Relearning from the old masters: Lessons of the American System of Manufacturing

Abstract Nineteenth and early twentieth century America witnessed the development of a spectacularly successful manufacturing infrastructure that propelled the United States into the forefront of the world's economic powers. The “American System of Manufacturing, ” a term once used exclusively by historians to describe the progress of the firearms and other light metalworking industries in early nineteenth century New England, has been recast in this paper to describe the advances in management practice, work force attitudes, and process technology that characterized American industry from 1800 through the 1930s. The managers responsible for building the American System of Manufacturing addressed themselves to the extraordinary opportunities made possible in their day by an unprecedented season of technological ferment. Their insights and managerial responses, which are the focus of this paper, led to the establishment of product quality and reliability, and excellence in technology-driven manufacturing, as the cornerstones of American industry. The comfortable maturity into which American industry drifted during the 1950s and 1960s disrupted the evolutionary progress of the American System. Confident that the age-old “problem of production” was firmly in check, American managers redirected their efforts away from the shop floor and towards marketing and finance. The ensuing absence of innovation in product and process innovation, and in the management of the work force, created a competitive vacuum that has been exploited by aggressive foreign producers. The heightened challenge to America's basic industries posed by these foreign competitors has induced lengthy debate among academics, industry officials, and practicing managers, concerning the steps that need to be taken to redress America's declining industrial capacity. Our contribution to this re-examination has two objectives. First, we will attempt both to categorize the types of management issues and production problems that since 1800 have confronted American managers, and to identify the practical responses these issues elicited. Second, we will combine the insight garnered from our historical examination with our knowledge of contemporary management issues to detail the lessons of the American System and to identify areas in the realm of production and operations management where change is most needed. Our inquiry has revealed that changes in the character of American industry occurred as workers and managers instituted new approaches to better manage technology. The succession began with the concept of manufacturing as a sequential flow process. Later, this basic notion was expanded as managers used advances in both process and product technology to provide for the competitive continuity of their firms. The rapid pace of technological diffusion in nineteenth century America not only fostered the growth of external, technology-based suppliers, but also complicated the task of production management by requiring firms to coordinate their internal resources with the actions of suppliers. This change necessitated, of course, that managers keep abreast of a bewildering array of changes in production and process technology. The management developments that emerged in response to the appearance of technology-oriented suppliers were the most advanced expressions of American manufacturing at the end of the nineteenth century. These advances are of interest to us for yet another reason, however, because the existence of a skilled manufacturing infrastructure helped prepare the ground for the first generation of automobile manufacturing. Although the first car producers were by and large assemblers who put together in rented shops components supplied by others, their efforts rested on a, by then, well-developed and widely diffused competence in manufacturing. Only because a host of other non-automotive shops and companies had mastered the full range of skills, technical and organizational, pioneered during the nineteenth century, could the first generation of work on automobiles proceed. Driven by the scale economies associated with capital-intensive, high-volume operations, relationships between auto producers and suppliers shifted in focus and emphasis as the car industry matured. In particular, the growing requirements of specialization and coordination in the auto industry demanded an increasingly bureaucratic form of organization and, by extension, the development of managerial skills appropriate to that form. The mastery of a genuine “flow” system of production at high-volume levels defined the organizational competence on which would rest the great manufacturing achievements of twentieth century American industry. With the development of a dominant product design and the production base responsible for building it, American industry had by the outbreak of World War II achieved unquestioned dominance in the work of manufacturing. Or had it? Industry certainly thought so for the post-war decades were to see a redirection of effort away from production management. The search for greener managerial pastures left untapped, however, the potential to be reached by diligent and relentless concentration on the work of production, and obscured gains attainable from better training and utilization of the work force. The task now facing American producers in a hotly contested global struggle for industrial ascendancy is to begin to understand and to extend the lessons that emerge from their now dormant industrial heritage.