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Technological Extinctions of Industrial Firms: An Inquiry into their ...

Technological Extinctions of Industrial Firms: An Inquiry into their ...

18 1929 growth in the

18 1929 growth in the three measures is more modest, after which the Great Depression depressed both output and labor productivity. Coupled with the Abernathy et al. list, it appears that process innovation was low until 1909, thereafter increased through roughly 1923, and then decreased to a lower but still high level in the early 1930s, after which it declined sharply. Process innovations ranked 4 or higher by Abernathy et al. are listed in Table 4. The innovations through 1902 established standardized designs and the first interchangeable automobile parts, making mass production of automobiles feasible. The most dramatic improvement in manufacturing, however, occurred when Ford pioneered the mass market automobile with the Model N and T cars. From 1907 to 1920, an array of new production techniques at Ford helped define the company’s new system of production. In the 1920s, the majority of innovations involved new methods of body production, finishing, or welding, reflecting the advent of the cheap closed body and the progressive substitution of steel for wood in closed bodies, while innovations in the 1930s reflect efforts by Ford to compete with new models from GM and Chrysler. Ford’s 1907 to 1920 innovations can be divided into five types. First, special- purpose machine tools were developed to perform multiple operations on parts simultaneously, such as drilling forty holes in an engine block. These tools not only economized on labor, but with improved gauges and indicators also facilitated the precision manufacturing required for interchangeable parts. Second, production methods for new metal alloys such as vanadium steel made possible lighter and stronger components. Third, new methods were developed to manufacture major components, such as casting the cylinder block and crankcase as one unit. Fourth, branch assembly plants economized on freight costs by eliminating shipping of bulky, finished automobiles. And fifth, the famous moving assembly line dramatically reduced labor requirements. The industry’s major process innovations were dominated by Ford and GM. From 1907 to 1920, all but two of the innovations listed in Table 4 were developed by Ford. In the 1920s, the majority of process innovations were introduced by GM, and then in the 1930s all the innovations were from Ford. This pattern contrasts sharply with the major

19 product innovations listed in Table 2, for which Ford and GM’s share together was only 35% for 1910-1919, 39% for 1920-1929, and 29% for 1930-1939, with Ford accounting for only two out of thirty-five major product innovations over all these years. Similar production methods to those developed at Ford and GM spread rapidly, but by no means costlessly, to other firms. Walter Flanders, who had been instrumental in a number of the early process innovations at Ford before he moved to the Everitt- Metzger-Flanders Company (E-M-F) in 1908, installed many machine tools new to the industry at E-M-F, which was later acquired by Studebaker (Doolittle [1916, p. 155]). Similarly, machine tool builders developed many novel machine tools for Buick in response to insistent and sometimes imperious demands that in some instances took months or even years to satisfy (Chrysler [1937, p. 137]). When it built its engine plant in 1916, Hudson equipped it with highly specialized milling, drilling, and grinding machines capable of multiple operations such as boring a series of holes in a cylinder block from several angles (Renner [1973, p. 113]). Many firms also established foundries and metal labs following Ford. For example, Studebaker had a lab headed by a top metallurgist to test materials. It also had an efficiency department to study all aspects of production and a factory devoted to experimentation (Smallzreid and Roberts [1942, p. 235]). Judging from a Bureau of Labor Statistics study of the productivity effects of changes in methods and machinery in the auto industry based on twenty-five establishments (La Fever [1924]), the use of numerous special-purpose machine tools, specialty metals, and new heat treating and forging methods was widespread and afforded tremendous reductions in man-hours per car in the 1910s and 1920s. The moving assembly line was also widely imitated soon after its implementation at Ford, no doubt spurred by Ford’s openness about his methods. A March 1916 article in Motor Age (Spencer [1916]) recounts in some detail the moving assembly line at the Maxwell plant in Detroit and cites similar assembly lines at a number of other leading firms, including Hudson, Packard, Overland, Studebaker, Dodge, Reo, Paige, and Saxon. Not all firms caught up quickly, and Hudson (cf. Renner [1991, pp. 113-4]) and other leading firms long relied in part on hand work and fitters (Raff [1991, pp. 729, 731]). Moving assembly-line methods at least at Studebaker, however, were compared favorably with

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