Desperate times led to birth of industry

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This article was published 20/08/2004 (8004 days ago), so information in it may no longer be current.

WINDSOR — If it weren’t for the desperation of a young Walkerville, Ont., man trying to clear the debts of his late father, Canada might not have developed the automotive industry it did.

Instead, a determined 31-year-old named Gordon McGregor managed to turn his family’s virtually bankrupt wagon works business into the largest industrial employer in the country, founding one of the world’s great national automotive industries in the process.

McGregor was the eldest of three sons of William McGregor, a member of Parliament for Essex County and Essex North in 1891 and 1896 and later a customs collector in Windsor. The town of McGregor is named for him.

At the end of his life at age 66, William McGregor owned a money-losing wagon works factory on the banks of the Detroit River in Walkerville. But by May 1904 the father was dead and his eldest son, who had been running the business only a short time, was facing the demands of the family banker.

Upon the elder McGregor’s death, John Curry, a Windsor banker and adviser to the family, recommended that the wagon works be closed and all assets but the valuable waterfront building — which he, in fact, owned — be liquidated.

But even after selling all of their father’s horses, stock and equipment, the McGregors found themselves $75,000 in debt — a huge sum in those days, when $350 when considered a good annual wage.

Fortunately, the young Gordon McGregor had become fascinated with the craze for horseless carriages sweeping the U.S. In 1903 there were already 88 automobile companies in operation in the U.S., 15 of them in Michigan.

But it was by no means a major industry. A newspaper of the time listed “car works” as the 11th most important industry in Detroit, after stove manufacturing, the paint and varnish businesses, and furniture-making and directory publishing.

Many of the “car works” were in fact little more than garage operations run out of back alleys, and most of them — including the fledgling Ford Motor Co. on Mack Avenue in Detroit — assembled vehicles from parts made by others, such as the Dodge brothers.

Eventually some 2,600 companies would sell automobiles in the U.S. We know now that only a tiny fraction of them would succeed. But McGregor’s gut instincts were good: his first attempt to enter the business was to meet with the Leland brothers of Detroit, then building Cadillacs.

With banker Curry in tow, McGregor then paid a visit to a lanky and laid-back engineer named Henry Ford. He decided he liked Ford better — not surprisingly, perhaps, since Ford had already split with the Lelands himself. Ford was already on his third car company, and the second one bearing his name.

After several meetings, Ford and his closest partners agreed with the McGregors and Curry that a Canadian branch plant manufacturing operation was a good idea for both sides. There were already 150 Ford automobiles on the road in Canada, all of them imported and subject to import duties. Assembling them in Canada would avoid duties and lower the price, making Ford cars more competitive — a key motivator for Henry Ford, his biographers later noted.

“The creation of Ford of Canada was the birth of the industry in Canada, no doubt about it,” says Walter McCall, an automotive historian and retired public relations executive with DaimlerChrysler who has written eight books about the industry.

And the Canadian partners knew they were doing something historic, even if they didn’t realize just how momentous their business decision was:

“After that first meeting in Windsor, a member of the board was deputized to walk across the street to the Border Cities Star to deliver the news to the newspaper. And that was literally the creation of the industry,” McCall said from his Windsor home, which is filled with automotive memorabilia.

“Ford of Canada launched the industry: the McLaughlins (of Oshawa fame, where they laid the foundations for General Motors of Canada) didn’t incorporate until 1919. The Chryslers were Johnny-come-latelies in 1925. Aug. 17, 1904 was a red letter day for Canada.”

The Canadians offered 51 per cent of the stock of the new company to Henry Ford & Co. Ford himself stipulated that the new company must have Canadian money invested — which it did, although just barely.

The majority of the cash put up for the Canadian company came from Detroiters. Most of the Windsorites who could afford to invest in the fast growing industry proved either too timid or too shortsighted to understand what the young McGregor saw in the business. It proved to be their loss.

In a lawsuit launched by McGregor in 1913 over Curry’s estate, a court heard at length about McGregor’s struggle to find backing for the company. The search for money was extremely difficult, McGregor said in testimony; dozens of begging missions to wealthy local investors ended in failure — a rejection that seemed to still rankle a decade later, after Ford, McGregor, and everyone associated with both had been proved right.

But in hindsight the investors were taking a big risk: The total investment in McGregor’s new company was a hefty $125,000. But the only equipment owned by the threadbare startup was a freight hoist and a single drill press.

The workforce produced 107 Model Cs and seven Model Bs in the first year.

In the first few years, parts were shipped by ferry across the Detroit River and the Canadian company did not prosper — largely, it appears, because of the high prices paid for those parts.

In 1907 some of the original shareholders were unhappy and wanted out. Later, McGregor told others he felt obligated to buy them out.

But once again McGregor saw the future where others didn’t, and got the better of that deal — he paid only 75 cents on the dollar for shares which in only seven more years, 1914, would be worth 400 times that amount.

In the meantime, the Ford of Canada Ltd. struggled to make sales. The first sales didn’t take place for nearly half a year after the company was incorporated, and in the first year, only 114 cars were built in the former wagon works.

Thomas E. Smith, a toolmaker who was one of the first skilled tradesman employed by Ford of Canada in 1907, and later superintendent of the axle division, described the original “wagon works” plant like this:

It stood directly across Sandwich Street (later Riverside Drive) from Our Lady of the Lakes church.

It was two-stories tall, over a basement, about 125 feet wide and 200 feet long. The first floor was situated a few feet above the muddy Sandwich Street, which was lined with wooden sidewalks.

The upper floor of the building was the paint shop, where completed chassis were sent after testing. New chassis were immediately put through their paces on Sandwich Street in front of the plant, with test drivers ordered to “give ’em the works” through dust or mud.

The drivers sat on a box attached to the chassis during the test runs, which reached 35 miles per hour.

The plant was bounded on the east side by a small, willow-lined creek that a Windsor Star account of 1944 refers to as “Hungry Hollow.” It drained the low-lying farmland that made up much of Walkerville and what was to become Ford City.

Staff lunched on pickerel at a hotel across the street from the plant called the Dewdrop Inn. If the accounts of the day are to be believed, the pickerel were caught from the river in front of the Ford plant.

Profits from this bucolic enterprise began to rise near the end of the first decade when the Canadian company started lining up Canadian parts producers to make their components for them. Among the first was William Gray and Sons Co. of Chatham, which started supplying bodies for $16.60 a piece. One of its owners was Robert Gray — one of McGregor’s original investors in Ford of Canada.

The historic introduction of the successful Model T in 1910 assured the Canadian company’s success and turned it into one of the country’s early industrial exporters. For while Henry Ford had reserved the right to export to England, Ford of Canada was given the right to export to the rest of the British Commonwealth — and it did so, starting with sales to India.

Gordon McGregor never became president of the great company he founded, although he was secretary and general manager until his death at age 49 in 1922.

His brothers and fellow investors, however, went on to rank among the city’s wealthiest and leading citizens.

A Detroit banker named John S. Gray was president of Ford of Canada from 1904 until 1906. Gray, an original investor with Henry Ford, was president of the parent company until his death in 1906, when Henry Ford took over the presidencies of both the U.S. and Canadian companies.

Henry passed the titles to his son Edsel until 1929, when Wallace Campbell, one of the founding shareholders with the McGregors, took the post until 1949.

Windsor native Rhys M. Sale assumed the role in 1949, holding it until 1960 when he was promoted to chairman of the board, a post he held another three years.

— CanWest News Service