by Bruce Cherney (part 1 of 2)
After two years of drought on the prairies, the spring of 1915 again brought rain and the prospect of a bumper wheat crop. The good weather encouraged farmers to increase the amount of land under cultivation from 10-million acres in 1914 to 14-million acres the following year.
W.E. Milner, the president of the Winnipeg Grain Exchange, related in the eighth annual report of the exchange in September 1916: “This (1915) has been one of the most phenomenal years in the history of the grain business in the Dominion of Canada. Our farmers, having been blessed by the hand of Providence, produced the largest crop ever grown in this country ... our wheat crop reached (a total of) 376,448,400 bushels.”
Among the people watching the return of happier times on the prairies with intense interest was Gordon M. McGregor, the founder of the Ford Motor Company of Canada, Ltd. McGregor understood the direct link between wheat prices, farm income and automobile sales, according to historian G.T. Bloomfield.
Despite Canada being in the midst of battling with the Allies against Germany and the Austro-Hungarian Empire in the Great War, as the First World War was then named, McGregor knew the time had come to expand Ford automobile production to other areas of the nation. His business plan involved placing assembly plants where demand was heaviest, and demand for Ford vehicles was extremely high in Western Canada. In Manitoba alone, 23 per cent of the over 9,000 automobiles registered in the province were Fords.
McGregor, like his mentor Henry Ford, also knew that increased production meant that the cost of automobiles could be lowered to the point that the vehicles would become more affordable to more people.
“We worked out a car and at a price which would meet the largest average need,” said James Couzens, the vice-president and general manager of the Ford company in Detroit, when describing the development of the Ford Model-T. “We set the car as a goal to reach and depended for profit upon the economies that we might effect in volume manufacturing” (In the Shadow of Detroit: Gordon M. McGregor, Ford of Canada, and Motoropolis, by David Roberts, 2006).
Henry Ford promised: “I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one — and enjoy with his family the blessing of hours of pleasure in God’s great open spaces.”
Before the war, the sticker price of a Ford Model T touring car in Canada was $650, but within a year of the outbreak of the conflict, it was announced by the company that the price would be dropped to $530.
To understand the significant drop in sticker price, a Canadian-built four-cylinder Ford Model T touring car in 1909 cost $1,000, while a roadster went for $975 ($825 in the U.S.). But that was still below the cost of other popular automobiles in 1909: an Oldsmobile sold for $3,000, a McLaughlin-Buick went for $3,100 and a Russell could be had for $1,950. Through the marvels of the assembly line and mass production, the “universal” car or “Tin Lizzie,” as the Model T came to be known, would always lead the pack in possessing the lowest price tag. The Model T continued to be produced in Canada until 1927.
A 1915 advertisement on the price change claimed the “Ford executives did not allow the war to interfere with their plans in the slightest degree. They considered the prosperity of Canada and the victory of the allied cause assured.”
Somewhat optimistically, the company made the price reduction in anticipation of a projected increase in production between August 1, 1915, and August 1, 1916, to 40,000 vehicles. At the time, Ford of Canada was struggling to produce 20,000 cars for its export and domestic markets.
McGregor knew that the Ford plant in Ford, Ontario (now a suburb of Windsor), could not meet demand, despite having just undergone a modernization and expansion. Due to the need for greater production capacity in 1915, new assembly plants were announced for Toronto, London and Montreal.
Rumours that a similar assembly facility would be built in Winnipeg had persisted since 1914. In fact, on April 4, 1914, the Free Press reported newspaper staff had wired Ford of Canada seeking either confirmation or denial of the rumours.
“Yes, some day,” was the reply by telegram from the company, “but not this year. No definite plans at the present time for Winnipeg.”
The Ford plans “for Winnipeg” were confirmed in April 1915, when McGregor came to the city to sign the legal documents to build a new $250,000 auto assembly plant.
“It was the only thing to do,” said George A. Malcolmson, the newly-appointed manager of the Winnipeg branch of Ford of Canada (Manitoba Free Press, May 8, 1915). “The factory are (sic) up against a problem. They already have the largest automobile manufacturing plant in the whole British Empire at Ford, Ont., which has an output of one car every three minutes — still this does not supply the demand. They must increase their output, and the only logical solution is to erect assembling plants where the demand is the heaviest, ship the parts in a knocked-down state to be assembled in the district in which they are sold. This not only relieves the factory of the burden of assembling the cars, but parts can be shipped cheaper and in larger quantities than fully assembled cars. Any money saved in this way will be knocked off the price of the car, so that the consumer will also be benefitted.”
In 1904, Henry Ford had endorsed McGregor’s proposal to assemble Ford automobiles as a method to overcome Canada’s high tariff of 25 per cent on American-built vehicles, as well as to take advantage of preferential tariffs Canada had with other British Empire countries, such as Australia, New Zealand, India, Sri Lanka, Singapore, Burma, Malaya and South Africa. In the 1910s and 1920s, 50 per cent of Ford of Canada’s production was destined for overseas markets.
Many of the Ford parts initially came from U.S. plants for assembly into cars in Ontario, but parts were subject to a much lower tariff than fully-assembled vehicles coming from the United States. Over time, the string of Canadian factories used components primarily manufactured in Canada, which was a boon to the industrialization of the nation.
For Henry Ford, manufacturing vehicles in Canada opened up new markets for the cars he promised to deliver cheaper to consumers than other automobile makers.
Ford of Canada was 51 per cent owned by the Detroit-based auto maker. Under the agreement, Ford shared his car patents and specifications as well as the technological support to produce cars, while Ford of Canada had exclusive rights to sell cars in Canada and overseas to British Empire countries. Initially, Great Britain was included within Ford of Canada’s export markets, but by 1911, the nation had its own Ford assembly plants.
According to Canadian law, the company had to first offer Canadians an opportunity to purchase shares before foreigners could subscribe. The original 393 Canadian shareholders held stock valued at $39,300, but American shareholders had purchased $85,700.15 in stock.
As it was, McGregor had great difficulty attracting Canadian investors, but he still managed to raise $125,000 in capital, which led to the founding of Ford of Canada, with McGregor, a former wagon maker in Walkerville, Ontario, named the new company’s managing secretary.
Although Henry Ford was involved in the initial formation of the new company, once Ford of Canada was up and running, he adopted a hands’-off attitude, claiming it was under highly capable management and was operating smoothly. In fact, for a period of 15 years, he never once attended a Ford of Canada board of directors’ meeting.
By 1916, the company announced “that all but $16.88 worth of the material that goes into the construction of a Ford car is bought here in Canada — and it would all be bought here if it were possible to get it here.”
In the new Canadian plants, including Winnipeg, components would be shipped by train from Ford,(Windsor) Ontario, for assembly into complete automobiles.
Meanwhile, the prosperity of grain growers in Western Canada was reflected in auto sales, with brisk trade occurring in Winnipeg.In the “Gateway to the West” city, Dominion Motor Car Co., 346 Donald St., was so successful that it was dubbed in its advertising as “the largest Ford dealers in Canada,” and would later move into a bigger building at the corner of Fort and Graham.
(Next week: part 2)