Chapter 92 A Gift from the Kingdom of the Netherlands
November 23, 1901. This day marked an extraordinary milestone in Australia's industrial history.
To begin with, Benz's automobile factory, through the combined efforts of Benz and Diesel, had finally completed its six-month-long transformation and became the world's first automobile plant to implement assembly line production technology.
Although it still differed somewhat from the more mature production lines that Ford Motor Company would later develop, the revamped factory had already shown remarkable improvements in reducing labor costs and production time.
Previously, building a vehicle comparable in performance to the Viktoria model required at least ten highly skilled workers working overtime for over a week.
Just the wages for these workers over that time amounted to at least £30.
Add to that the cost of producing various mechanical parts, and the cost per vehicle soared to over £100. After factoring in defective parts, the final cost per vehicle came to no less than £160.
Here's the problem: was it expensive to sell a car for under £200 when it cost £160 to produce?
The answer: not really. Given Benz's original factory scale—despite being the largest automobile manufacturer in Germany—it produced fewer than 200 cars per year.
Even if each vehicle brought in a £30 profit, 200 vehicles would yield a mere £6,000 in revenue.
After taxes and various other expenses, the company's net profit wouldn't even reach £5,000.
What's worse, even with low pricing and razor-thin margins, few people could afford such expensive cars.
Despite their enormous potential, automobiles had not yet found a viable market—this was the core issue.
Thankfully, the factory's overhaul significantly addressed that flaw.
According to Benz, the new factory introduced three major improvements. First, vehicle construction time was drastically reduced.
At his German factory, Benz employed over 300 workers to produce fewer than 200 vehicles annually.
In contrast, the newly upgraded plant, with a smaller workforce of just over 200 employees, was projected to produce an astonishing 2,000 vehicles a year.
This was the revolutionary power of the assembly line. Workers no longer had to handle multiple components; each person was responsible for just one module in the production and installation process.
As a result, workers became increasingly skilled at their specific task, and the speed of part assembly and production rose significantly.
The second major improvement was in component standardization.
Previously, since each car was built by a different team, the parts varied greatly, which made repairs complex and costly.
That was one of the reasons cars remained unaffordable. Over just a few years, repair costs could rival the car's original price, turning automobiles into luxury items.
Now, with the same workers producing uniform parts, consistency was greatly improved. Repairs became easier, and part replacement could now be a primary maintenance strategy.
The third and most impactful change was a sharp drop in production costs.
Producing more cars with fewer workers drastically reduced labor costs.
Under the old handcrafted system, labor alone added at least £20 per car.
With the new assembly line method, that cost plummeted to under £3.
Additionally, due to the reduction in assembly errors brought on by task repetition and part standardization, overall production costs were lowered further.
Benz estimated that the new production cost per vehicle ranged between £100 and £120—and could drop even more as the workforce became more skilled and the process improved.
After all, this was still only Benz and Diesel's first attempt at applying Arthur's ideas about assembly-line production.
Their initial results were already impressive—dramatically cutting costs and significantly speeding up manufacturing.
When Arthur received the news, he was both surprised and pleased. However, a cost of over £100 per unit was still too high—there remained room for further optimization.
The Ford Model T, for example, would eventually retail for just $260—around £50.
That meant car production costs could be compressed below £50. For now, Benz's vehicles still had some catching up to do.
Arthur's directive was clear: continue refining the assembly line system.
If they could get the production cost below £80, mass production could begin.
The Model T's initial price was $825, or £165. If Benz could produce a car for under £80 and sell it for £150, the profits would be massive.
In addition to optimizing assembly-line technology, Arthur believed it was time to expand the scale of the Benz factory.
As prices dropped and market potential rose, the auto industry could reach a staggering 20 million cars in just 30 years.
If Benz could move fast, it might break the Model T's future sales records and build a powerful automotive empire.
To do that, production had to keep pace—enabling early market dominance, especially in Europe.
If the success of the assembly line was the first good news, then the return of the diplomatic delegation was the second.
Nearly three months had passed since the fleet's departure. Now, to Arthur's delight, the fleet had finally returned safely to Sydney Harbor—with great news.
First, the native labor treaty had been formally signed.
This had been arranged long ago, and with Queen Wilhelmina's signature, the agreement was now officially in effect.
For Australia's development, this was a major breakthrough—effectively solving its labor shortage crisis.
The second piece of good news came wrapped in red cloth aboard a transport ship.
The item was tightly concealed, but judging by the long barrel protruding from beneath the cover, Arthur guessed it was a cannon.
According to Princess Louise, this was a gift from the Kingdom of the Netherlands.
Given that it was in recognition of the newly signed treaty and the exchange of ambassadors, and judging by the Dutch government's formal presentation, it was undoubtedly of great value.
(End of Chapter)
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