194 (10.05.18)


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HISTORY

Henry Ford’s Bid to Buy-Up America's Mines

Industrialist Henry Ford went on a mine-buying spree in the 1920s, to control the raw materials that kept his factories running; as carmakers today try to lock-up battery metals, how did Ford's experiment end?

Henry Ford is the man who put America on wheels, a pioneer of mass production who built the world's largest assembly lines, churning out motorcars eight times faster than any of his competitors. The biggest bottleneck was paint (it couldn't dry fast enough) and the biggest risk was a shortage of raw materials.
   Ford disliked America's banking families and wanted to keep his money turning, so as his motor company grew, he began building his own suppliers on a grander scale than anything seen before. “If you want it done right, do it yourself,” was one of his maxims.
  At Ford's huge Michigan factory complex, he built the world's largest iron foundry and steel mill, churning out ten-tonne ingots that were rolled into sheets and pressed into panels. Iron ore could be loaded onto Ford's docks and turned into a finished vehicle in under 28 hours.
   In 1922, a coal shortage briefly brought facilities to a stop, so Ford set about buying more than a dozen coal mines in Michigan and Kentucky, plus iron mines and a limestone quarry. To make windows he built a glassworks, fed by Ford's own silica mine in Minnesota, and to build batteries it mined lead from an operation in Idaho, turning out 10,000 car batteries per day, containing 30 lbs of pure lead each. From “ore to assembly”, the model was called.
   Ford was also spending millions of dollars on tyres each year, so he bought land in Brazil and planted an 8,000-acre rubber plantation, “Fordlandia”, with state-of-the-art housing, a golf course, docks and a hospital, all overseen by mechanics from Ford's American factories. His cars meanwhile rolled-off the assembly line faster in every year of production, and he owned the resources to build almost every component, from radiators to bearings.
   By 1936, documents suggest that Ford had begun to lose his head with excitement in pursuit of raw materials. With sweeping

intent, one new subsidiary was launched to “mine land for gold, silver, copper, lead, zinc, iron, antimony and all kinds of ores; to hypothecate and deal in minerals and mineral land.” Six years later, the new subsidiary was wound down.
   Indeed, many of Ford's schemes outside of manufacturing either lost money, or ballooned into unmitigated financial disasters. His rubber plantation failed to produce even one tyre, because the trees were planted too close together. His coal mines introduced the industry's most advanced conveyers, but closed due to a shortage of railcars. According to company archives, Ford spent more on his mines than they ever delivered in ore, whilst operators at his steels mills had to blend the company's poor quality tonnage with better grades from other sources.
   Today, his methods are considered outdated. Shipping is less clunky and supply chains are faster, so firms maximise value by specialising. Ford's mines were sold off throughout the 1930s and its steel mills were hived-off in the '80s.
   But according to his book, Today And Tomorrow, Ford thought integration was critical to his success. In coal, he upped tonnage, producing double what his factories needed, flattening prices. In iron ore and lead, rivals had no inkling that his mines lost money, so Ford's encroachment kept suppliers in line and prices low.
   “We bought the mines not because we wanted to go into coal mining,” he once told the US Labour Secretary, “but because we had to be assured of an uninterrupted supply at a fair price. That assurance we could not have without ownership.”
   Ford's business decisions were also partly ideological, a rich man indulging his vision for a new America, in which workers were paid well, turning them into consumers. “Man is happiest and most prosperous,” he said, “with one foot on the land and one in industry.”

 

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