Dodge Brothers and Ford
On February 23, 1903 the Dodge brothers formally agreed to supply Henry Ford with 650 chassis (including engines, transmissions, and axles) for $250 each, thus beginning a profitable, but stormy relationship between the two firms. This contract kept the 150 men at the Hastings Street plant fully occupied and the Dodges began working exclusively for Ford. He built a plant on Mack Avenue to assemble cars from parts made elsewhere, the entire operation dependent upon extensive credit from his parts suppliers. In return for an investment of $10,000 ($7,000 in materials and a $3,000 bank note), the Dodge brothers accepted 100 shares (one-tenth of the total) in the Ford Motor Company., newly-incorporated on June 16, 1903. Dodge delivered the first shipment of chassis to Mack Avenue in July via horse-drawn hayracks and the Ford Motor Company assembled its first cars. During these early years. Ford often complained that the Dodge workers turned out shoddy products because they were paid by the piece. Despite these problems, he ordered another 755 engines for delivery in January through May 1904, and insisted on the right to order 500 more by early April. By the spring of 1905, when Ford had moved into his new Piquette Avenue plant. Dodge Brothers supplied 400 “rigs” (engines and transmissions) a month. Dodge continued as the major supplier, but by late 1905 Ford was already taking steps to produce his own engines and transmissions for the low-priced Model N.
The fates of Ford and the Dodges remained intertwined for fifteen years. The Dodge brothers began erecting a new plant on their thirty acre site in Hamtramck in 1910, the same year Ford opened his Highland Park complex. In 1912 they supplied Ford with 180,000 transmission-axle sets, with future prospects for much larger orders. Fearing their total dependence on one customer, particularly because it was Ford, the Dodges gave Ford the required year’s notice that they would terminate their contract effective August 1914. John Dodge simultaneously resigned as director and vice president of the Ford Motor Company, but he and his brother retained the Ford stock they had since 1903. Their connection with Ford was extremely profitable. Through 1914, they collected $3.8 million in dividends from their stock and earned another $1.7 million in profits on the Ford contracts. When Ford sharply reduced dividends to the stockholders In 1916, the Dodges brought a suit which eventually forced him to pay a dividend of slightly over $19 million in early 1918, with ten percent of this going to them. In July 1919, Ford bought out the remaining stockholders in the Ford Motor Company and the Dodge brothers accepted $25 million for their ten percent interest in the firm. When they finally severed their relationship with Ford, they had earned $5,4 million in dividends and $1.7 million in profits, which combined with the sale of the stock produced a return of about $32 million on their 1903. investment of $10,000. Ford provided them with both the reason and the means to build the plant in Hamtramck.