The price of the Ford Continental delivered to the John Pierpont father and son was set at $9,500 per vehicle, bringing the company a profit of $4,500 per car.
I received the remaining balance of $4,500 from John Pierpont Morgan and returned the remaining $500 from the $10,000 received as an advance to Uncle Jack Morgan.
"No, there's no need to return the remaining money. Why return $500 when you already received $10,000 in advance?"
"That's because the price of the Ford Continental was set at $9,500. So I should return the remaining money. I'm going to keep selling cars in the future, so I can't mess up the best deal since the company's establishment with sloppy handling."
Uncle Jack nodded at my words.
"That's certainly a good spirit. By the way, besides the Continentals Father and I bought, have any others been sold separately?"
"Not yet. Since demand for luxury cars is limited, if someone orders separately, we'll produce it then."
"I heard you hired a coachbuilder separately; you didn't take a loss, did you?"
"The coachbuilder also liked handling a car for the first time. So price negotiation was easy."
"Then, did the Ford Model A sell a lot?"
"That's a corporate secret."
"Hahahaha, sorry for asking a corporate secret. Then I'll pray that we can continue to contract next time too."
"Thank you, Uncle."
I kept it a secret from Uncle, but since the establishment of Ford Motor Company, we sold 2 Continentals and 346 Ford Model As.
The total sales revenue from cars was $53,600, and the net profit was $21,000. In this era, US taxes only required paying 1% corporate tax when profits exceeded $5,000, so we hardly had to worry about taxes, and that was essentially pure profit.
To think a tax-free heaven actually existed on earth, America in this era is heaven.
The Ford Model A was quite popular. Since its introduction at the Morgan family party last Christmas, it gained immense popularity among young bankers, and since then, many young people from Wall Street or other wealthy classes sought it out.
However, I wanted to increase the distribution of this car a bit more. The easiest way to increase car distribution is to lower the price. But it's not just about simply lowering the price. Accordingly, efforts to lower production costs and establish a mass production system were necessary.
Since we secured a fairly large factory site when creating the company, it wasn't insufficient. The truly difficult task was recruiting employees to match the production increase.
I discussed employee recruitment with Jimmy again.
"Duke, you know we need to recruit more people, right?"
"Yeah, I know that too, but we need to reorganize the production line first. Working haphazardly as we are now makes it difficult to increase production volume."
"I was thinking about that too; do you have a good method?"
"First, there needs to be a separate person managing parts coming in from outsourcing. You felt too that distributing those well is a task in itself, right Jimmy?"
"Certainly, with production volume increasing, I thought it wouldn't work like this."
"Besides, we need to organize the factory too. Look inside the factory now; there are more than one or two places where things are piled up making movement inconvenient. People might think it's nothing, but it gets in the way more than once or twice while working. We need to clear all that up, and the assembly line needs a total overhaul."
"Do you have something in mind?"
"I have something drawn up."
I placed a simple assembly diagram on the table and explained it to Jimmy.
"So here, we only assemble the engine, and here only the steering system. Also, here is where tires are made, and here we make a long final assembly area like this. And I'm going to lay rails along this final assembly line."
"Lay rails inside the factory?"
"Yeah, lay rails inside the factory, assemble on top of them, and pass it to the next assembly part."
"Ah, that would be convenient."
"Besides, doing painting inside here right now makes the smell severe."
"Yeah, that really needs to be run separately."
"So, paint this frame part here, and paint the tires over there. Since tires are made separately over there anyway, just paint them there before bringing them here. And final painting here."
"To do this, we'd need to completely overhaul the factory."
"Just break through there and there. For the rest, just remove the doors."
"Huh, Duke, did you think of all this from when building the factory? It matches the door locations exactly. Did you build it like that from the start?"
"Yeah, I thought of it from the beginning."
Jimmy admired me once again, and the factory expansion was carried out relatively easily.
Also, employee wages were raised. Those who joined agreeing to receive $25 a month initially could now receive $40, and those who received $40 from the start were raised to $55 a month.
"Then will you give $40 to newly recruited employees too?"
"No, give $30 first, raise it to $35 after working a month, and pay $40 after 3 months. Of course, technicians can be decided case by case. Can you do this?"
"Yeah, even I receive a salary like this at 19, so I should do that much. By the way, what will you do about black workers?"
"Why, is there a problem?"
"I don't have a problem, but a few newly joined kids are grumbling that they receive the same treatment as blacks."
"Aren't most of those people immigrants too?"
"There are immigrants and kids born here, but mostly immigrant descendants. It's problematic that they discriminate against blacks despite being in that position. Italian or Irish descents don't pick fights over that often, but kids from Northern Europe mainly pick fights like that. The worst are kids from England. Immigrant sons, but acting like they are Anglo-Saxons too."
"If they bring that up again, ask them what color the boss's face here is, and argue why they receive wages given by a yellow monkey but can't receive the same wage as a black person. If they still don't understand, fire them. As long as I'm the boss, racial discrimination is not tolerated in our company. They should talk sense in a company where an Asian is the boss."
"Okay, I can't say exactly as the Duke said, but I'll say it indirectly. If they don't listen, I'll fire them. First, since you are the boss, you shouldn't talk about yellow monkeys. The reason I call you Duke all the time is also to establish the boss's authority."
"Okay. Jimmy, you take care of things like that."
As I was about to leave after finishing the last discussion, Jimmy asked.
"By the way, will you continue working at your dad's bank and Mr. Morgan's bank? Our company profits are rising now."
"Still, I should continue for the time being. Is there any other work where I can work just one hour a day and receive that much? I should continue until the company finances are completely stable."
I couldn't quit immediately the work where I earned about $40,000 a year by working at 4 banks including Dad's and Morgan Bank at the end of the day.
The value of changing and organizing the production line appeared immediately. Furthermore, placing newly recruited employees and starting production drastically increased production efficiency.
This surprised not only Jimmy but also Dad who visited the company after a long time.
"Wow, the company scale has grown but it became much neater."
"It's because we cleared everything that hinders employee work movement."
"Production volume increased tremendously too. How many units do you produce per month now?"
"60 total employees are producing 400 units a month."
"Then that's 4,800 units a year; can we sell them all?"
"That's why I'm going to lower the price to $600."
Dad was surprised by my words.
"Does profit come out even lowering the price like that?"
"Production cost decreased much more than when 30 people produced 100 units. So isn't it much more profitable to lower the price and sell more?"
"Still, can 4,800 units be sold in a year?"
"Wait and see. They will definitely sell."
"And you said you are developing a new model."
"Yes, I'm going to change Model A's steering system to a round wheel like the Continental. I'll name it Model C."
"Then what about the price?"
"The price will be raised a bit to over $700. It will probably come out next year."
"Naming it Model C, did you name it considering the Continental as Model B?"
"No, Model B will come out separately too. As a luxury car made a bit cheaper than the Continental."
Not only Dad but also Mom, Aunt Jessie, and Uncle Jack worried about the production volume of 4,800 units and whether that many would sell in the US, but as if such worries were unfounded, cars sold terrifyingly fast.
Especially when the price was lowered to $600, purchase inquiries flooded in endlessly, and people appeared who wanted to buy more than ten units at once to sell in their neighborhood.
I met directly with a customer who wanted to buy 10 units at once.
The customer was an old gentleman in his early 50s with white hair and beard. Although he felt awkward because I was too young, I was already quite rumored in this neighborhood, and perhaps hearing the rumors, he didn't find it particularly strange.
"So you mean you will take these 10 units to Chicago and sell them."
"If I transport cars by rail and sell them in Chicago, there will be many people willing to buy even for $1,000 per unit. If they don't sell, I can gift them to my friends."
"So you mean that level of consumption is possible in Chicago too. Ah, I'm not looking down on Chicago, but saying this because automobiles are items that depend on taste. Honestly, right now cars can't travel unless it's a paved road."
"Chicago is a quite wealthy neighborhood. Road paving is well done, and there are probably more factories than here in New York. New York is a city prospered mainly by finance and commerce, not an industrial city."
I nodded.
That is true. It's not that there are no factories in New York, but it's closer to a commercial city than an industrial city.
"Anyway, isn't there a discount if I buy 10 units at once?"
"Of course there is. Since it's 10 units, I'll give them all for $5,750."
"Can't you do a little more?"
"It's not easy to match $600 per car, so please bear with that much."
"Indeed, $600 per car is a bit low price."
Since there was something enticing about this customer's attitude, I made a proposal.
"Buying cars is buying cars, but don't you have thoughts of doing a bigger deal with us?"
"What big deal?"
"Becoming our dealer in Chicago. Seeing you buy 10 cars at once, I'm suggesting because it seems possible."
"So I become the Chicago specialized wholesaler for your cars. Is that it?"
"Yes, that's it. However, some capital will be required."
"I do have that much capital."
Since he looked like it, I made this proposal to him.
We wanted to create a dealer system to expand sales channels, but didn't know whom to choose as a useful dealer. Occasionally, people came with the greed to become dealers, but most were swindler-like figures who jumped in thinking it would make money without their own capital. In comparison, this person had a decent attitude and looked wealthy enough to say he would give $600 cars as gifts to friends.
"If you become our dealer, I can discount the price of the 10 units you bought now even more."
"No, I haven't decided yet, so no need to discount that. That is that and this is this. But your proposal sounds a bit tempting; what conditions are possible? I'm asking at what price it will be supplied if I become a dealer and what the retail price should be set at."
"In the case of Model A, the retail price is $600, same as us, and we can supply it to you for up to $480. This is on the condition that we also bear the transportation cost. So if you sell one, you can leave $120. However, conditions attached are that you must purchase in cash and must purchase in units of 12 at once. If not that unit, transportation costs go up too much."