Mark Herdman, from "down under" was at the Speedster Reunion this week in Lincoln NE. I've corresponded with Mark before, and was happy to meet him in person. While talking Fords, Mark showed me a publication he bought while at the Benson Library prior to arriving in Lincoln, "The Model T Reconsidered" (edited by Judith Endelman). Specifically, Mark pointed out pages 18 and 19 to me, and a line item showing 67 Ford Model S Coupes delivered in 1908 (more on this below above the second document).
In the publication, a collection of articles and document copies prepared for the Centennial in 2008, were two documents that I have not seen before. The first, shown below, is the Audited Income Statement for FMCO for the 1908 fiscal year (Oct 1 1907 through Sep 1908).
The Model K information is interesting to me (big surprise ) as is the report that three Model Ts were sold during this period (prior to October 1, 1908).
Pertaining to the Model K, a wealth of information is contained in this document. First, 118 Model Ks were sold in FY 1908. With a total of 1,000 Model Ks produced between April 1906 and the summer of 1908, we are now able to determine the approximate number of Model Ks sold each year.
We know about 350 Model Ks were 1906 models, produced between April and September 1906.
With 118 Ks sold during FY 1908, and ten left over (according to the second document), that leaves about 500 Ks sold in 1907. This is important because it indicates a significant number of moderate to high priced cars sold (by any automaker) and also helps confirm Ford's claim during 1907 and 1908 that they were the largest producer of six cylinder cars in 1906 and 1907. (500 cars sold would place an automaker in the top 15 of auto makers in terms of cars sold for 1906 and 1907, according to some automotive sources).
Another important piece of information is the "Gain" column on the right. The auditors determined the gain (profit) of each model sold. By extrapolating out the number sold, the Model K appears to make FMCO over $540 per car ($64,000 profit from Ks sold). By comparison, the 733 Model Ns sold generated a gross profit of $60,000 for 1908 (about $80 per car). Bottom line, the Model K, according to this document, appears to generate more gross revenue for FMCO than Model N sales for 1908.
Granted, the Model S sales are significantly more, and provide the bulk of profit for FMCO in 1908. Still, this flies in the face of "history" telling us the Model K was a financial "loser" for Ford Motor Company.
To keep this Model T related, it is also interesting that three Ts are sold in FY 1908. I don't know if there is any indication somewhere that these are the standard waterpump Ts built prior Jan 1 1909, or a prototype? Still, this is the earliest sale of Model T that I've encountered.
The second document contains interesting information too. Three Model Ts and two Laundau s are listed as "delivered". Importantly for NRS researchers, 67 Model S Coupes are listed as delivered. History (as I've read it) says only 26 or 27 Model S Coupes were produced.
For anyone interested, I hope this provides thought provoking information concerning the Model T and the models preceding the T. I'm "digesting" this information while still attending the Speedster Reunion, and apologize if I made any math errors or misinterpretations while putting this together on the fly.
Many thanks to Mark for finding these documents, and the authors who compiled "The Model T Reconsidered", edited by Judith Endelman.
Thank you for posting the information. Trent had previously mentioned/posted/or published that there was evidence that a few Model Ts were sold before Model T #1. But at that time he did not share what the evidence was.
Note I am NOT an accountant and I’m not that good in math. But as I look at the two sheets of paper (scans) they both appear to cover Fiscal Year 1908. But in the top document it is listing cars sold and the bottom document is listing cars delivered. At least I think that is what it is saying.
Sold (i.e. revenue)…………………..Delivered
1745 S [Runabouts]…………………1731 S [note less 11 returned]
3650 or 3680 S Roadsters……...3740 SR
…26 S Coupes………………….….........67 S Coupe [less 1 coupe]
...733 N [Runabouts].………….588 N [note less 68?N]
…..92 R [Runabouts]………….…46 R..[note less 2 R]
….119 K [Touring & Road]……113 K..[note less 10 K]
…….2 T………………………..……..3 T
…….1 Landaulet………..……………2 Landaulet
From the list above the numbers are close – but I would still think my check book was not balanced if I said I wrote the check for 733 [that would be Model Ns] and the bank said I wrote it for 588. And in the case of the S Coupes a different of 41 (more than double the production) or in the case of the Ts only 1 but 50 percent more than sold were delivered.
Now that it is summer – hopefully Trent or someone else with a better background and understanding of the methodology that was used may be able to help us better understand what we are looking at.
The Model S Roadster was the biggest money maker and number produced for FY 1908 if I understand the pages correctly. Followed by the Model S Runabout. The Model N Runabout had more cars sold/delivered than the Model K and if I am reading the top page correctly (it is not that clear on my computer) the Model N had a “Revenue” (I think that is profit?) of $67, 107.00 while the Model K netted a little less profit of 60,057.10 or $60, 067.10 -- it is hard for me to tell if the number is an 8, 6, or 5. But clearly much much more profit per car. Clearly the Model K was NOT a financial drain if we are understanding these pages correctly. [Although perhaps Model K production was taking up space that could have been used for Model S and Model SR production – never-the-less the Model K was making a good profit and NOT a loss.] Note the K did out sell the Model R Runabout, Model S Coupes, Landaulets and Ts for 1908 and provided a larger revenue than those. And if I misread the figures it may have provided more revenue than the Model N.
If it is possible to obtain a better scan of those pages, it would hopefully let us know which way the figures were, i.e. 8, 6, or 5 where it is hard to tell (or maybe not). Again thank you for sharing that information. I suspect if you did not like history and did not own a Model K this would have remained unnoticed by most folks. But you are the right person at the right place to be helping make the history of the Model K be better documented. Thank you for your efforts!
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P.S. I will e-mail Trent as I know he also enjoys this sort of stuff. And there is a good chance that he actually may have briefed some of this information at the Centennial and/or helped to initially locate some of that documentation.
It is a fascinating document. The 733 Model N's delivered I think would have been to fill orders from the previous fiscal year since the "N" was not a 1908 model year offering. If we had a chart of monthly deliveries I would expect those Model N's were all delivered during calendar year 1907.
I had no idea there were that many Model S coupes delivered. I wonder if they were to fill a big order from a single customer, perhaps the USPS?
Really enjoy documents like this Rob!!!!!
I agree with you that I too really enjoy documents like that. We can compare them to some additional data points from Trent's Early Database. That database is included in Bruce McCalley's "Model T Comprehensive Encyclopedia" as well as Carl's "Pate's Early Ford Automobile Encyclopedia" has the shipping dates taken from the accounts receivable ledgers. Because many of the ledgers are missing the data base has a little less than 25 per cent of the cars shipped. But they show Model Ns shipped from Jan 1908 to Nov 21, 1908. The serial number range is about from 6200 to 6928. Note some numbers before and after 6200 were shipped in 1908 and some numbers after 6200 were actually shipped in 1907 but most of those Model Ns were shipped in 1908. I could count the examples and see how close it comes to the number 602 which is reported later in this posting but I will leave it that some of the numbers were shipped in 1907 and that just "eyeballing it" it appears the Accounts receivable ledgers arrived at a slightly larger number than the Ford Financial Statements arrived at. If someone wants to look closer they records may be dead on -- but from just the initial look -- I think the database has a slightly larger number of cars shipped than the other ledgers record as sold. Of course it looks that way to me on the two pages above also! I.e. one shows a different number of cars than the other page.
Many of the early automobile companies did not have a yearly model year. Instead they had a model that they introduced and continued to sell over more than one year. In the case of the Model N the price list of parts list them for all three years, 1906, 1907, and 1908 -- implied specifically by the 1908 Splitdorf coils and coil box that were used on the N (pg 28 of the 1908 Price List of Parts). And if you look closely at the photo of the Model S Roadsters in the run up yard at Piquette (page 32 Philip Van Doren Stern's book "Tin Lizzie") you can see a Model N in front of the Model S Roadster. And the S Roadster was not introduced/started shipping until Mar 1908. While the Model R is basically considered a 1907 car -- that was primarily because Ford ordered 2500 Model R bodies and sold them quickly. Model R # 2532 was shipped Oct 21, 1907 [yes that is already more than 2500 -- so he must have gotten a few additional bodies and he also made at least one Model R into a Coupe ref serial number 2546 listed second hand coupe shipped Sep 4, 1908. So the Model Rs listed in FY 1908 were most likely sold in Calendar year 1907 but a few were assembled later. The same is true for the Model K that was sold 1906 to 1908. Yes, the Tulip body was replaced but in general same basic chassis. And the Model F continued to be assembled and sold into May 1906 with a few stragglers (probably using up the left over new parts) made and shipped as late as Sep 1906.
Note Trent did an excellent article for Vol 3 Issue 1 of the “Early Ford Registry Newsletter,” Spring 2005 pages 3 & 4 where he documented the Monthly Sales figures by month with the exception of Mar 1905 and the months of Apr, Jun, & Jul 1909. In that article he documents that 602 Model N Runabouts were sold between Jan and Dec 1908. It also documents that 26 Model S Coupes were sold during that time frame which agrees with the number listed on the first page above but disagrees with the 67 number listed on the second page. That newsletter is available on the Early Ford Registry site at: http://www.earlyfordregistry.com/ under the member’s area.
It was and still is a fascinating time in automobile history and it is great to see additional data being uncovered and shared.
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Royce, as I've seen you post to others, "wrong again". I could continue down the path your posts have gone, but won't, unless forced.
As any early Ford follower is aware, the Model N (and K) were offered as the "staples" of Ford Motor Company between 1906 and 1908. As the documents above show us, the Model S made more profit (gain) for Ford than the N, however the N was offered and sold through 1908.
Following is a "Cycle and Automobile" magazine article showing Ford cars for 1908. The article appeared in March 1908.
This article mentions the Ford lineup for 1908, including the Model N.
I suspect that the first document showing revenues is purely a financial document. I think it shows receipts received during the fiscal year (Oct 1 1907 thru Sep 30 1908). I think inventory already "pushed" to dealers prior, but now paid for are included. As the Ford board minutes in 1907 tell us, Model N required no "up front" money from dealers, and Model K only $200 down. This could mean inventory at dealerships that FoMoCo did not see receipt for until the dealership made the sale.
The second document is an inventory tool, showing how many cars (by model) have been delivered during the fiscal year (but not necessarily paid for). For these reasons I did not expect the two documents to reconcile.
Unfortunately I do not have the entire report (but will try to find more).
Thank you for your insights and help as we discover more about early Ford operations,
I would look at it perhaps a little bit different.
What we would think of as a sale is not on accounting ledgers. It is a deposit on the P&L.
A 'sale' as shown here would have occurred internally in the month the car shipped. When the 'sale' was recognized. (paperwork shuffle).
A 'Cost' is the total manufacturing cost summary for raw materials, sub-contract parts and assemblies received, and direct labor for assembly and a factor per direct labor dollars for shop costs. Today the manufacturing overheads for building, power use, indirect labor are also included in this category. may have been so then, may not). This early we don't have to worry about standardized costs as they pretty much added up receipts for others and only had few employees to count up.
'Revenue' here is 'Sales minus Costs (mfg cost) what we call Gross Profit today
'Commercial Expense' is all else. Henry's salary, front office salaries, probably production chiefs down to supervisor salaries, the front office expense, paper and pencils, R&D expense, manufacturing engineering expense, marketing expense, and warranty expense, the building, office power and heat.
'Gain' as shown and illustrated here is what the buzz boys call EBITDA today! (Earnings Before Interest, Taxes, Depreciation and Amoritization) Gain is of course 'Revenue' minus 'Commercial Expense'. It can loosely be called 'cash flow'
So Rob...I think you found one of your original question answers.
You have the total K's sold. Divide into the 'Sales' number. Equals average sale price per car. Ditto 'Costs' (mfg. cost). On a cost of sale ledger there are NO carryovers, the 'booking' turns to a 'sale' in the month shipped so there is no fuzz at beginning or end months, no carryovers. This is true cost of sale accounting. Might be fun to put into a spreadsheet and play with the commercial expense.
Typically, you just took your budget and cranked backwards to have a % of 'sale' charge. but you were also allowed to play the game...by predetermining that some products were costing you more in 'overheads' and front office expense and as long as the sum of all these percentages equaled the budget/actual, nobody cared!
Thus cash cows could show as dogs, and pigs can become silk purses...and the first rule of due diligence is to look at these Commercial Expenses (GSA today) completely as how they are calculated can slew financial perceptions of what a product really generates. My guess here is a straight across the board %...but someday I'll play to check.
Thank you for the accounting information. Not an area I'm familiar with (does this make me "no account"? ). I'm curious how Ford distributed costs such as advertising ($50,000 according to Ford board minutes, including racing costs), per vehicle, based on gross cost, etc?
Another difficult task is, how were Ford branches treated? Were cars delivered to the branches as "sold" or just a continuation of inventory owned by FMCO? Branches also received a 20% reduction of list cost, whereas dealers/agents received 10% off list price (for Model N, possibly the same for the new Model T). Would a portion of the "sales" dollars include some of this discount to the branch, since Ford was the owner, and I assume participated in any branch profits?
Bottom line, I hope standardized accounting and auditing principles give us a somewhat clear (is that an oxymoron?) picture of the true picture of the cost/profit relationship between models.
Lot's of good stuff (for early Ford geeks),
geeesh, not enough coffee, the last full sentence should have read "picture of the cost/profit", not "picture of the true picture .....".
I’ll be back at you PM on a few things to help you with your cause…but let me just say for now and the others that may be curious, that finding the ‘true total cost of sale’ is an impossibility, both then and now, in any accounting convention for a company that makes more than one product.
To even come close you would need the Cost of Sale Ledger, The annual & monthly INCOME STATEMENT (P&L), the annual & monthly BALANCE SHEET showing changes, and the one thing you will probably never find…how were the DEPARTMENTALS arranged and line itemed in the ‘Commercial Cost’ summary.
By then Ford was not running a simple check book ledger. Board members were in fact savvy business men and just like now a whole lot can be dodged (no pun intended) in just what goes into that Commercial Cost category…and/or what was taken below the line as an offset to net profit. (I.e. your 50K question.)
It could have been a one-time charge below the line…or…it could have been a line item within the K commercial cost only ...or it could have been spread out over the entire product range. Without the 4 evidence categories you are shooting at ducks! The joke in the accounting circle is ‘Figures don’t lie, but liars can figure!’
Even today, ‘true cost of product by model and type’ accounting is shunned as a direct management tool in all but a few large enterprises. Ties hands too much on where costs can be redistributed to smooth things along even though computers can take it to the penny! GAAP (accounting rules) STILL allow lump sum redistributions within the 'commercail Cost', or % of 'sale' allocation.
But my friend, you already have what you need to prove what you have been trying to prove, although not in the way you think. Take the ‘cost’ of production and divide be ‘sales’ for each model. This becomes what is called C/P. C/P is what determines cash cows and hogs at the OPERATING level. The other is all on management and how they chose to distribute to make darlings or dogs! Some hide it always by using a fixed common % of ‘sales’ to determine ‘Commercial Cost’, but watch the departmental for their view. Other’s actually do not allocate universally and do try to use the line item true overheads. You never know, but the only truth is once structured internally, you cannot change…this is how ‘GSA cost’ today (Commercial Expenses) blows by CPA’s. The equal to Hippocratic Oath for accountants and green eye shade employees is called the ‘principle of consistency’.
The numbers "crunched" into a spreadsheet. I doubt the Model T numbers tell us much.
The Ford board of directors commission addendum lists a 10% commission for Model N and 20% for the Model K. It appears the sale of Model Ks provided a good profit for both the dealer/agent and FMCO.
Hey Rob, those are fascinating numbers. Are those numbers for the physical year or calendar year of 1907?
They are from Ford's fiscal year, Oct 1 1907 through Sep 30 1908. These documents help identify how many cars were delivered and/or sold for FY 1908. That in turn allows us to estimate how many (for my purposes Model K) were sold the other years of production.
For example, if 113 Model Ks were sold in FY 1908, that leaves about 880-890 Ks (1,000 K chassis were contracted for with Dodge Brothers in December 1905) sold in 1906 and 1907. I believe about 350 1906 Ks (sold between April and Oct 1, 1906) were sold in 1906. This leaves us with about 520-540 Model Ks sold in 1907. Both the 1906 and 1907 numbers would be quite large for a high end model car, and probably the largest number of six cylinder cars sold by any auto maker those two years, including Franklin, Stevens, Rolls Royce, Napier, and several other well known marquees of the time.
This information, along with the auditing information showing a very profitable car, go a long way in disputing the historically accepted reputation of the Model K, in my opinion.
All good stuff. Even better, I took the wife and one daughter to town for an "ice cream" before writing this, in the Model K of course .
Now if only you can find the same information(ledger pages) for the model years of 1906 and 1907. Unless they were lost in the fire, they have to be there somewhere. Then you will really have all the informatin you have been looking for. You have done a great job so far Rob.
Who wants to go to the archives and start looking?
I need to thank Mark Herdman again for finding these two documents. Also, I just noticed, the spreadsheet above should say "1908 Sales Revenue", not 1907. Below is a corrected copy.
I would love to find the same audit info for 1905-1907. Sounds like a great excuse for another trip to Benson Library .
Thanks for the ride in your K. Nice car!. I think you need to buy a copy of this book and read it. Page 27 refers to Monthly reports indicating that 2 Model T Fords were sold in Oct 1907. The reports were not included in the book due to pour quality. They are available for reading at the Benson Archives. These 2 T fords were shipped to the Paris Branch. (Paris exhibition?)
To me I'm starting to think pre Oct 1908 Fords bodies were experimented on S Chassis and bought across to The T range.
Yes, I think there were evolutionary Ts out there. Newspapers mentioned the "new light touring" at several car shows in the fall of 1907. The drawings look like an S Roadster front (cowl) with NRS style shift lever. Also, the hp is rated at twenty, yet no magneto is listed, only storage battery.
The London Auto Show report says the light touring and Laundelet are shown.
I've located the Accession where these papers are located at the Benson Library, and hopefully there is more to learn from the papers.
Thanks for bringing them (and the book) to our attention. I hope you enjoyed the trip,
This item from the Sep 1906 "Automobile" mentions Ford's desire to find a new site, and build a "moderate priced car seating five persons." This is only a month and a half after the Model N is finally being delivered and the "trade" is aware that Ford intends to build what will eventually be the Model T.
Enjoyed the trip all round. Unfortunately the first person, an old friend, I planned to see passed away 3 days before I got there. His family allowed me to take lots of photos of his collection as he left it. Very nice people.
T book mentions the T commencing in 1906.