Suppliers and Product Development in the Early American Automobile Industry

Joint product development, in which suppliers and automakers hare the responsibility for component design, has given Japanese auto companies an important competitive advantage in both quality and new model lead times [Clark, 1989]. In contrast, U.S. automakers until recently left little room for suppliers' participation in the design process; vendors typically manufactured components to assembler-provided drawings. Although joint engineering is usually regarded as distinctively Japanese [Nishiguchi, 1994], American automotive suppliers often participated in component design before 1920. There were three overlapping stages in product design in the early American auto industry. While pioneering auto builders like Henry Ford and Alexander Winton designed their cars in detail, suppliers' engineering contributions were crucial in making a car sufficienfiy reliable and cheap to be attractive to consumers. Vendors like George Holley and Cleveland Cap Screw solved critical design problems in carburetion and valve production, enabling their customers, Henry Ford and Alexander Winton, to overcome what historian of technology Thomas Parke Hughes has termed "reverse salients" in an advancing technological front [Hughes, 1983]. After these engineering issues had been resolved, and as consumer demand for automobiles took off, over a hundred car makers entered the market between roughly 1903 and 1918. Nearly all assembled their automobiles from outsourced motors, transmissions, and chassis. The presence of a technically sophisticated supplier base enabled these builders to produce automobiles without large fixed capital investment or much technical expertise [Seltzer, 1928, pp. 19-21]. Vendors were therefore responsible for most of the engineering that went into assembled cars; components were usually off-theshelf parts that the assembler merely installed. The third stage of product development arrangements began with the rise to dominance of vertically integrated, high-volume producers between 1910 and 1920. By 1920, Ford and GM produced three-quarters of the automobiles sold in the United States. From then until the restructuring forced