By the 1930s, one in every seven Americans was in employment linked to the auto industry – for example the number of garage laborers grew by 600% between 1910 and 1920.28 Whole new industries in auto insurance and finance appeared. The car ushered in the shopping mall and changed the very structure of the retail industry. The impact on raw materials was equally profound as steel, oil, and rubber replaced iron, animal feed, and wood. In just 10 years, the auto industry went from a minor buyer to becoming the leading consumer of steel, with demand skyrocketing from 70,000 tons in 1910 to one million tons by 1920.29 Increased investment in the steel industry as a result pushed costs down further and brought innovations like corrosion-free stainless steel, which opened new possibilities in applications from surgical implants, food and beverage equipment, and construction. The car industry also played a more direct role in the growth of the U.S. middle class by raising incomes. In 1914, Ford doubled its workers’ wages, raising eyebrows throughout the industry and beyond. Two years later, profits had doubled and within seven years it owned half the U.S. auto market. The move to attract and retain talent had proved a masterstroke. “The payment of $5 a day for an eight-hour day was one of the finest cost-cutting moves we ever made,” Henry Ford later said.30 Soon industry throughout the country found itself emulating Ford.But alongside this extraordinary economic growth there was also destruction of value. The carriage industry was all but wiped out – of the 13,000 carriage makers operating in the U.S. in 1890, only a handful were in business by 1920.31 Those industries servicing horse and carriages were hit equally hard – between 1910 and 1920, the number of stable hands in the U.S. dropped by 70%.32 Existing value chains were also hit hard – in 1915, 22% of U.S. cropland (about 93 million acres) as well as 80 million acres of pastureland was used to feed horses and mules. By 1960, all but five million acres had been freed for other uses – mostly for beef and dairy cows.33 Unexpected Consequences But the car’s impact was not limited to the economy. Its introduction led to huge changes in the built environment as houses, towns, and cities were redesigned around this radical new form of transport. It changed where we lived and worked, and where we built our schools, shops, hospitals, and factories. For the first time, people moved out of towns into the suburbs in huge swathes and needed cars to commute to and from work.34,35 Meanwhile, drive-in diners, movie theaters, malls, and big-box stores all became part of the urban landscape.
Indeed the driving test became a cultural rite of passage for teenagers – a new marker of the transition from childhood to adulthood. Motor tourism opened up the whole country to the newly-mobile American population as ‘road trip’ and the ‘open road’ entered the national lexicon. Autocamping became a popular activity.36 National Parks and the automobile, both relatively new ideas, enabled each other’s growth, popularity, and cultural hold on America’s imagination.America’s car companies even made a huge contribution to the country’s 20th century military domination. During World War II, Ford shifted production at 42 domestic plants to produce war goods as well as military hardware for other Allied nations.37,38 Indeed the car helped transform international relations as the rise of the U.S. as a global superpower was supported and amplified by its dominance of the oil and auto industries. The productivity benefits that came with this new transport industry were felt across all sectors, cementing U.S. leadership in other markets and driving the levels of immigration and investment through the 20th century that helped accelerate U.S. growth and innovation further.The car had impacted every aspect of society and, in doing so, had gone from a ‘nice to have’ to a necessity. To participate fully in life, both economically and socially, required access to this new form of transport. And as the economy, culture, built environment, and governance structures coevolved with the auto industry, it became ever more locked-in. After the explosive adoption in the early years, the past hundred years have seen a long period of incremental improvement to the product within a value chain, business model, and market structure that have remained largely unchanged.
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