A Strange Move To Fix Economical Problems - A Lesson Taught By Henry Ford

[Ananya 0]

Henry Ford in 1914,the then business executive of Ford Car Company made a startling decision that left many in the business class gasping. Henry Ford all of a sudden decided to double his employee's wages from $2.34 to $5 a day - an equivalent of $120 with respect to today's money.The whole country was shocked by such a seemingly bad decision to pull down the profit margin of a company.As its a well known fact that a company pays in accordance to the market rates. So how can one stand a way ahead from the league and make such a drastic decision? But the basic idea behind such a move was to help increase the sales of Ford car by increasing the purchasing capacity of the employees.On contrary to the popular belief this one single step taken by Henry Ford not only enhanced his own business but also benefited the whole economy.A number of people stood in queue to acquire a job in Ford which sustained the employee holding capacity of Ford thus ensuring a steep fall in recruiting,reemploying and training cost. Because Ones company's employees are another company's customer. So we can infer such a move taken by any company is going to benefit the whole economy.Henry Ford's historical decision is still relevent in today's time when most of the major world economies are undergoing a tough time. The basic problem lies in the fact that business owners and executives are unwilling to share their profit margins with their employees thus putting a bar in purchasing power of majority of population and hence crippling the whole economy in turn.This whole process is finally going to affect the business class as well if they don't find a steady customer inflow in long run.We need to understand this simple point that accumulation of money hence access key to resources if gets restricted to a very small proportion of population shuts the way to progress as a whole affecting every nook and corner of economy.

[sheepdog 10]

As they have often said, "Ford has a better idea!"Even in this day and age, it was Ford Motor Company that did NOT take any government bail out money, unlike all the other major car companies. Makes me proud to be a Ford owner!

[Ananya 0]

Ford's decision is still so relevant in today's time but its unfortunate that very few in the business class can actually recognize this with clarity that how such a wise decision can actually save an entire economy. One can cite very few instances of such great deeds.

Edited September 3, 2012 by Ananya (see edit history)

[k_nitin_r 8]

The Ford Motor Company is known for many firsts in the automobile industry and in the manufacturing business. Mass production was first made popular by Henry Ford, who announced that the Model T Ford was available in any color, as long as it is black. It was an amusing statement to make indeed, but by eliminating the effort involved in customizing the vehicles at the factory and shipping them to the dealers, Ford was able to make its automobile readily available the consumers. The Fordism of the past is less applicable today because it is possible to use machinery to paint an automobile in the desired color and make it available to the consumer within 24 hours by holding off the painting process till a holding area close to the dealer. Such a practice is still uncommon because of the level of management and cost involved in ensuring that the process is handled smoothly and that the quality of the product is maintained. Often, we see car repair workshops and, more specifically, the vehicle body repair shops that spend up to a month trying to get a vehicle back into its original shape after an accident when it is possible to manufacture a vehicle in much less time. It just goes to show you how well a manufacturer has to optimize a process to build a new car when compared to the processes of repairing a vehicle at a workshop.

[rpgsearcherz 5]

I actually did not know about this stuff regarding Ford. It's kind of interesting though. But I'm a bit confused on how paying his employees more helped his company by increasing the purchasing capacity of cars by his employees (being that if he pays them more and they buy Ford cars, he's basically giving away the cars...).Still kind of cool though how thinking outside the box can lead to unforeseen outcomes!

[darko100 1]

It's all just an illusion. And also we are very hungry about money , while we don't look at the other side. We often say "Look at that guy he doesn't have money for a flat or a car" without thinking about it more. It's just like a see saw , everything has a weight and something's up , something's down. It wasn't much better few centuries back , with all those kings and no democracy.The point is that , for us to have a comfortable life , people in China are forced to make microchips , work for few dollars , Afrikans get no help and they don't have food nor money... And WE are arguing about having a world crisis and economical problems

[rpgsearcherz 5]

And WE are arguing about having a world crisis and economical problems

This reminds me of the quote I see all too often now: "...first world problems." It's related to people complaining about absolutely everything. "iPhone 5? Why can't it come out on Monday instead of Tuesday? This sucks!" Things like that. Most of the things we end up arguing about are things most people would do anything for the luxury to even experience, and they wouldn't complain as a result.

[darko100 1]

It's not even hard to make money with just a small investment. There are lots of students like me who would work for few hundreds of dollars to make a full logo , website , slogan and a full internet brand. With 500$ you could give the student a sallary and make a good startup. Or even just with sports gambling (even though it has a BIG risk)