AUTOMOBILE ASSEMBLY: A MAJOR PART OF MICHIGAN'S ECONOMY

Although 19th-century lumbering and mining activities somewhat altered the state’s rural character, the automobile in the 20th century was the chief catalyst in the transformation of Michigan from an agricultural to an industrial state. The importance of car making is due in large part to Detroit’s early emergence as the nation’s automobile capital. The city had long been the site of a wagon-and-buggy industry, and this heritage, combined with an advantageous location in relation to key raw materials, set the stage for Detroit’s automobile production.
    In the late 1890’s, Ransom E. Olds organized Michigan’s first operating automobile company, the Olds Motor Vehicle Company, and Olds proved to be a shrewd assessor of popular taste. The sluggish market for high-priced cars prompted him to design the first relatively cheap car, "the merry Oldsmobile," and by 1904, gasoline-powered vehicles like the Oldsmobile had surpassed steam-and electric-powered competitors and had become the most dependable and fashionable method of conveyance on the market. With this rise in status came an increased demand for heavier, higher-priced models. Olds’s desire to enter this newer market led him to reverse his earlier inclination toward manufacturing more moderately priced cars, and in 1904, he reorganized his enterprise as the Reo Motor Car Company, moved to Lansing, and created a heavier, more expensive touring car.

Twelve years after the introduction of the first Oldsmobile, the major companies of Packard, Cadillac, and Buick, as well as hundreds of smaller establishments, like Oldsmobile, were struggling to compete for a select, affluent clientele. The average price per car was $2,000, well above most family budgets, but then Henry Ford introduced the Model T, a move that catapulted his company into prominence. The Model T was designed for utility rather than beauty and with the hope of providing a product that would be within the reach of the common man’s pocketbook. The strategy paid off. For nine years, the Model T was the nation’s most popular car, and despite a price as low as $360 in 1916, it proved a tremendously lucrative venture. Ford undercut his competitors by standardizing parts and using assembly-line techniques to produce a vehicle that was durable, cheap, and easily repaired. During the car’s inaugural year of 1908, Ford Motor Company sold 10,000 Model Ts.
    Henry Ford’s career was a curious mixture of innovation and intransigence. In 1914, when the usual daily wage averaged from $2.00 to $3.00, he introduced the $5.00 day, thereby drawing thousands of workers to Detroit. Yet his refusal to accept yearly model changes and installment payments permanently cost him part of the market. When sales dropped to a crisis level in 1926, Ford finally introduced a new model, the Model A. This car proved successful as well, but Ford never regained his earlier dominance in the industry.

The Ford Motor Company’s influence extended far beyond Detroit and its environs. From the 1920s to the 1950s, the company was the largest private employer in the Upper Peninsula because the company had devised a master plan to control all phases of auto production. Logging camps, hydroelectric dams, chemical and auto plants, iron mines, airports, hotels, and company towns were all built and controlled by Ford. Today, this Upper Peninsula empire has mostly vanished, the victim of distance and changing management.
    With his personal control, integrated operation, and low-priced product, Ford retained and expanded his holdings throughout the 1910's and 1920's, a period in which many companies specializing in medium-to-high-priced cars were absorbed through mergers. The merger king was William C. Durant, founder of General Motors. Beginning with the purchase of Buick in 1905, he gradually constructed a vast corporation of auto, truck, parts, and body factories that included Chevrolet, Cadillac, Pontiac, Oakland, Oldsmobile, Buick, and Fisher Body. Although Durant engineered the original mergers, his direction eventually resulted in severe financial difficulties. He resigned in 1921, later to go bankrupt, and General Motors was reorganized into a stable corporate structure.
    As the size and profits of individual auto companies grew, so too grew the entire industry. Grand Rapids, Flint, Lansing, Pontiac, Kalamazoo, and Grand Haven all had auto plants, but Detroit was still the hub of the industry, producing over half the world’s cars. The lure of employment and Henry Ford’s five-dollar day drew thousands of unskilled workers from Michigan, the rest of the United States, and the world.
    Rural blacks migrated north to Flint and Detroit after World War I, along with immigrants including Syrians, employed by Olds in Lansing; Poles, who settled in Hamtramck and worked mainly for Dodge; and Russians, Austrians, Czechs, and Lithuanians.
    The first big boom was in the 1920s. Auto sales climbed steadily, and associated industries-such as road building, bus systems, petroleum and rubber manufacture, and tourism-flourished as well. Detroit exhibited all the characteristics of a boom town-pollution, sprawl, and rapid growth. A 1920 letter aptly described the city: "Its single characteristic is the smell of gasoline. Imagine this: A cluster of new skyscrapers thrusting gawkily up out of a welter of nondescript old buildings".


    The 1920's also witnessed the emergence of the Big Three Automakers: Ford, a vast single company; the reorganized General Motors Corporation; and Walter P. Chrysler’s Company, founded in 1925. Through recessions, strikes, times of peace, and times of war, the three companies have continued to exercise tremendous influence over Michigan’s economy.
  Assembly line workers of today are skilled craftsmen and women, and are a part of a highly productive workforce.

Unlike the automobile plants of old, modern car assembly plants make extensive use of robots for welding and assembly.

Parts of the text on this page have been modified from L.M. Sommers' book entitled, "Michigan: A Geography".

This material has been compiled for educational use only, and may not be reproduced without permission.  One copy may be printed for personal use.  Please contact Randall Schaetzl (soils@msu.edu) for more information or permissions.