Hitching a ride to higher productivity
How one man’s innovation provided the missing link for 20th century agricultural revolution
You can find the podcast/video version of this here
There’s a lot of good stuff which comes out of Ireland. Leaving aside the wonderful music, the amazing countryside (complete with its ‘soft’ rain) and some excellent food and drink (including a drop or two of the black stuff to which I am occasionally partial). But it’s also a country which punches well above its weight in terms of ideas — it’s got a reputation for being a smart economy basing its progress on putting knowledge to work. Creating value from those ideas — innovation.
That’s something which you’ll find not only in the universities and hi-tech companies dotted across the landscape but also down on the farm. Farming’s a tough business — anyone who watches the series ‘Clarkson’s Farm,’ will recognise the multiple challenges farmers face, battling all that Nature can throw at them when she’s in a bad mood plus rising costs, increasing regulation and volatile markets. It’s a field (ouch) where innovation is not just a nice to have, it’s essential.
And in Dromara, County Down there’s a statue erected to honour a man to whom many farmers, not just in Ireland but around the world, have cause to be grateful. Harry Ferguson.
Of course farming innovation isn’t new; it’s been at the heart of our progress towards being able to feed ourselves and so move beyond subsistence to doing something constructive with our newly-found spare time. Like building cities and societies. Think back to your school days and you’ll recognise many of the key innovations which enabled the ‘agricultural revolution’, increasing productivity to help feed a growing population. The early days were all about ingenious implements — Jethro Tull’s seed drill, (1701), Cyril McCormick’s reaper (1840), John Deere’s steel plough (1847) — all these and hundreds of other innovations helped move the needle on farming practices.
But better implements still faced the limitations of power — and that aspect of innovation remained unchanged for centuries. We’d moved on from back-breaking manual labour but for centuries we relied on animals, primarily horses, to pull or occasionally push our implements. Power was the agricultural equivalent of the ‘philosophers stone’ for alchemists, the secret which would turn base metals into gold (or farms into more productive units). So with the advent of steam power in the early 1800s it looked like it had been discovered; as factories, mines and even early railways were showing, a steam engine could harness the power of many horses.
But (in an early example of the hype cycle) the promise of steam power failed to deliver — largely for technical reasons. Steam engines were big and heavy which meant they had to stay in one place with their power distributed to where it was needed by elaborate systems of pulleys, belts and wheels. They were unreliable and dangerous with an unpleasant tendency to explode unpredictably. For certain tasks they held out promise — they could plough a simple flat field ten times as fast as a team of horses— but their inflexibility limited their application.
Traction engines provided a partial solution since these machines could carry out basic tasks drilling and ploughing. Though they were often too heavy to work directly on muddy fields they had the advantage of power which could quickly be moved to where they were needed. Set them up on the side of a field, hook them up to relevant implements like ploughs and put them to work. When the job was finished, uncouple everything and move on to the next field (as long as it was fairly flat and big).
(Interestingly it was the traction engine which inspired Henry Ford to work on transportation. Reflecting on his first encounter with a traction engine on the family farm he said ‘I remember that engine, as though I had seen it only yesterday, for it was the only vehicle other than horse-drawn I had ever seen….it was that engine that took me into automotive transportation’).
So steam power wasn’t really going to change the farming world. But another innovation was — the internal combustion engine. Engineers around the world had seized on the possibilities of this technology and were working to try and come up with a ‘horseless carriage’, something which Karl Benz managed to do with his Motorwagen in 1885 in Germany. It didn’t take a big leap of imagination to see another location where replacing horses could have an advantage — and John Froelich, an engineer from Iowa duly developed the first gasoline-powered tractor, mounting an engine on a traction engine chassis in 1892.
Unfortunately he wasn’t able to make the machine in volume, producing only four tractors before closing down the business. But others were more successful; for example in 1905 the International Harvester company produced its first tractor, and in 1906 Henry Ford invested over $600,000 in research for tractors, building on his growing experience with cars. An early outcome was the ‘Automobile plow’, a cross-over concept using the Model T as the base.
Pretty soon, just as in the personal transportation marketplace, hundreds of entrepreneurs began working on tractor innovation; a classic example of what Joseph Schumpeter (the godfather of innovation economics) would call ‘swarming’ behaviour. By 1910 there were over a thousand tractor designs on offer from 150 different companies.
A key part of Schumpeter’s theory of how innovation works is that many of the early entrepreneurs active in a new field will fail, whether for technical or business reasons, and there will be convergence along key dimensions — setting up a technological trajectory along which future developments will tend to run.
That was certainly the case with tractors; key pieces of the puzzle were coming into place like an ability to deal with difficult terrain by using all-wheel drive (offered by John Deere in 1914) and the trend towards smaller (and more affordable) machines, pioneered by the Bull Company. Agricultural shows began to feature tractor demonstrations which allowed farmers to see first-hand the relative benefits of different machines and an early front runner in the move towards widespread market acceptance was International Harvester with their light and affordable Titan 10/20 model.
This was a growing market; by 1916 over 20,000 tractors had been sold in the USA. As with many innovations once the ‘dominant design’ has emerged for the basic product configuration emphasis shifts to the ways in which they can be made — process innovation. Those players — like Henry Ford — with experience in mass production had a significant potential advantage. His Fordson brand became the benchmark in terms of pricing and other manufacturers often struggled to compete unless they were large, like the John Deere company which offered its Model D in 1923 for around $1000. Ford had priced aggressively to try and capture the market, originally offering the Fordson for $200 in pre-sales advertising , but eventually selling the tractor in 1917 for $750 ( a price at which he was actually making a loss).
Ford understood the principle; he’d used it to open up the automobile market by offering ‘…to build a car for the great multitude’ at a price that multitude could afford. But things were a little more complex down on the farm. At first sight tractors seemed a great idea not least because of their running cost advantages. Animals, while a flexible source of power, were also a big cost since they needed food, shelter and veterinary services, plus there was an opportunity cost in terms of land needed to grow their feed which could otherwise be sued for more profitable crops. It took around 6 acres per horse over the faming year. Tractors ran on kerosene, becoming widely available and at low cost; and they only burned this fuel when they were working.
Ford’s strategy appeared to pay off; by 1923 he had over 75% of the US market . Yet only five years later things had deteriorated so much that the company exited the business. What led to this dramatic shift was a series of challenges to which cost advantages based on process innovation weren’t the answer. Product innovation once again became a key differentiator. This time the issue wasn’t around simply replacing the animal power unit with a mechanical one; it had everything to do with what you connected that power up to.
Early tractors solved the connection problem with a simple drawbar, essentially a metal stick to which you could attach different implements. Which worked fine when the going was flat, the surface dry, the field large and simple. Unfortunately most farming also involves uneven ground, plenty of mud and rain-filled potholes, trees and other obstacles and small fields with uneven boundaries. To cope with all of that you need a utility tractor — not for nothing was the IH Farmall a runaway success in the 1920s — the name says it all. Having spent a significant amount (for a small farmer) on buying your lightweight utility tractor you want it to carry out much more than just row crop duties — helping out with a wide range of construction and maintenance operations down on the farm,.
In particular one innovation which helped endear International Harvester to many a farmer’s heart was the ‘power take off’ device — essentially making power available to be hooked up to a variety of different implements. Introduced in 1922 this opened up the market by massively increasing the versatility of tractor. All manner of attachments — seed drills, rotary cutters, posthole diggers, snow throwers — all could be run off the core PTO. We could draw an analogy to today’s IT world; buying a tractor without the ability to attach tools to it would be like buying a computer without software.
Which brings us back to Harry Ferguson (in case you thought we’d lost the Irish connection). Because connecting farm implements to tractors became his passion — and the basis for a highly successful business. In doing so he provided the platform on which so much could happen, much as Steve Jobs with the smart-phone enabled users to find and deploy the apps they wanted . And along the way he was able to help Henry Ford re-enter and revive his tractor business.
Ferguson was born 1884 in County Down, Ulster and grew up in a farming family — though he wasn’t particularly taken with the life. Nor was he that keen on school either, dropping out at the age of 14. What saved him was a love of reading and a fascination with all things mechanical — which in the early 20th century was a good interest to have. His brother helpfully opened a repair shop to cater to the emerging motor trade and Harry joined him, kindling enough focused motivation to study at Belfast Technical College. Arguably, though, his skill set was less around the mechanical detail than in the front office — sales and PR. He persuaded his brother to sponsor him and he proved adept at motor car and cycle racing — even persuading his brother to fund the development of Ireland’s first aeroplane which Harry then learned to fly!
Eventually he set up his own automobile business, May Street Motors, in Belfast in 1911 and one of his first appointments (a 21 year old mechanic, Willy Sands) proved to be crucial in his subsequent success. Sands was a gifted engineer; he remained with Ferguson for nearly fifty years, working in the backroom and helping develop the technologies which built business success.
Ferguson was quick to spot an opportunity in the emerging tractor market and managed to obtain a franchise for sales and service of the John Deere Overtime tractor which was being built in the UK. That gave Ferguson and Sands extensive experience in the way the tractor was put together, the repairs it needed and the context into which it was being applied.
The miseries of the Great War on the home front included food shortages and problems with imports so the British government were urgently seeking anything which could help out with farm productivity — including subsidising investment in tractors. Harry played a part in this when he was given a contract for the Irish Board of Agriculture in 1917 to oversee government-owned tractor maintenance and production records. The duo travelled the country to advise farmers, help set up equipment like ploughs and understanding the problems farmers faced in deploying the tractor. For example soil compaction, caused by the heavy weight of tractors and ploughs of the time, was a common complaint.
All of this honed their skills at repairs and improvements to the current stock of tractors in Ireland; their next break came when conversion kits for the Model T car began to appear to create a car/tractor. Ferguson took a franchise for the Eros, a kit which involved putting larger rear wheels on the car, together with a chain transmission to them and installing a bigger radiator to cope with the engine load. His experience with farmers paid off; he realised that this lighter weight car/tractor could solve the soil compaction problem and so got Sands to design a lightweight plough for the Eros.
This — the ‘Belfast plough’ — was launched in 1917 and was the first farm implement bearing Ferguson’s name; it was half the weight of a standard plough and crucially used a clever idea for the hitch connecting the tractor to the plough. This meant that the load from pulling the plough was shared equally by all four wheels instead of just the rear ones; this made it easier to steer and drive.
But Henry Ford was not about to let the tractor opportunity market fall into the hands of conversion kits for Model Ts; instead he commissioned design and manufacture of his own tractor with a large slow turning engine. He persuaded the British Ministry of Munitions to purchase 6000 units in return for his setting up a factory in Ireland. The Fordson tractor (as it was called) arrived in 1917 but quickly ran into problems as farmers began to use it. In particular it had a worrying tendency to flip over on its back if it hit an obstacle; its powerful engine and the relative lack of weight on the front end meant it could be pulled over by an obstacle or an unexpected drag while ploughing. Nonetheless its arrival spelt the end of conversion kits — and dealt a blow to Harry Ferguson’s dream.
He was nothing if not resilient; in true entrepreneurial style he turned the arrival in force of Fordsons to an opportunity, adapting his lightweight plough for use with the tractor. In particular they worked on their hitch system so that it helped overcome the tendency for the front wheels to rear up; their design included a clever depth control device — a floating skid — which stopped the problem happening when the plough dug too deep and pulled the tractor over.
This worked well with the plough but for other implements they realised depth control could be enabled by the use of a hydraulic lever which adapted to the terrain. Putting all of this together led them to a system which worked on a variety of implements including disc harrows and cultivators. In 1925 Ferguson was granted a patent for this 3 point hitch — and it became the basis on which he built his future success. It was the key to unlocking the puzzle of how to connect power to implements and became the dominant design, one which is still widely used today.
The significance of this design should not be underestimated, and it’s something explored in depth in an excellent review by Scott Marshaus at the University of Wisconsin. Even though other factors helped contribute to the major increase in agricultural productivity like fertilisers, better seed strains and environmental management of pests the importance of completing the mechanization cycle is central. Yes, you can replace horses and mules with machine power but you can’t plant the seeds or distribute the chemicals unless you have the means to connect power with application. Which was the problem that Ferguson did so much to solve.
Just when all looked promising the market weather changed once again, another shift triggered by the business strategy of Ford. After years of making a loss the company decided to exit the tractor market in 1927, choosing instead to concentrate resources on their new Model A automobile. Which left Ferguson with no market for his Fordson-fitting plough.
So he (and Sands, as ever working away diligently in the backroom) developed their own lightweight tractor based on the Fordson design. They included their 3 point hitch and the prototype ‘Black Tractor’ appeared in 1933. Ferguson then went into partnership with the David Brown company to manufacture what became known as the Ferguson Brown Model A; production started in 1936. Disagreements quickly followed with Brown wanting to make a bigger tractor so Ferguson pulled out of the venture.
Instead he took one of the production Model A tractors into Henry Ford’s back garden — literally. In 1938 he showed it off and tested it against the Fordson and another tractor from Allis-Chalmers at Ford’s Fair Lane country estate. It performed so well that Ford wanted to make a deal on the spot and after brief discussion the two men shook hands. This handshake deal put a version of the tractor, called the Ford-Ferguson Model 9N into production in 1939 and it sold over 10,000 in its first year. By 1940 the factory was churning out 150 per day.
All should have been plain sailing but Ferguson’s prickly nature posed problems. He was, in many ways, a classic example of an entrepreneur, seeking opportunity wherever he could find it and adapting setbacks to become new directions for development. However he was also, according to his biographer Colin Fraser, ‘someone who combined the extremes of subtlety, naiveté, charm, rudeness, brashness, modesty, largesse and pettiness; and the switch from any one to another could be abrupt and unpredictable. And, he had a penchant for confrontation.”
He had hoped that Ford in the UK would start production after the end of WW2 and he wanted a seat on the board; when this was rejected he threatened to walk away and start production on his own. But his position was weak; what he didn’t know was that Henry Ford 2nd, who took over in 1945, had discovered that the tractor business was still losing money at a desperate rate. He also discovered that the Ford-Ferguson 2N was being sold at a loss to Ferguson for resale to his dealers, an arrangement that cost Ford $25 million. Not surprisingly Ford wanted to stop and Ferguson was advised that 1947 would be the last year of the handshake agreement.
Ferguson fought back, putting his own version of the Ferguson/Ford tractor into production in 1946 in a war-surplus British factory. But competing with Ford was always going to be difficult; in response Ford introduced a new version, the Ford Model 8N in 1947, conspicuously missing the ‘Ferguson’ name from the badge. Ford’s engineers had tried to improve and sidestep Ferguson’s patented ideas but the core 3 point hitch and hydraulic system were retained. Although Ford’s marketing and distribution muscle backed him into a corner Ferguson in turn fought back, suing Ford in 1948 for $251 million for infringement of these patents.
Ferguson eventually won the bitter dispute and used some of the $9.25 damages agreed to continue to make tractors in the UK. But his attempts at working independently in the USA failed and eventually he merged his business with the Massey-Harris company in 1953.He retired from the tractor business but continued to develop ideas for the world of motor sport, including creating the first 4 wheel-drive system for use on Formula One racing cars.
He died in 1960 as a result of a barbiturate overdose; the inquest was unable to conclude whether this had been accidental or not. A sad end for someone whose passion and drive had helped enable the later stages of the agricultural revolution. But he left a powerful innovation footprint in farming soil all around the world. remembered in the tractor brand which bears his name and in the 3 point hitch design which is still in widespread use.
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