American automobile industry in the 1940s
The American automobile industry in the 1940s underwent significant transformations influenced by both economic recovery and the demands of World War II. Initially recovering from the Great Depression, the industry saw growth in vehicle sales, with major companies like Ford, General Motors, and Chrysler leading the market while smaller manufacturers also thrived. However, the onset of the war in Europe in 1939 began to reshape the industry’s focus, as the U.S. government sought the industry's capacity to produce military vehicles and equipment. Despite initial resistance from auto executives, who feared losing civilian customers, many companies gradually adapted to wartime production needs, resulting in a complete cessation of civilian vehicle manufacturing after the attack on Pearl Harbor in December 1941.
Throughout the war, the automobile industry was crucial in producing military machinery, including tanks and aircraft, fulfilling billions in government contracts. Post-war, the industry faced challenges in reconverting to civilian production, leading to labor disputes and economic struggles. By the end of the decade, while the "Big Three" regained dominance, many independent manufacturers faced decline or closure. The changes during this period not only shaped the automobile industry but also had lasting implications for labor relations and societal norms regarding women's and minority employment. Overall, the 1940s were pivotal in establishing the automobile industry's role in both wartime efforts and peacetime recovery.
American automobile industry in the 1940s
During World War II, the automobile industry was one of the chief industries that provided equipment, materials, and supplies to the U.S. military and its allies. The reconversion of this industry from wartime to peacetime pursuits helped usher in a period of great prosperity in the United States.
In 1940, the automobile industry was slowly recovering from the Great Depression and experiencing growth in sales of private and commercial vehicles. The “Big Three”—Ford, General Motors (GM), and Chrysler—dominated the market, but a number of smaller independent companies enjoyed decent sales as the economy recovered from its crisis. Ford and GM had overseas affiliates that generated profits. After September 1, 1939, exports were affected by the war in Europe, limiting sales for some companies. Nevertheless, firms such as Packard and Studebaker introduced new models in 1941 that seemed to satisfy American customers, promising a bright future for these companies. Hence, at the beginning of the decade, auto executives resisted pressure from government officials to convert some automobile manufacturing facilities to assist allies who were fighting the Axis powers in Europe and Asia. Executives were worried that converting factories to produce advanced military machinery during a period of high demand for their automotive products would cause them to lose civilian customers.
Mobilization for War
Much of the United States was focused more on domestic recovery than international affairs in 1940, but the Roosevelt administration was already heavily involved in preparing for war. The president and his advisers knew that success against Adolf Hitler, Benito Mussolini, and Japan would require production of war machinery in great quantities, and that the automobile industry was the only one capable of producing tanks, planes, and other items the United States would require. Automobile executives such as Alfred P. Sloan at GM and Henry Ford were deeply distrustful of President Roosevelt’s administration and balked at assisting in any way that might be perceived as pushing the United States into the European conflict.
Nevertheless, steps were taken toward mobilizing the automobile industry for wartime production long before America entered the conflict. A 1938 Educational Order Act allowed the government to award contracts to companies to experiment with production of small quantities of military equipment, and some auto manufacturers took advantage of the program to produce items other than cars and trucks. Many in the United States thought that the auto industry could convert from civilian to military production easily and quickly, just as it had done in World War I. Savvy auto executives knew better. Modern military trucks, tanks, and specialized vehicles were nothing like the civilian vehicles being produced in 1940, and retooling plants to make military vehicles and equipment would require months of downtime in production.
In 1940, Roosevelt chose William Knudsen, the president of General Motors and a former executive at Ford Motor Company, to head up the first advisory board on wartime production. With no real authority, however, Knudsen faced difficulties in getting auto executives to speed up conversion. Alfred Sloan was reluctant because he feared that both the original conversion and the reconversion after the war would prove costly. Henry Ford was against any American involvement in support of the war, even that which might help England and France. In 1940, Ford’s company was asked to make engines for the Royal Air Force, but Henry Ford refused to accept the contract, as did executives at Chrysler. Eventually, Packard Motors took the contract. Studebaker signed a contract to make trucks for France. At the same time, these firms continued to make cars for the American market.
One technique used by the government to encourage the auto industry to take on production of war materials was the offer to have the work done in Government Owned Contractor Operated (GOCO) plants. Under this arrangement, the Defense Plant Corporation would construct facilities with government funds for lease to companies that would operate them. This prevented manufacturers from incurring too much debt—and assuming too much risk—by having to make capital investments in plants that might not be needed after the war. Chrysler was one of the first to sign on to this proposal, agreeing in 1941 to make medium-sized tanks in a GOCO plant in Warren, Michigan. Several other firms did the same, and the practice became commonplace after the United States entered World War II in 1941.
Wartime Production
Within weeks after the Japanese attacked Pearl Harbor in December, 1941, production of all civilian vehicles ceased. The Automotive Council for War Production, an industry-sponsored and industry-led group, coordinated efforts at production of war material, going so far as to convince manufacturers to share information and resources. Within months, companies such as GM found that 90 percent of their business was coming from the government. Some companies became specialists. For example, Chrysler produced most of the tanks used in the war. Ford partnered with the Willys company to build Jeeps, all-wheel-drive vehicles developed in 1940. By the middle of 1942, manufacturers were turning out trucks, tracked vehicles, tanks, components for aircraft, and a host of other items for the war, including small arms, ammunitions, and even parts for advanced radar systems. Ford ended up building B-24 bombers from start to finish at its new facility in Willow Run, Michigan, where 100,000 workers staffed the assembly line. Chrysler built components for machinery to produce uranium-235, the special isotope of uranium used to build the first atomic bomb. GM estimated that during the war, two-thirds of its work consisted of producing items it had never made before the war.
Despite a general feeling of patriotism and willingness to do whatever was necessary to bring about victory for the Allies, auto manufacturers faced numerous problems in 1942 and 1943. Raw materials were allocated by government agencies created to manage the war effort and keep the civilian economy from collapsing. Shortages often meant delays or even shutdowns of assembly lines. The industry faced serious labor issues as well. Many of the men who worked at auto plants enlisted or were drafted, and companies scrambled to find replacements. Two groups filled the need admirably: women and members of minority groups.
Union issues, a great source of consternation for auto manufacturers during the 1930’s, again plagued the industry. Although unions had agreed not to strike during the war, wildcat strikes often shut down facilities, sometimes for weeks. Only strong federal intervention managed to bring management and labor together for the duration of the war.
Although manufacturers had enough government contracts to expand operations during the war, auto dealerships felt the loss of new inventory almost immediately. Within a year, 15 percent were out of business. Americans could not buy new cars, and therefore many held on to their old ones. Additionally, rubber and petroleum products were rationed. Fearing adverse reactions from the American public, automobile manufacturers mounted massive public relations campaigns to let the public know how much they were doing to help the United States win the war.
By the war’s end, the automobile industry had fulfilled $29 billion in government contracts. Although the bulk of that work had been in manufacturing trucks, tanks, and aircraft components, the industry had also produced nearly $2 billion in marine equipment, more than $1.5 billion in weapons and ammunition, and $1 billion in other war products. It is no exaggeration to say that the industrial might of the automobile industry was an indispensable component in the Allied victory.
Reconversion to Peacetime Production
Even before the United States entered the war, farsighted executives such as Alfred Sloan at GM were planning for reconverting facilities back to manufacturing civilian automobiles. By 1944, the government was sponsoring reconversion efforts. When the war ended with the signing of surrender documents in September, 1945, the auto industry was as ready as possible to begin producing vehicles for private customers, although retooling from military manufacturing to production of passenger cars took some time. In the remaining months of 1945, only 100,000 new vehicles were produced. By 1949, however, the industry had an annual production output of 5 million passenger cars and 1 million other vehicles.
As they had during the war, automobile manufacturers faced significant problems in the postwar years. Initially, the government was slow to lift price controls. Cars offered for sale in 1946 carried 1942 prices. At the same time, companies were plagued by a series of labor strikes as unions fought to recover what they perceived as losses in earnings and benefits, which had been frozen for nearly four years as a result of the war. As a result, some manufacturers found that they could not charge enough to make a profit on new cars. Most companies had to settle for bringing out “new” cars using the same designs that were in production before the war. Not until 1947 was a truly new vehicle offered for sale.
Problems of reconversion hurt smaller manufacturers even more than the Big Three. Although independents controlled 20 percent of the market in 1949, eventually some brands disappeared, including Studebaker and Packard. Surprisingly, however, after the war both Preston Tucker and shipping magnate Henry Kaiser attempted to enter the automobile manufacturing industry, purchasing plants that had been built for wartime production by other companies. Neither effort was a long-term success in the United States; Tucker’s company produced only fifty cars before it was brought down by scandal.
GM emerged as the dominant manufacturer after the war, although Ford made a strong comeback under new president Henry Ford II. Chrysler lagged behind its chief competitors and did not return to prewar sales levels until 1949. Despite initial setbacks, the Big Three firms managed to increase their sales and market share, squeezing out independent manufacturers such as Studebaker and Packard and forcing others such as Hudson and Nash to consolidate in order to compete for customers.
Impact
Unquestionably, the efforts of the automobile industry to supply military vehicles, aircraft, and other items to support the efforts of the United States and its allies in World War II were crucial, even pivotal, in ensuring victory over the Axis powers. The automobile industry produced one-fifth of everything manufactured for wartime use. Although the scale of production was large, the profit margin was small, and for several years after the war many companies found themselves struggling to regain a solid footing. The labor unrest that plagued many companies in the years immediately following the cessation of hostilities led them to develop more effective strategies in dealing with unions, while union leaders ultimately negotiated better wages, benefits, and working conditions for autoworkers.
Women and minorities saw significant changes in their lifestyles as a result of the war and reconversion. When personnel shortages existed, these groups had filled in admirably on assembly lines and in offices. When white men returned to the workforce and their old jobs, women and minorities often were displaced. The apparent inequality of treatment set the stage for future protests and led to changes in hiring practices involving women and minorities, eventually affecting the entire fabric of American society.
Bibliography
Critchlow, Donald T. Studebaker: The Life and Death of an American Corporation. Bloomington: Indiana University Press, 1996. Surveys the role that Studebaker and other independent auto makers played during World War II. Describes changes in the industry in the years immediately following the war that made survival of companies such as Studebaker virtually impossible.
Farber, David. Sloan Rules: Alfred P. Sloan and the Triumph of General Motors. Chicago: University of Chicago Press, 2002. Includes a chapter on General Motors’ war production efforts and the work of GM chairman Alfred Sloan to position the company to be profitable after the war.
Hyde, Charles K. Riding the Roller Coaster: A History of the Chrysler Corporation. Detroit: Wayne State University Press, 2003. Detailed examination of Chrysler’s operations during World War II. Describes the firm’s struggle to meet the demand for a variety of military products, including tanks. Discusses problems with reconverting to a postwar economy.
Lichtenstein, Nelson. The Most Dangerous Man in Detroit: Walter Reuther and the Fate of American Labor. New York: Basic Books, 1995. Extensive analysis of labor unions’ role in supporting American efforts during World War II. Focuses on labor-management relations and the distrust labor leaders had about getting fair treatment of autoworkers from automotive executives and federal officials.
Rae, John B. The American Automobile Industry. Boston: Twayne, 1984. Detailed analysis of the automobile industry’s efforts during World War II and the struggle to return to normal operations in the years immediately following cessation of hostilities. Includes a chart outlining production of military vehicles and other materials for the war effort.
Watts, Steven. The People’s Tycoon: Henry Ford and the American Century. New York: Knopf, 2005. Brief account of Ford Motor Company’s involvement in wartime production, concentrating on the company’s involvement in constructing the B-24 Liberator bomber.