p2 Together they produced two-thirds of all Allied military equipment used in World War II. That included 86,000 tanks, 2.5 million trucks and a half million jeeps, 286,000 warplanes, 8,800 naval vessels, 5,600 merchant ships, 434 million tons of steel, 2.6 million machine guns, and 41 billion rounds of ammunition p2 Knudsen left GM in 1940 to spearhead America’s rearmament, first as director of the Office of Production Management and then to accept a lieutenant general’s commission (the first and only civilian in American history to receive this honor) as head of industrial production for the U.S. Army. p2 American workers in war-related industries in 1942–43 died or were injured in numbers twenty times greater than the American servicemen killed or wounded during those same years. At General Motors alone 189 senior executives died on the job during the war, trying to ensure final American victory. p6 Nye’s proposed solution was nationalizing the armaments industry. That didn’t happen, but companies like DuPont got the message. The Wilmington, Delaware, firm had supplied America’s armed forces with gunpowder since the American Revolution. Now it slashed its munitions-making division to less than 2 percent of operations.7 Other companies drew the same lesson: Supplying America with arms was business you did not want.* p7 From the fourth-biggest military force in the world in 1918, the United States Army shrank to number eighteen, just ahead of tiny Holland. p7 When Roosevelt learned in October 1938 that Neville Chamberlain had handed over a large chunk of Czechoslovakia to the Third Reich, he sent a congratulatory telegram: “Good man.” p8 Patton had 325 tanks—at a time when the Germans had more than 2,000—but no reliable nuts and bolts to hold them together. Patton asked the quartermaster for the necessary nuts and bolts; they never reached him. In desperation he ordered them at his own expense from the Sears and Roebuck catalogue. p9 After Poland fell, Roosevelt dared to appoint a War Resources Board of industrial leaders to consider what might be needed if America did have to prepare for a modern war. The board sat for six weeks before public outrage forced him to disband it. p10 Within hours he sent an urgent message to Congress, asking that the $24 million appropriation for the Army be expanded to $700 million. He said, “This nation should plan at this time a program that will provide us with 50,000 military and naval planes…. I should like to see this nation geared up to the ability to turn out at least 50,000 planes a year.” p11 What kind of planes do you want? they asked. Morgenthau could not tell them. They wanted to know exactly how many were needed and when the delivery date would be. Again the Treasury secretary drew a blank. The executives went home, more confused than ever.

Note:Help the customer define the solution

p13 When Roosevelt announced his plans for 50,000 planes a year, Hitler branded the number a fantasy. He scoffed, “What is America but beauty queens, millionaires, stupid records, and Hollywood?”27 He was about to find out. p21 Knudsen realized that the key to mass production was not uniformity or even speed. It was creating a continuous linear sequence that allowed every part to be fitted where and when it was needed, while keeping costs down by growing the volume instead of skimping on materials. Knudsen had found the key to the economy of scale underlying all industrial manufacturing. “In other words,” as Knudsen liked to explain it, “the less complex parts were, the easier they were to make; the easier to make, the less the cost; the less the cost, the greater the demand.” It was a guaranteed formula for success and profit. p22 Albert Kahn, a poor immigrant like himself with a positive genius for industrial architecture. Kahn had revealed that gift in 1907 in his factory building for Packard—the nation’s first modern factory with great cathedral-like windows that flooded the shop floors with sunlight—and then with Ford’s Highland Park plant. p31 “Speed produces nothing in manufacturing,” Knudsen liked to say—which was one reason he eschewed the complicated time-and-motion studies of production gurus like William Taylor. “Accuracy is the only straight line to great production.”52 Knudsen was moving automobile production out of the workshop mentality and into modern manufacturing. p33 The experts call it “flexible mass production”: a manufacturing process that allows for constant modification and change. This was the second revolution William Knudsen introduced to the auto industry, after the continuous assembly line he developed at Ford. Flexible mass production was embodied in the idea of the annual model. Billy Durant’s consumer-driven car culture was about to become reality.55 p35 Sloan was blunt about why. “We want to make you dissatisfied with your current car,” he told Chevy customers, “so you will buy a new one.” But there was a more profound truth underlying flexible mass production. Companies could now change how a product was made—or even introduce a new product—in rapid response to either changing market demands or to new technology, without breaking a single stride. This was true whether they were making cars or radios—or later, tanks, planes, and radar sets. p36 Centralization equals regimentation. Decentralization equals free enterprise. By 1937 the Sloan-Knudsen formula had saved GM. In three years it would have to save the world. p49 Then and later, Kaiser never could understand businessmen who shunned dealing with the government. He quickly discovered that government contracts were often also the longest running. p53 Although ninety-six men would die in accidents and cave-ins, the thousands who worked on the dam were grateful for a job at a competitive wage when tens of thousands of others were on relief. p54 Ickes wanted every federal safety regulation to be rigorously enforced; Kaiser patiently showed him that doing so would mean the dam would never be finished on time, let alone on budget. p54 Kaiser struck back—not by confronting Ickes directly but by having a pamphlet with color illustrations drawn up, called “So Hoover Was Built,” celebrating the heroic achievements of the Six Companies and its engineers and employees, which Kaiser intended to mail en masse to congressmen and members of the media. p56 Garfield suggested setting aside part of the employees’ paychecks to provide health insurance in case of injury or illness, which would also extend to their families. Kaiser enthusiastically agreed, and the result was the creation of the Kaiser Health Plan—the biggest and most successful private health insurance plan ever established by a private business, which is still up and running today. p62 But the Futurama was unique. It was the brainchild of Norman Bel Geddes, America’s foremost industrial architect and a former Broadway set designer. He had come up with the idea after working with J. Walter Thompson on an ad campaign featuring a futuristic city built around the automobile. p68 Pratt had done his level best to give advice on how to coordinate industry with military needs for war materiel. His reward was being vilified in the left-wing press as a corporate shill, while New Dealers attacked the entire WRB as a haven of fascistic “Wall Streeters and economic royalists.” Interior Secretary Harold Ickes denounced the idea of giving business a major role in organizing for war, calling it an affront to democracy itself. p71 Despite a decade of depression and high unemployment, the U.S. economy was still the most productive in the world. Its steel mills had produced an impressive 28 million long tons of steel—although that was less than half of what it produced in 1929. Nonetheless, America still produced more steel, aluminum, oil, and cars than all the world’s great powers put together—almost three million cars in 1939 alone. p71 Likewise a year’s production of aluminum, the primary material for making modern warplanes, would have to rise to a minimum of 750 million pounds. The industry’s twin giants, Alcoa and Reynolds, were making less than a quarter of that amount. p72 America’s merchant shipbuilding industry on both coasts was producing four ships a month, when it would need to launch hundreds. p73 In private, Harry Hopkins was even more apocalyptic. “Democracy must wage total war against totalitarian war,” he wrote in a secret memo for the president. “It must exceed the Nazi in fury, ruthlessness, and efficiency.” p74 Abroad, his agents bribed South American officials to keep certain strategic materials such as tungsten out of German hands. p79 He couldn’t get a straight answer because they were waiting for him to tell them what the American economy could produce, and how much. If the country was going to make itself seriously ready for war, neither the politicians nor the generals nor the admirals were willing to take the lead. American business and industry would have to figure it out on their own. p86 British and French military planners all assumed American-made planes and other equipment could help to close the gap with the Germans. In 1938 alone, their orders would total some $350 million—with $84 million in aircraft engines.2 It was five times what the Army Air Corps was ordering. p87 Meanwhile, French and British purchasing agents were ordering machine tools for their own factories, some $100 million worth, while another $138 million was spent providing machine tools for American factories to fill their orders. It was equal to the entire machine tool output of the country the previous year. p88 The evacuation of Dunkirk marked the next turning point in America’s call to arms—the very week Knudsen arrived in Washington. The British army had left all its tanks, trucks, and field artillery pieces on the beach. Even rifles and machine guns were in desperately short supply. With a German invasion looming, Churchill confessed to one intimate that there might be fewer than seventeen tanks left in the entire British Isles. p92 Knudsen also insisted that a “letter of intent,” meaning an official War or Navy Department letter stating the government’s intention to do business with a particular firm before a formal contract was drawn up and signed, should be enough to get a company advance funds from their bank—and to protect the company’s out-of-pocket expenses in case the contract never went through. It was a practice he borrowed from the British, and critics would hound him for it, decrying the fact that he had abandoned the costly, time-consuming process of competitive bidding. But Knudsen sensed that the time for slow, deliberate action was over. The government had to be willing to work with those companies willing to work with it. p94 For all of 1941, one-third of all warplanes produced in the United States—and one-half of all tanks—would be slated to be sent to Great Britain. p95 Nelson was a little shocked at the Army’s intransigence regarding uniform buttons. It told him that it had to have horn or ivory for its uniform buttons, as in the First World War. Nelson pointed out an American company called Rochester Button was ready to make thousands of perfectly fine celluloid buttons, and that horn and ivory had to be imported from South America or Czechoslovakia—the latter now under Nazi rule. Horn or ivory, the Army said, and for the time being that was where things stuck. p101 But the old man was adamant. He was still in the throes of isolationist sentiment and strongly believed that the war in Europe was none of America’s business—and that any money used to prop up a tottering British Empire was money wasted. p105 The difference was that whereas the English Merlin was still made by hand, with workmen still shaping every part to fit each particular motor, Packard’s mass-production approach allowed relatively unskilled labor to do the same job three times faster. Indeed, one-third of Packard’s new employees were women who had never set foot on a factory floor. p109 Describing those early days at NDAC later, he talked about being barraged by would-be defense contractors whose attitude was, “I’ve never done it before but I can do it again.” p111 The auto industry was the country’s biggest single employer, with one out of every twenty Americans employed directly or indirectly by its 850 companies.14 It had the biggest pool of mechanical and engineering talent—engineers who knew how to make rapid modifications in production and design, including machine tools. It was also an industry of associations, with closely knit ties binding its members together, p112 Here was a network that could mobilize talent, information, and resources from iron and steel to plate glass, copper, lead, leather, and motor oil, for the defense effort. p112 Knudsen also sensed that the auto industry was poised to be a model for the future of the American economy. Everywhere Knudsen looked, he saw an American industrial base woefully unprepared for the scale of demands that would be placed on it. He stunned one audience of politicians and businessmen at the Carleton Hotel by stating that the war effort was going to require a complete retooling of nearly every American factory over the next eighteen months.

Note:Parallel to data/AI decisions?

p115 By D-day almost one out of every five Michigan residents was involved in war work, and 70 percent of that work was confined to the four counties around metro Detroit, the heart of the auto industry.

Note:1 in 5 is almost low, really