technology and other stuff

Henry C.K. Liu hliu at mindspring.com
Mon Mar 15 12:02:05 PST 1999


I don't know if Henry Ford ever said that. But as a young consultant, I personally heard Iaccoca say so in a meeting in 1968 that was attended by Henry Ford II who very much appreciated the sentiment. The context was a corporate review on the question whether Ford should go into real estate development which in the late 60s had a higher discounted rate of return (above 16%) on investment than manufacturing (6 - 9%), including household appliances. The only other areas that were yielding higher returns were space and military contracts which were expected to have a declining grow rate in the long term. Several top manufacturing executives at Ford, including the newly arrived Knudson from GM, were arguing for staying with making cars because of the traditional company culture, at which point Iaccoca made the statement: "We are not in the business of making cars; we are in the business of making money." The issue was further affected by the fact that, without realizing it, Ford was already one of the biggest real estate developers in the country for its own accounts, in factories, wharehouse and dealerships. The decision was made to make real estate a separate profit center in its own right instead of being just a cost item in serving manufacturing needs. Also, by spinning off real estate, it actually forced maufacturing to use real esate more efficiently because it would no longer be a subdidized cost item. Company insiders said that decision marked the ascendance of Iaccoca who had risen through sales from the profitable Truck Division to be President of North America Division over Knudson who was President and CEO under Chairman Ford II. Knuson left to head White Motors a short time after that. Within 6 months, Chrysler also followed suite and went heavily into real estate development, which some analysts have since suggested as a policy that contributed to its eventual bankruptcy. Later, Iaccoca took over Chrysler.

Henry

rc-am wrote:


> >I once heard that Henry Ford said he wasn't in business to make cars,
> but
> >to make money, Does anyone know if he really said this, and if so,
> where?
>
> and he made a shitload of money making cars that he convinced people
> they needed.
>
> he also was the first money maker - as far as i know - to have
> sociology dept.
>
> angela



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