Mass Production

Mass production is a way of making goods in very large numbers by using standardized, interchangeable parts, specialized machines and a fixed sequence of work, usually along an assembly line. Because large fixed costs are spread over many units, the cost of each item falls sharply as volume grows. It became the dominant model of manufacturing in the twentieth century, behind cars, appliances, clothing and packaged food.

The term is closely linked with Henry Ford's moving assembly line of 1913 and with the wider idea of "Fordism", a system of high-volume output, high wages and mass consumption. It rests on the division of labor and on economies of scale, and it was later challenged by lean manufacturing, which aimed for flexibility and less waste.

Imagine making sandwiches for a school trip. Making one sandwich from start to finish, then the next, is slow. If one person lays out bread, the next adds butter, the next the filling and the last wraps it, the line of friends can turn out hundreds in an hour, and every sandwich looks the same.

Mass production applies that trick to cars or phones. The first product is expensive, because the factory and machines cost a fortune. But each extra one costs only its materials and a few minutes of work, so the more you make, the cheaper each one becomes.

Several ideas came together over a century. Adam Smith described the gains from dividing tasks in 1776. In the nineteenth century, American armories developed interchangeable parts made to precise gauges, so a gun could be assembled from any matching set rather than hand-fitted. Meatpackers in Chicago used overhead lines to move carcasses past workers, and Frederick Winslow Taylor's time-and-motion studies broke jobs into measured steps.

Ford combined these at his Highland Park plant in Michigan. A moving line for the Model T chassis began in October 1913; within about a year, assembly time for a chassis had fallen from around 12 hours to roughly 93 minutes. Lower costs let Ford cut the car's price repeatedly, and in 1914 he introduced a $5 daily wage to reduce staff turnover on the repetitive line. More than 15 million Model Ts were built before production ended in 1927.

The key is the split between fixed costs, such as plant, tooling and design, and variable costs, such as materials and direct labor. Average cost per unit is:

• $AC$ is average cost per unit.
• $FC$ is total fixed cost.
• $Q$ is the number of units produced.
• $v$ is the variable cost of each unit.

Suppose a plant costs $10 million to set up and each unit needs $200 of materials and labor. At 10,000 units, $AC = 10{,}000{,}000 / 10{,}000 + 200 = 1{,}200$ dollars. At 100,000 units, $AC = 100 + 200 = 300$ dollars. The marginal cost of one more unit stays at $200, while the average keeps falling toward it. This is why mass producers chase volume, why markets with huge fixed costs often end up with a few large firms, and why price cuts can expand the market enough to pay for themselves when demand is elastic.

Mass production also needs large, steady demand and a lot of capital goods. It raised productivity dramatically and, with rising wages, helped create the consumer economies of the twentieth century.

• Rigidity. Dedicated lines are costly to change. Ford's famous line that customers could have any color "so long as it is black" captures the trade-off between low cost and variety.
• Inventory and waste. Producing in big batches to keep machines busy builds stocks of parts and finished goods, ties up working capital and hides defects until many units are affected.
• Work quality. Repetitive, machine-paced jobs were criticized as monotonous and deskilling, and they helped fuel the growth of the trade union movement in factory industries.
• Demand risk. When sales fall, high fixed costs turn into heavy losses, which makes mass producers sensitive to the business cycle.

From the 1970s, Japanese carmakers showed that smaller batches, quick changeovers and just-in-time supply could match mass-production costs while improving quality. Most modern plants now blend the two: high volumes of standardized platforms and components, with flexible assembly that allows many versions of a product, an approach often called mass customization. Containerized shipping, through containerization, extended the logic to global supply chains, letting firms mass-produce parts in one country and assemble them in another as part of globalization.

• The Henry Ford (museum and archive)