Large scale production

Early in this century, Henry Ford used the principle of the assembly line to produce the Model T automobile. His success made the Ford Motor Company the world's leading producer of automobiles and Ford became one of the world's richest men.

The basic idea of the automobile assembly line is this: Instead of having workers move from one automobile to another, the automobiles were moved to the workers.

The introduction of the assembly line was a most important step in the development of large-scale or mass production. Indeed, mass production as we know it today could not have come into existence without the assembly line. Because the items being produced had to be moved automatically from one worker to the next, someone had to figure out how long each item had to remain in one spot before moving on. The workers had to have enough time to complete their jobs. However, if the line moved too slowly, the workers would have nothing to do. This led to the development of time and motion studies, which examined the work done at each step of production, and how long it took to do each step. As a result of these studies, production methods were constantly being altered and improved. This led to greater and greater output.

The efforts to find more efficient methods of production did not end with the development of the assembly line in 1913. Today, we hear of the great changes taking place as a result of automation. This technological revolution, in which machines rather than men operate other machines, is a continuation of the search for ways to increase production.

When goods are made by mass production, manufacturers are able to produce more. But mass production is very costly. It may take millions of dollars to set up a factory. In spite of this, manufacturers are willing to make the investment. They know that, although their total costs will be increased, each item they produce will cost less.

There are several reasons why goods tend to cost less when they are produced in great quantities. Let us take a look at some of these reasons.

1. The Division of Labor. In the manufacture of an automobile no worker assembles an entire car. Instead, each worker does only one small part of the total job. Similarly, in a factory that makes refrigerators, a worker may spend his entire day installing motor parts. That is, the total job of production is broken down into many parts, and each part is performed by a number of workers. This is called the division of labor.

There are two important advantages to the division of labor. First, workers are more easily trained when the job they perform is limited. It is much easier to teach a worker how to operate one machine that makes part of a finished product than to teach him to operate all the machines in a plant.

What is more, as a worker does the same thing over and over, he tends to become increasingly expert at it.

The simpler the operation, the easier it is to train workers and the more likely they are to become expert at their jobs. As businesses become larger, they frequently seek new ways to divide their production lines, and thus take greater advantage of the division of labor.

Second, fewer skills are needed because the work is divided up.

2. Lower Costs of Materials and Services. Big business buys big. This is an advantage because suppliers frequently offer discounts to producers who buy large quantities of raw materials. This saving also applies to almost all the expenses of doing business. Large-scale producers save money on such things as advertising, storage, and shipping.

3. Latest and Best Machinery and Equipment. Modern factories and equipment are quite costly. For this reason, only companies that can afford the expense are in a position to buy the latest machinery. Since modern equipment turns out goods more efficiently (at a lower cost per item), big business is able to reduce its cost of production even more.

4. Research and Use of By-Products. Scientific research can find many new products and better ways of doing business. But scientific research is costly. After all, laboratories have to be built and maintained and scientists and technicians must be paid. Only the largest firms can afford the expense of maintaining research staff. But research can bring great rewards to the company that makes a discovery.

Similarly, large-scale business can make more efficient use of its raw materials. For example, when a farmer slaughters a steer for his own use, he is likely to throw away half the carcass as waste. But a large meat-packing plant will use virtually the entire animal. Bones and horns may be ground for fertilizer. Pet food, gelatin, leather, glues, paints, and other by-products will be made from parts of the animal. As scientists find wider and wider uses for previously unwanted leftovers, the cost of producing the original item is reduced.

5. Lower Borrowing Costs. Large-scale businesses frequently need money to build new factories, buy modern equipment, and increase their production. Banks and private investors are more willing to lend money to big companies than to little ones and usually charge lower interest rates when they do. Thus, another important cost of doing business is reduced for the big companies.

Key words and word combinations of the text.

productivity	efficiency
machinery	capital equipment
labour force	training programs
production process	profit sharing
stock ownership	experienced staff
assembly line	economies of scale
research and development	push production
pull production	continuous production
batch production	catalogue
appropriate	labour turnover
job rotation	business cycle
extra costs	production method
alter	spare parts
expert	complete
lower costs	by-products
reward	borrowing costs
unit	minimize