» The automobile industry is indispensable in our drive for victory. Its transformation is a seven days’ wonder. What has been the impact of the war upon the younger executives, the unions, the whole complicated structure of mass production? As goes Detroit, so goes the nation — tomorrow.
by ARTHUR POUND
EVERYTHING the automobile business ever has done is dramatic, revolutionizing, socially significant. Even in the catalepsy of depression its quiet was portentous of the coming storm whose fury, breaking in 1935, wrought changes in our social order which are still beyond calculation. The present chrysalis change of the industry from peace to war, from vehicles to shooting irons, from flossy passenger cars to tanks and airplanes, is breath-taking in speed, scope, and historical import. Yet fewer than fifty years have passed since the horseless carriage was introduced to America by the Duryeas, who placed a little internal combustion engine under a buggy seat and said “Giddap” to the whole wide world. Charles B. King, the first man to drive a motorcar in Detroit (population then less than 200,000), is today hale and hearty at age seventy-four; but his old home town has grown to 2,000,000. Under the eyes of scores of living participants in those fateful beginnings, that tiny business germ grew into the nation’s largest manufacturing industry and set the pace for the entire world in efficient production. Actually the making of automobiles grew to such proportions that the government, in order to wage total war, had to suppress the manufacture and sale of cars for indiscriminate civilian use. Production required so many workers and machines and such vast quantities of materials that business as usual in this master machine-shop and assembly industry imperiled the nation.
Union officials foresaw this possibility by December, 1940; management not so soon. Some time earlier I asked a top-flight automotive engineer what I ought to say about the effect the war would have on the industry, and he firmly replied, “Nothing whatever. There is no connection.” At present he is going full steam ahead to make up for lost time; but the first two years of European warfare baffled him, along with millions of other Americans in the sheltered Middle West. Many years ago this same man told me that automobile engines should be located on the rear axle, whereupon streamlining might become really effective in the true teardrop design. This obvious change, he explained, hadn’t been made for two substantial reasons. The cost of tooling would be enormous; but more compelling was the high cost of educating the public to the advantages of new and radical design. Customers, it seems, like to make haste slowly, by short steps from one model to another; consequently, radical changes may be deferred year after year and eventually be blanketed entirely by some development closer to current practice. Since that talk was way back in the twenties, I conclude that for fifteen years the cost of retooling was a factor in restraint of the sort of engineering progress which requires expensive leaps and bounds. The Diesel engine seems to have encountered the same feather-bed barricades. This whole industry, while still young in years, was obviously growing a bit heavy-waisted through prosperity, and extreme change called for the kind of work and worry that a fat industry dodges.
Today, with passenger car production at a standstill and specialized machinery in any amount hustled out-of-doors, the return to the usual, after the war, can proceed on unusual lines. Stakes involved in successful comeback are so huge that investment in former machine installations, now discontinued, is trifling by comparison. Minute by minute, obsolescence gets in its deadly work on parked machinery, while new and better tools and systems are being developed under urgent pressures. Practically, all Detroit has pooled its idle machines, and with every withdrawal of machinery from that pool there is less reason to return to conventional designs and old methods. Functional design has a better chance against traditional or decorative design. A public keen on airplanes, tanks, and command cars is being schooled to welcome something different in personal transportation. Engineers may again be free to seek novelty, variety, and utmost efficiency of operation as respects fuel and tires. It would be a pity to miss this war-born grant of freedom.
There are men in this industry who downright refuse to look beyond the war. One of these scored a spectacular success in combining mass production with varied appearance of product. By means of accurate timing and swift interfactory communications, his assembly lines brought together so many kinds of fancy trimmings that the various combinations gave an air of individuality to automobiles basically the same. Now he looks upon that subtle dexterity as child’s play on “Christmas tree” models, something for a man to forget.
“I don’t care if I never make another passenger car,” he proclaims. “I ask nothing better than to go right along as we are, on machine guns and anti-aircraft — all we can turn out and then pretty soon twice as many. After we’ve won the war, I hope we’ll continue making guns until the United States has so many that it will never again be caught unprepared. But right now I’d rather not think beyond week after next. I’m concentrating on shooting irons.”
In war or peace such singleness of purpose is beyond price. But there are other men who cannot do otherwise than look backward and forward, partly because of their greater responsibility to stockholders, partly because their inner natures compel them to think of post-war depressions, of dependent communities, and even of the sour lessons of history. They know that it will be impossible for America to pass our war costs along, and that a long period of disillusionment normally succeeds the short exultations over peace born of victory. The Spartan moods of war are ever closely trailed by social disorders and decay of public morals. Victorious armies must eventually be demobilized and wages found for them, while arms production is falling from flood to rivulet. Those who reflect upon these melancholy truths must work and plan, at the very least, for continuance of a social order satisfactory to a majority of our people and one that is not too bitterly resented by any considerable minority. Many such minds, in industry and out, will feel under moral compulsion to keep their planning in line with the recovery of a sense of world brotherhood, and the re-establishing of amicable relations in diplomacy and trade.
I have heard conservative executives enlarge on this text. A few are lifelong diehards and others are fatigued liberals gone temporarily astray. Every war has such casualties. Such are now drawing comfort from the thought that history repeats itself, at least to the point where it ceases to validate their reckonings. They are sure that the Republicans, as in 1918, will gain Congressional seats this fall and go on to elect the next President. The converted liberals express a pious hope that the new Harding may surpass the old one in wisdom and piety; but a gleam in many conservative eyes indicates that an exact duplicate would not be altogether unacceptable.
In that sort of post-war world, motorcars would again roll down the assembly lines, to be snapped up by the millions in a seller’s market deep with accumulated demand.
These cars will be immensely superior vehicles constructed of improved materials by well-trained and well-behaved men. A most impressive schooling is going forward, not only in industrial techniques, but also in industrial discipline.
What’s more, the automotive industry now has a stout second string to its long bow; it is now also an armament industry and intends to preserve all the skill and kudos so evolved. At last airplanes have come into quantity production, and the automotive industry will always be its big brother and chief supply to aviation. An industry so fortunately circumstanced will make a good living, thank you, in any kind of world where it is at all possible to pass taxes along to the consumer. Reasonable dividends can be paid to stockholders and the traditional social dividends contributed toward the amelioration of life and a rising standard of living. In our kind of country it just isn’t possible to stop this most American of industries from making profits, creating wealth, and scattering blessings. Thus declare the official spokesmen, optimists all. So far these bearers of good tidings have always been right; and from that hopeful but not introspective point of view a good many piecemeal changes will be considered.
Here are some of them. How about extravagant display in car trimmings; will “doll-up” be denied either by edict or economic pressures on post-war buyers under heavy tax burdens? Why not less steel and more plastics, plywood, what not? What price novelty, and how flexible will pricing policy be? How about using the interest rate to influence car buying, as the Federal Reserve used to use it in restraint or encouragement of security buying? Would cheap customer credit encourage car buying in bad times, or tend to break down the seasonal lag if winter and fall buyers were given a lower rate on installment balances than spring and summer buyers? Could outof-season buyers be tempted by lower prices, as is done by the coal merchants? And now that the dealer organization is retrenching where it is not collapsing, is it utterly necessary to revive that function on the former expensive and elaborate scale? Should the consumer continue to pay nearly one-third of the purchase price for the sake of being sold something he ardently desires? Are improvements in efficient merchandising impossible in this most efficient manufacturing industry? How about chain automobile stores and factory outlets? Is Automobile Row a necessity? Or the used-car lot and the junk graveyard — eyesores both? Is the used-car situation, as it used to be called whenever a glut in that field damaged first sales, beyond peacetime remedy and control ?
In addition to this medley of merchandising questions, here are some which relate to consumer use and affect sales indirectly rather than directly. What about parking? Is the parking problem to be forever a nuisance discouraging alike to car owners, merchants, and downtown property owners? Could not automobile manufacturers encourage the application of more decisive remedies than have ever been attempted? Might it not be worth while to make an investment in some troubled city by way of demonstrating what could be done to clear streets? How about exorbitant service charges and the too frequent undependability of garages? Is big business to be forever at the mercy of petty methods in the market place? All these considerations affect the paramount social question posed by the very existence of this great industry in its present proportions: Must factory operations, and with them the steady social life of great cities, be left henceforth at the risk of any adverse influence which can be foreseen and forestalled? I think that most of the leaders of the industry would like to make the right answer to this fundamental question and that they are already trying to find constructive answers to the lesser questions involved.
When you mention “labor” to one of these steady optimistic executives at the helm, you will find him hopeful but wary. There is less rough stuff, fewer hair-trigger strikes. In the diplomacy of industry, to borrow a phrase from the diplomacy of states, “procedure through channels” gains authority. The war has sobered the workers and their leaders. Recent conferences, before press and public, indicate a new spirit of team play. “Full mobilization of manpower” is a favored phrase of the moment; but the usual disagreement exists as to who is to do the mobilizing and to what end. There may be extremely practical ways to improve labor relations and increase output. For instance, the whole seniority system needs revision. There is no point in management straining toward the future on labor relations right now, for these are matters for collective bargaining, with government as ultimate arbiter.
How are all these questions and hundreds of others going to be studied and answered, for better or worse, by men as harried and hurried by pressing duties as these commanders on the automobile front? Well, everyone agrees that after a while the “tops” will not be as busy as they are today. When the new and the revamped plants are running steadily on war orders, the “brass hats” will have less to do in the way of routine than ever before in their lives. Weapons and war equipment are ideal fruits of mass production, quickly consumed, with no trade-ins and absolute standardization, since you can’t change tanks in the middle of a stream or a war. Presently there will be time to spare for the men who are perfectly willing to admit that they can do a sound, constructive job at planning for this industry. And who, on the record, can say them nay? For they are the Old Reliables who helped to make the automobile the wonder that it was and the swift changeling that, it is today, far ahead of schedule and driving to new highs.
These men, peering with such determination into the hazy future, will accomplish some notable things and overlook equally rich opportunities. Such lapses as they fall into, such absurdities as they commit, will arise from their habitual and perfectly natural shortness of view. History for the elders begins with the motorcar in 1893; for the youngsters, with the closed body in 1916. When they think of history repeating itself, they drink false comfort from mere tots of time. Possibly the voters, in hot reaction against war controls, may elect another Harding some November day. But will any Republican President and Congress be able to stem the currents which flow so strongly toward government control of industry the whole world around? Even before war shot up the pressure, the world trend ran that way in every sort and condition of political regime, no matter whether it was republican, imperial, monarchical, democratic, fascist, or communist. The United States has been definitely part of that swing, under both Democratic and Republican administrations, during the greater part of our national existence. Election results may hasten or slow down the march, but they cannot reverse it.
An historical repetition of more validity, because it is universal in space and time, is this: whatever social adjustment proves helpful in war is likely to be popularly demanded and firmly adopted in peace. War, in this sense, is an experimental prelude to peace. The income tax, for instance, was introduced during the Civil War as an emergency revenue measure and soon discarded. Agitation continued, however, and after thirty years it was revived, adopted, and declared unconstitutional. Then, more than half a century after its introduction during war, the income tax became part of the Constitution by amendment.
Of the many gradations in the scale of government control over industry, the slot in which this industry now finds itself isn’t so bad. Operating companies cannot do as they please, but within limits of a broad program they can pretty well choose what they want to build and proceed with its production in their normal way, subject to schedule and inspection. And, of course, they are being well paid. This situation, while far removed from ordinary commercial liberty, is even farther removed from government seizure and operation without consent. At what point will government check in on its next visit?
That depends upon how well the industry stands with the public of that day, and how well it has been prepared to meet the changing strains of the times. For example, consider barter trade, at once a disturbing and alluring prospect to an industry which adores a big deal. In another depression, ten or fifteen years hence, a manufacturer might do something for his company and the nation by trading, let us say, ten thousand cars to a farmers’ coöperative in return for farm products. Any of three large companies could handle such a transaction a few months after planning that move; but a joint effort of all companies, under Washington’s consent and approval at all points, would be needed to cope with larger barter transactions originating in foreign demand. Suppose Russia, whose economy is readymade for international bartering, offered to send us a million ounces of gold in return for a hundred thousand motorcars — $350 per car, F.O.B. Detroit, for something plain and neat. An order of this kind might spell the definite beginning of the cartel system in America as a domestic by-product of the barter system which seems likely to remain a factor in international trade for years to come, no matter how or when the war ends. If the antitrust laws run counter to transactions of this nature, remember that they can always be amended to gain a national objective.
Even if barter wins in salt-water trade, strong efforts no doubt will be made to keep domestic commerce free from the innovation. But if barter deals of foreign origin assist full employment, their influence will surely affect home practice in a society where production for use instead of for profit already has many advocates. Our popular and traditional opposition to cartels is not likely to outlast the war, because it is now evident that this form of industrial organization possesses certain definite advantages not lightly to be thrust aside by an industrial nation. Already we have seen how easily American corporations were tricked by German cartels into situations dangerous to our military safety. These unfortunate transactions were rooted in desire to secure benefits from German scientific research, which has long been prosecuted by the cartel system on an overall industry basis with the help of the Reich. America’s chemical self-sufficiency at present gives the lie to the old German taunt of “barnyard American chemistry,” but obviously Germany’s broader approach to industrial efficiency gains through steadier prosecution of research and a swifter spread of new ideas and formulas throughout an industry.
Our established practice of licensing agreements functions rather slowly and not always fairly, because of personal and corporate likes and dislikes. One of the continuing debates in big business is whether licenses should be declared open to all applicants on equal terms or whether the owner of the patents should use discretion in an effort to check unfair competition or “chiseling” among licensees. A patents pool would eliminate these difficulties. Equally, cartel planning would eliminate uncertainties which inevitably arise through separate corporations competing strenuously for sales, talent, material, and labor. The staunchest defender of unrestricted initiative must admit that competition is continually dislocating the best-laid plans of men and corporations, as well as those of governments.
In America trade associations have always been suspect, and in the automobile world relatively weak. A new element, union labor, has arisen which can see this industry as a whole without piecemeal responsibility for any of its parts. Just as the mine workers gained strength by showing that coal mining was a sick industry, so the automobile workers gained by demonstrating that their industry was too healthy for the nation’s good when the nation was running a temperature. For instance, consider the advantage a union official possesses over a corporation official in a war economy when the statistics of production indicate an approaching steel shortage. The union man can go all-out for more production because that means not only more guns and tanks, but also more work and wages no matter in which shops the work is done. But the corporation official must consider — or at least he is in the habit of considering — his company’s contractual relations with certain steel producers, the relative costs of the various kinds of steel acceptable on filed orders and those to follow, and the chances of loss if he buys the wrong steel at any price or the right steel at the wrong price. A war economy often makes a prudent businessman look stodgy, while acclaim goes to those in position to take broader views at no personal risk. Industry must strive for equal insight and breadth. Until management becomes able to take the national view, — intellectually as well as emotionally, — the unions are likely to surpass the corporations in realistic planning as well as in successful collective bargaining.
How much corporation initiative can be salvaged for the post-war period depends a good deal on how long the automobile industry remains under restraint. Some of the younger executives are beginning to ask themselves whether the eggs can ever be unscrambled if the present scrambling continues for several years. In this self-questioning they are in deadly earnest, for their careers depend upon the answer. Having adjusted themselves quickly to war, they are enjoying a revived conviction of social approval as they crash into production for use, not for profit. Although profits accrue and may well become enormous, the production men aren’t thinking of profits, but of output, of beautiful schedules in which the ceiling is the limit, of assembly lines that will never be slowed down by bad salesmanship or hard times or anything but victory.
These men are the majors and colonels of industry, not its generals. There are a good many of them, and the present situation makes their contribution to victory apparent to everyone. In both authority and income they are in the middle brackets. Like everyone else, they have been whittled down by taxes, but they are not complaining. Once upon a time they would have been horrified at the thought of wasting time on government blueprints, standards, and inspectors. Now they act as if they would be willing to run their plants for the government forever. Labor has been gaining, both in pay and prestige. Consequently one net result of the combination of union recognition and arms program is a sharp gain for an old and cheering phenomenon, the leveling process. Twenty years ago, in my Iron Man in Industry, I observed that this healthy movement was a conspicuous social feature of automobile manufacturing and likewise drew immense strength from the common use of automobiles. Truly, this industry has been a mighty force for democracy, not merely by leading a consistent upward trend in wages, but also in developing mass markets on the broadest possible scale for a product which liberates and broadens mankind. More than any other influence except public education, the cheap automobile saves us from the full effects of class hatreds and jealousies. Now, in addition, titanic war pressures are pushing closer together the men above and the men below — in income, in way of life, in patriotic objectives. Through this very compression are being generated some of the future waves of thought and feeling which are destined to drive this nation, and other nations that lean on us, toward high decisions. No industry can foresee, measure, and prepare for the interplay of all these complex imponderables. But planning which does not take into account the rise in status of the rank and file, and accept that new level as one of the platforms on which to build a nobler society, will fall short of its highest opportunities.
This industry climbed to a high place; and then a high, hot wind, which was war, tore off its false whiskers. Whereupon everyone saw that the automobile industry is something utterly unique and precious. Having been thrust into primacy by the government, the automotive industry can no longer masquerade as just another industry. Now it is the indispensable industry, the key industry, the industry. The one industry without which war cannot be made effectively or peace be maintained effectively has now become the special target for whatever hidden forces are brewing in the cave of the future. As goes Detroit, so goes the nation, perhaps the world.