The rise of modern mass production required fundamental changes in the technology and organization of the processes of production. The basic organizational innovations were responses to the need to coordinate and control the high-volume throughput. Increases in productivity and de- creases in unit costs (often identified with economies of scale) resulted far more from the increases in the volume and velocity of throughput than from a growth in the size of the factory or plant. Such economies came more from the ability to integrate and coordinate the flow of materials through the plant than from greater specialization and subdivision of the work within the plant. Even in the metal-working industries, where in- creasing subdivision was possible, the primary impact such subdivisions had on factory organization was to intensify the need for coordination and control. As the fate of Taylor’s functional foreman emphasizes, specialization without coordination was unproductive.
This challenge of coordination and control that led to the development of modern factory management initially appeared in those industries where high velocity of throughput required careful control to assure steady use of a plant’s equipment and working force and where, at the same time, such effective coordination could not be assured by the careful designing of plants and works. In the mechanical industries, where continuous- process machinery and plants permitted mass production, and in the refining and distilling industries, where the materials were liquid or close to liquid and the processes were chemical rather than mechanical, improved plant design and machinery were in most cases enough to syn- chronize the processes of production and to assure intensive use of equipment and personnel. But in the metal-making and metal-working factories, organization and management of men became more critical than plant design.
The organizational and technological challenges in the metal-making and metal-working industries encouraged the professionalization of factory plant managers much as comparable challenges in the management of large railroad systems led to the professionalization of railroad man- agers. The men who were in the forefront of designing and putting into operation new machines, furnaces, factories, and works and in developing new management techniques and structures were the moving spirits in the new professional societies. Holley, Fritz, and Jones participated in the founding and growth of the American Institute of Mining and Metalurgi- cal Engineers.83 Towne, Halsey, Taylor, and Oberlin Smith, were all founders and became presidents of the American Society of Mechanical Engineers. As late as 1907 the owners and managers of the metal-working shops and factories dominated the membership of the ASME. In the na- tional and local societies the members concentrated, as did their counter- parts in railroading, on standardizing terminology, measurements, parts, tools, and other equipment.84 In the last two decades of the nineteenth century mechanical engineers wrote about their technical problems and common concerns in the pages of new professional journals like the American Machinist, the American Engineer, Engineering News, Engineering Magazine, and the Transactions of the ASME.85
After 1880, training of factory and shop engineers also became more professional. Mechanical engineering departments were founded and en- larged at Massachusetts Institute of Technology, Purdue, and Wisconsin. Cornell opened a separate engineering school; Sibley College, Stevens Institute of Technology, and Case Institute began to concentrate their curriculum on mechanical engineering.86 Although many mechanical engineers continued to preach that the shop apprenticeship was of more value than formal book learning, they looked on apprenticeship as the first step to a full-time professional career, much as railroad men had viewed comparable early training on the line of or in the shops of a road. By 1900 mechanical engineers operating shops, factories, and plants viewed them- selves as professionals, as did many railroad executives. The difference was that in railroading several functional specialties developed the parapher- nalia of professionalism, but in factory management mechanical engineer- ing was the only activity to do so.
As the new mass production industries became capital-intensive and management-intensive, the resulting increase in fixed costs and the desire to keep their machinery or workers and managerial staff fully employed created pressures on the owners and managers to control their supplies of raw and semifinished materials and to take over their own marketing and distribution. The changing ratio of capital to labor and of managers to labor thus helped to create pressures to integrate within a single industrial enterprise the processes of mass distribution with those of mass produc- tion. By 1900 in many mass production industries the factory, works, or plant had become part of a much larger enterprise. In labor-intensive, low-level technology industries most enterprises still operated little more than a factory or two. But in those industries using more complex, high- volume, capital-intensive technology, enterprises had become multifunc- tional as well as multiunit. They had moved into marketing of the finished goods and the purchasing and often the production of raw and semifinished materials. These larger enterprises did more than coordinate the flow of goods through the processes of production. They administered the flow from the suppliers of raw materials through all the processes of production and distribution to the retailer or ultimate consumer.
Source: Chandler Alfred D. Jr. (1977), The Visible Hand: The Managerial Revolution in American Business, Harvard University Press.