In the metal-working industries, the technical and organizational chal-lenges were more difficult than those facing Carnegie and his competitors. Processing of materials required greater skills and more precision, the use of more complex machinery, and a greater variety of raw materials. For these reasons, major technological innovations took longer to be perfected and organizational improvements required more concentration on the design of the movements of men than on the layout of a plant or works.
The organizational challenges in the metal-working industries increased proportionately with the number of subunits within the enterprise. The making of simple fabricated products, such as castings, mouldings, nails, screws, and implements like axes, hoes, saws, knives, and other cutlery, required an establishment that differed little from Adam Smith’s classic pin factory. Furnaces for welding and tempering, forges for stamping, machinery for grinding and polishing were lined up so that the materials moved easily from one part of the subdivided process to another. The making of stoves and plows added the extra dimension of assembling a relatively few interchangeable parts. This dimension became more complex in the production of harvesters and reapers, scales and safes, and still more intricate in the production of locks, clocks, and watches. Problems of overall coordination and control grew even more challenging where the production of goods involved a large number of different types of fabricated parts. Such was the case in the manufacturing of the new breechloading and repeating firearms, sewing machines, typewriters, electrical motors, and at the opening of the new century, automobiles.51
A brief description of the process of producing a sewing machine illustrates the complexity involved. This description is taken from Charles H. Fitch’s introduction to the census of manufactures of 1880. He notes the many different materials used, including “pig-, bar-, and sheet-iron, iron and steel wire, bar- and sheet-steel, malleable iron, japan varnish, and power and machine supplies in general, woods for casing (largely walnut and poplar), besides a considerable range of other materials.”52 In the making of metal parts, the bulk of materials passed successively from one operating unit to another—from the foundry to the “tumbling-room, annealing, japanning, drilling, turning, milling, grinding and polishing, ornamenting, varnishing, adjusting, and proving departments.” In addition, there were other metal- working departments producing tools, attachments, and needles. The “wood- working and cabinet-making departments constitute a separate and distinct manufacture” that was probably as complicated as any mass producing furniture factory of the period. Finally, a large assembling department was responsible for the completion of the product and its “gauging,” inspection, and preparation for shipment.
In developing the technology and organizations essential for highvolume output in the metal-working industries, factory owners and managers relied more on their own industrial experience than did the first mass producers of steel and kerosene. They borrowed less of their technology from other industries or from abroad, and less of their organizational methods from the railroads. The most innovative were the New England manufacturers, particularly those of the Connecticut Valley, where the mass production of firearms and, after the coming of anthracite coal, simple tools and implements had their beginnings.
From the 1850s until the economically depressed years of the 1870s, the manufacturers of mass-produced metal goods concentrated on improve – ing their machinery for shaping metal. Skilled mechanics trained at the Springfield Armory and other early metal-working establishments, such men as the celebrated superintendent at the Collins Axe Factory, Elisha K. Root, devised new types of machines and machine tools to produce re- cently invented breechloading and repeating firearms, agricultural imple- ments, sewing machines, locks, scales, pumps, and, later, typewriters.53 Others trained in this type of manufacturing helped to establish Brown and Sharpe, Pratt and Whitney, the Providence Tool Company, and other enterprises specializing in the production of machinery so essential for high-volume production in metal-working factories.
The initial concentration on technology left the manufacturers in these establishments little time to improve management methods. They turned the day-to-day operations of the new factories over to the foremen of the several departments. As in the case of the iron and steel mills, these fore- men controlled; they hired, fired, and promoted their working force. In those departments requiring the most intricate processing techniques in grinding, polishing, and other finishing of metal components, the foremen were responsible for the profitability as well as the productivity of their departments. They frequently became “inside contractors.”54
By the “inside contracting” system of management, a skilled mechanic or metal worker contracted to deliver a specified number of parts over a specified period of time, usually a year. He paid as well as hired his labor force. The owners agreed to provide the contractor with floor space, machinery, light, power, heat, special tools, patterns, and the necessary raw and semifinished materials. At first the contractor paid his men directly; later payment was handled through the company’s financial office. Thus, as Harold Williamson has pointed out in his history of the Winchester Repeating Arms Company: “The management credited the account of the contractor so much for every hundred pieces of finished work which passed inspection, and debited his account for the wages paid to his men and the cost of oil, files, waste, and so on, used in production. Anything left over was paid to the contractor as a profit.”55 In addition, the contractor received a foreman’s wage which assured him a minimum income.
Such a system meant that the owners of these works had fewer problems of supervision of the working force than had the superintendent at the Springfield Armory in the 1820s. Nor did they have to work out accounting methods to assure proper payment for piece work. At the same time they knew relatively little about the precise costs of labor and materials used in the contracted departments and by the enterprise as a whole. Nor did they provide for careful supervision of the flow of goods from one department to another. Such coordination was left to informal cooperation of the foremen of departments with a modicum of supervision by the partner in the firm who had charge of manufacturing.
Source: Chandler Alfred D. Jr. (1977), The Visible Hand: The Managerial Revolution in American Business, Harvard University Press.