In all the groups reviewed so far the large enterprise coordinated the flow of goods from the suppliers of raw materials to the final customer. In all, the volume of the flow was high, and its scheduling from many suppliers to still more numerous consumers was complex.
This was less true of the metal makers and metal users. Although they all integrated production with distribution, few came to control the flows through all the processes of production and distribution. The metal- fabricating and machinery-making companies purchased their materials from the metal makers, and the metal makers sold their finished products to the fabricators and machinery makers. This meant that the metal pro- ducers sold to a relatively few customers, and fabricating and machinery firms purchased from a relatively few buyers. This difference in the number of transactions affected the size and activities of the buying and selling departments in these enterprises. The fact that the metal makers and metal users did not integrate their operations suggests that there were few economic advantages in coordinating two processes that were so different technologically and required different types of working forces and managerial skills.
Although metal fabricators had larger and more costly manufacturing plants that did food or chemical companies, they rarely reached compara- ble size. They purchased from a few suppliers, and they often sold only to a relatively small number of buyers. The only firms in the metal-fabricating group (34) to have assets of $20 million or more by 1917 were those with large and varied markets. Only one in that group produced for the consumer market, and that was the Gillette Safety Razor Company. Its history follows closely that of the pioneering cigarette, oatmeal, and photographic film producers. In 1903 the inventor of the safety razor pro- duced 51 razors and 168 blades. By the end of the next year his factory was turning out 90,000 razors and 2.4 million blades.10 By the end of the decade the Gillette Company had, in addition to its worldwide marketing organization, factories in Britain, France, Germany, and Canada. Like similar earlier manufacturers, Gillette easily financed this sudden and massive expansion out of retained earnings.
The other metal fabricators listed in Appendix A used large-batch processes and sold to many and varied consumers. American Can and Continental Can, both the result of mergers, provided cans and canning machinery for small canners who normally operated on a seasonal basis throughout the country and much of the world.20 Scovill Manufacturing, National Enameling & Stamping, Crane Co. and Standard Sanitary (both producers of standardized plumbing fixtures), and National Acme, makers of screws, sold to hundreds of contractors, builders, plumbers, manufacturers, and hardware dealers. Weirton Steel, producers of tin and roofing plate, and American Brake Shoe had a somewhat smaller set of customers, but still enough to make full use of a network of sales offices to obtain orders, assure prompt delivery, and take payments on thousands of orders.
Yet in 191 7 these were the exception. Most metal-fabricating firms were like American Brass, an 1899 merger which produced semifinished materials for other manufacturers and was just beginning to build its own sales force. The makers of simple fittings, tools, and implements continued to rely on wholesalers to sell consumer goods and on manufacturers’ agents to sell producers’ goods. Even the largest of these had only a small sales force to keep in touch with dealers and customers. Though such firms had substantial manufacturing establishments, they did not grow to great size. Only 11, or 6.5 percent, of the manufacturing companies included in Appendix A are in the metal-fabricating group.
Source: Chandler Alfred D. Jr. (1977), The Visible Hand: The Managerial Revolution in American Business, Harvard University Press.