bust on every level. Performance was dull, lines and body silhouette a pale memory of the distinctive 1950’s design and the public walked quickly away from the car. After only three years of disappointing sales, the new Thunderbird was discontinued.

Ford at least tried. My question, re-issued while watching the 2006 Barrett-Jackson auction was this: Why didn’t the new “Bird” body look exactly like the old bird, gorgeous pastel colors, cutting edge styling cues, continental kits, but with modern mechanics under the hood? The “old Bird” is a recognized classic. Every collector wants a classic Thunderbird in the garage. No one cared for the lame attempt at a pseudo-Bird as offered by today’s Ford designers.

The contemporary American car business suffers for many reasons, including legacy costs, past management mistakes and bloated staffing. However, the biggest mistake by far, and I believe any casual viewer of the Barrett-Jackson auction would agree, is the stodgy, sameness of their contemporary offerings. When a Cadillac, a Buick, a Hyundai and a Toyota look the same, the car with the lowest price, best warranty and best service history will claim the lions share of the sales. Unfortunately these are not currently benefits associated with American cars.

The historic design pedigree that naturally could, and should be attached to American models has largely been forfeited. When a 1970 Plymouth ‘Cuda (original sticker price, $4000) sells for over $2 million and Shelby Mustangs regularly sell for $1 million the market is making a clear statement. Is any body in Detroit paying attention?