Ford and the Economy (RE: India - wave of the future?)

[eric -dot- dunn -at- ca -dot- transport -dot- bombardier -dot- com]

>>The business world was shocked when Henry Ford paid his workers $5/day
when
>>he could have paid the same workers $2/day.

>>Now, after several generations of unprecedented prosperity and increases
in
>>the US standard of living, driven by high wages like Ford's, Ford is now
>>losing ground to other countries with lower labor costs.

I've seen this statement before. I also remember a TV documentary claiming
that the reason Ford paid so much was precisely so his workers could
afford his products.

However I have to wonder. Is the reasoning sound?

Ford's big contribution was the assembly line. Was it not increased
production that also gave Ford the competitive edge that allowed him to
pay his workers more? Saying that it was so they drove Fords would become
a self-fulfilling truism as the workers would be loyal to the company due
to the pay.

Interesting to note as well wrt current discussion is that Ford's main
customers would be people NOT working at Ford. I doubt purchases from
employees were more than a helpful pocket lining blip. The methods Ford
introduced ultimately put many workers out of work. From failed car
manufacturers to the numerous obsolete trades that were no longer needed
as handcrafted components were no longer used.

Eric L. Dunn
 Senior Technical Writer