The Company Town (28 page)

Henry Ford was born on a farm near what would become Dearborn, ten miles west of downtown Detroit. As a youth, Ford worked as a machinist in Detroit, and in time he became a master mechanic at Detroit's Edison Illuminating Co. He tinkered by night in his shed, attempting to build an early automobile. His first two attempts at founding auto companies failed before he began Ford Motor Co. in 1903, operating out of rented shops in Detroit, and then at the giant Highland Park complex north of the city. By 1917, ten years after the opening of Highland Park, Ford had sold 1.5 million Model Ts and become a billionaire. Finally, in the 1920s he established the huge complex that would become synonymous with his company: the two-thousand-acre River Rouge plant in Dearborn, a few miles from his family's farm. By 1929, the average hourly workforce there was more than 98,000. The once bucolic area was transformed into an industrial wilderness. Ford and his son Edsel owned the whole company personally—no partners, no stockholders, and no back-talkers.
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The nature of Dearborn was made perfectly clear during the Great Depression, on March 7, 1932. Detroit-area Communists organized the Ford Hunger March with the intent of trooping from downtown Detroit to the Rouge plant, where a petition demanding jobs for the jobless, free medical care at the Ford Hospital, and much more would be presented to Ford management. A crowd of 3,000, composed largely of the unemployed, formed, and police escorted them to the Dearborn town line. There a contingent of thirty to forty Dearborn police awaited and warned the marchers to disperse. These police took their instruction from Chief Carl Brooks, formerly a member of Ford Motor's private police squad—the euphemistically titled Ford Service Department—and Clyde M. Ford, who was Dearborn's mayor, a cousin of Henry Ford's, and the owner of a Ford dealership. When the marchers attempted to advance, they were tear-gassed, hosed with icy water, and finally fired upon. Four marchers and a teenage newsboy were shot dead and fifty were wounded.
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Like employers in many company towns, Ford was very much interested in his employees' private lives. In fact, his Sociological Department was the very prototype of the corporate social welfare agency-cum- management espionage apparatus, alternately helping workers with housing and loans and having them discharged for such infractions as smoking or owning a General Motors car.

But the Ford fiefdom of Dearborn was quickly integrated into the Detroit metropolitan sprawl. Ford steadfastly refused to be involved in building worker housing, and consequently, as in Gary, Rouge plant employees commuted from across the city. And of course, there were other employers of equal prominence in the metropolis, notably General Motors, which maintained its own company town at Flint, seventy miles north of the center of Detroit. There lay giant Chevrolet, Fisher Body, and Buick plants, along with the AC Spark Plug Division, employing 40,000 people even in hard times and supplying 80 percent of Flint's jobs. GM held sway over the local media, including the town's one newspaper, and over the years many of Flint's officials including the mayor and chief of police were tied to the company.
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Automobile production soon spread across the continent. By the late 1930s, for example, Ford had assembly operations in California, New Jersey, Chicago, Louisville, and Kansas City, not to mention plants in Canada, Mexico, and six other countries. In the 1940s, General Motors had 102 plants across the United States and a headquarters building in New York City.

In addition, Ford created nineteen “village industries” in small towns across Michigan, all within sixty miles of Ford headquarters. Many of these “little industries out in the country,” in the words of company organ
Ford News
, were situated in rehabilitated gristmills and staffed by part-time farmers. They, along with workers who transferred from the Rouge plant and elsewhere, made such small parts as gauges, horns, valves, ignition locks, and starter switches. It was a typically eccentric and ill-explained exercise, but Henry Ford seemed to see these operations as a way of employing rural people and as an experiment toward a decentralized industrial future. In any case, Ford insisted that they were not company towns, as the company did not own the areas around the small plants and there was no effort to build housing, establish company stores,
or exert political sway over the villages. When journalist Drew Pearson asked Ford if he intended to create any model towns near the outfits, the Flivver man responded: “No, I am against such things. If people want to get things done they can do them themselves.” After Henry Ford's death in 1947, Ford Motor gradually sold off all the village-based operations.
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Many glory years followed for the U.S. auto industry, but a period of very slow decline began with the oil shocks of the 1970s. Today, despite all of the industry's travails, including a takeover of Chrysler by Fiat and the near-bankruptcy of General Motors, nearly half of all cars and trucks sold in the United States are produced by U.S.-owned companies.
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What's more, 38 percent of all cars and trucks made in the United States are produced in Michigan and Ohio. But in the 1980s, a new group of auto-production facilities began appearing, many in southern states that discouraged unionization. These were run by Japanese and European automakers. Honda opened its facility in 1982 in Marysville, Ohio, forty miles northwest of Columbus. The following year, Nissan opened a facility in Smyrna, Tennessee, near Nashville, and five years later, Toyota followed with a plant in Georgetown, Kentucky, not far from the Bluegrass center, Lexington. In 1989, Subaru-Isuzu opened a car-manufacturing plant in Lafayette, Indiana, a small city sixty miles northwest of Indianapolis. And in the 1990s, German maker Daimler opened a facility in Vance, Alabama, and BMW in Greer, South Carolina. As of 2008, there were fifteen foreign-car assembly plants in eight states. Toyota alone was responsible for more than a quarter of all U.S.-made cars.

The move of Japanese carmakers onto U.S. soil came after the companies had significantly penetrated the American market, doubling sales during the 1970s, to 24 percent of all cars sold. The migration was at least in part a response to U.S. critics who charged the foreigners with dumping exports. Once the Japanese arrived, they brought along corporate practices that emphasized quality and a sense of common purpose. Managers carefully selected American production workers for youth, education, and an ability to fit in; not a few traveled to Japan for training. The cautious approach paid off, as unions have regularly been defeated in representation elections—losing by 2 to 1 at Nissan in 1989.

The Japanese also brought along many executives—who avoided any conspicuous presence in the small, center-of-the-continent towns. The
companies are very concerned not to come across as an alien presence: “We constantly need to think about the potential backlash against us,” Toyota CEO Katsuaki Watanabe told
Business Week
in 2007. So they worked at demonstrating their good citizenship. Nissan made record contributions to the United Way, and Toyota donated $1 million for a community center in Georgetown, where its workforce totaled 7,000. Toyota has gone on to fund literacy programs and university research institutes. It has also ramped up its spending on corporate lobbying, to $5 million a year.
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Controversy has still dogged the interlopers, including charges that they have engaged in racial discrimination and placed inflated demands on communities. Nevertheless, in 2010 the foreign companies have a foothold in the United States—apparently permanent and maybe growing. Volkswagen for one plans to open a $1 billion, 2,000-worker plant near Chattanooga, Tennessee, in 2011.

At the same time, all automakers have a tougher road ahead, as U.S. consumers have at least momentarily stopped buying and millions have lost their credit standing. Toyota in particular has an unpredictable future, given its 2010 recall of 6 million vehicles in the United States as a result of problems with accelerator pedals and braking systems. Globally, some thirty significant carmakers are fighting over a market that has shrunk by 30 percent in the past couple of years. With a capacity of 90 million cars, the companies are selling only about 55 million.
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Earlier, many U.S. industrial communities ripened into full-fledged company towns over a period of several years. It remains to be seen whether the likes of Georgetown, Kentucky, or Vance, Alabama, will ever attain that status.

The United States today is a country filled with gadget freaks, people addicted to everything from personal digital assistants to digital radio. But what made Americans that way? Labor-saving appliances, from telephones to phonographs and toasters, taught generations of citizens to be wowed and eager for the next cool thing. Washing machines and other devices freed people from exhausting, time-killing tasks and helped build interest in mechanical gizmos among women.

Maytag Co. was a pathbreaker in the field of washers. It evolved from small-town beginnings in Newton, Iowa, to become a major international corporation by the mid-twentieth century. Never straying from its small-town domicile, Maytag prospered as a result of a commitment to quality rather than flash, successful innovation pioneered by an inveterate tinkerer, and the growth of the vast consumer market. The founding Maytag family was, like so many others in this book, quirky, possessive, sometimes exploitative of its town and workforce, and anti-union but not suicidally so. Finally, like too many other U.S. manufacturing concerns, Maytag no longer exists, having been absorbed after a period of crisis by a larger competitor, Whirlpool Corp.

Frederick L. Maytag, a farm boy born near Elgin, Illinois, moved with his parents in the late 1800s to Newton, a village of 2,500 souls thirty-five miles east of Des Moines. In time, he found employment as a lumberman. In 1892, Maytag joined with inventor and entrepreneur George Parsons to market a “band cutter and self-feeder”—a threshing-machine accessory. Peddling their device directly to farmers, they had modest success, and in 1896, to help them make refinements they hired a talented mechanic out of Austin, Minnesota, Howard Snyder. Snyder would prove his worth many times over, rising to be head of the company's “experimental department,” then plant superintendent, and finally a company vice president.

After the turn of the century, Newton had become home to several makers of hand-operated washing machines, including the One Minute Washer and the Automatic Electric Washer. In 1907, Parsons and Maytag began producing a washer, too—the Pastime—basically a wooden tub with a crank mechanism that dragged clothes against a corrugated surface. Although they viewed the product as a sideline, it had several advantages. Unlike farm equipment, the Pastime could be sold in all seasons. And its manufacture would draw upon skills and materials similar to those the outfit already employed. Mechanic Snyder turned his hand to the machine and never stopped making improvements.

Within a few years, the company—now known as Maytag Co. after F. L. Maytag bought out Parsons—was producing a model that ran on a gasoline engine and another that was electric-powered. A prime venue for exhibiting and market-testing the machines: state fairs across the Midwest.

By 1915, Maytag's washing machines were outselling its farm implements, a field it would soon abandon. The Maytag Multi-Motor, which ran on gasoline, became a hot seller, and the company's production more than doubled. In part, the machine's popularity was due to the fact that, while in operation, its engine could also serve as a power source for other appliances, such as butter churns and ice cream freezers. Ads in the
Saturday Evening Post
showed a housewife blithely reading a book while the Multi-Motor labored away, its flywheel propelling three household appliances simultaneously.

Although some 120 manufacturers were making washing machines at this time, four companies in Newton, Iowa, made more than one-third of them. Maytag produced several pioneering models that utilized metal cabinets, electric motors, and the “millrace washing principle,” which tumbled clothes and forced hot water through them. By 1920, the company had the largest factory in Iowa, a network of thousands of dealers, and a backlog of orders. Early in that decade it introduced a model employing an innovation that would become standard in modern machines: a bottom-of-the-tank agitator that used water alone, rather than any sort of corrugation, to do the cleaning. Maytag's employment in Newton rose above 2,000, and it erected a new 600,000-square-foot factory.

Maytag became a public corporation listed on the New York Stock Exchange in the 1920s, establishing a separate Maytag Acceptance Corp. to help facilitate installment-plan purchases. But, for better or worse, the company continued as a family-run operation, with F. L.'s sons taking turns as chief executive and the founder keeping an active hand in the game. Corporate welfare measures included a piecework-pay plan that allowed factory employees to set their own pace of work. Then there were other acts of questionable benevolence: CEO Elmer Maytag joined with a Newton contractor to buy vacant lots around town and build hundreds of homes that they sold to employees. Mortgages, paid via payroll deduction, were offered by a savings bank where Elmer was an officer. A company gasoline station accepted scrip-like coupons that were also charged against workers' pay. The Maytags funded a local YMCA—workers were required to join and pay dues. They gave away free tickets to various concerts and public performances and sponsored a yearly family picnic that included a parade to the fairgrounds site and speech-making. For employees, attendance at
the picnic was also mandatory. In 1935, city fathers dedicated F. L. Maytag Park as a memorial to the aging founder, and the dedication was delivered by a local radio personality, Ronald “Dutch” Reagan.