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Ford's Investment in Colonial Malaya, 1926–1957

Published online by Cambridge University Press:  14 April 2011

Shakila Yacob
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Extract

The corporate history of Ford in Malaya from 1926 to 1957 reveals Ford Canada's global strategy to tap new British colonial markets. A combination of factors motivated Ford Canada to set up a subsidiary in Malaya, whose subsequent domestic sales and marketing success depended on maintaining mutually beneficial relations with the local merchant firms and Chinese entrepreneurs. After it was directed by the parent company to restructure its operations, Ford Canada imposed tight control on its own local operations to ensure that it could meet evolving consumer demands in Malaya and across the wider region. However, the company was careful to maintain its ties with these marketing and networking channels.

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Articles
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Business History Review , Volume 83 , Issue 4 , Winter 2009 , pp. 789 - 812
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Copyright © Harvard Business School 2009

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References

1 “Ford” here is used to refer to Ford U.S. unless otherwise specified. “Malaya” (now Malaysia), a term widely used between World War I and World War II, in this study refers to the Straits Settlements (Singapore, Penang, Malacca), Federated Malay States (Perak, Selangor, Negeri Sembilan, and Pahang), and the Unfederated Malay States (Perlis, Kedah, Kelantan, Terengganu, and Johore). In a separate development, the territories of British North Borneo (abbreviated North Borneo) and Sarawak became British colonies in 1946. In 1948, the Federation of Malaya (uniting Penang, Malacca, Federated Malay States, and the Unfederated Malay States) was formed, while Singapore remained a crown colony. By 1957, the Federation of Malaya had gained independence from Britain. Although North Borneo, Sarawak, and Singapore then became distinct from Malaya, for the purposes of consistency and clarity, I include data from that area. Although these states were politically and administratively divided, they were unified economically.

2 Works on the early history of the automobile sector in Malaya include Fyfe, Christopher, Wheels in Malaya: The Wearne Brothers and Their Company (Claremont, Western Australia, 2002)Google Scholar; and Jennings, Eric, Wheels of Progress: Seventy-five Years of Cycle and Carriage (Singapore, 1975).Google Scholar

3 Wilkins, Mira and Hill's, FrankAmerican Business Abroad: Ford on Six Continents (Detroit, 1964)Google Scholar is essential reading, as it provides an excellent background on the development of the Ford Motor Company in the United States and Canada and, by extension, on its activities worldwide. Although there are few references to Ford Malaya's early history and dealership arrangements, this seminal study does identify important areas of research as well as provide information regarding a number of records on the Canadian parent company and its rela tions with the Malayan subsidiary. The most comprehensive and substantive study on Ford Canada and its imperial subsidiaries to date is by Anastakis, Dimitry, “From Independence to Integration: The Corporate Evolution of the Ford Motor Company of Canada, 1904–2004,” Business History Review 78 (2004): 213–23.CrossRefGoogle Scholar Anastakis provides a thorough and balanced account of the “push factors” that motivated Ford Canada's overseas ventures. Another work Ford's Investment in Colonial Malaya, 1926–1957 / 791 about Ford's business in developing economies is by Tignor, Robert L., “In the Grip of Politics: The Ford Motor Company of Egypt, 1945–1960,” Middle East Journal 44, no. 3 (1990): 387–97.Google Scholar Unlike in Malaya, where economic nationalism came long after colonial rule, Ford had to contend with earlier nationalistic pressures in the 1940s in Spain, India, Egypt, and Brazil. Government intervention in countries like Spain and Egypt was necessitated by the fact that Ford set up manufacturing plants there.

4 See the following articles by Conlon, Robert and Perkins, John: “Australian Governments and Automotive Manufacturing, 1919–1939,” Australian Journal of Politics and History 45 (Sept. 1999): 376–91CrossRefGoogle Scholar; “Protection and Canada's Role in the Interwar Development of the Automobile Industry in Australia,” Australian Canadian Studies 17, no. 2 (1999): 81–104; Wheels and Deals: The Automobile Industry in Twentieth Century Australia (Aldershot, 2001).

5 As in Malaya, Ford Australia was more likely to be concerned about the GM threat to sales of the Model T, which was not superseded by the Model A until 1928. See Conlon, and Perkins, , Wheels and Deals, 28–29.Google Scholar

6 In the same year, GM alternatively set up an assembly plant in Batavia (Jakarta), Dutch East Indies (Indonesia), although its sales subsidiary and regional administrative office for the Far East was established in Singapore. Address delivered by James D. Mooney at the Exports Managers Club, New York, 20 Mar. 1928. James D. Mooney Papers, Lauinger Library, George town University, Washington D.C. See also GM, Annual Report, 1927; Editorial, Straits Times, 4 Jan. 1927.

7 While acknowledging the importance of such links, this paper differs from, and expands on, Wilkins and Hill's work on the stories of individual countries by focusing on the second ary market of Malaya.

8 A 35 percent duty rate was imposed on ready-built cars. Wilkins, and Hill, , American Business Abroad, 18.Google Scholar

9 Ibid.

10 Ankli, Robert E. and Frediksen, Fred, “The Influence of American Manufacturers on the Canadian Automobile Industry,” Business and Economic History 10 (1981): 109.Google ScholarAnastakis, , “From Independence to Integration,” 216, 220–21.Google Scholar

12 “Motor Cars: Position of Canadian Manufactured Ford Cars,” 1928, CO 323/1005/2, U.K. National Archives, Public Records Office, Kew, London (hereafter PRO). See also U.S. Consulate General Singapore, Monthly Report, Mar. 1924 (end. Singapore Free Press), Records of the Department of State Relating to the Internal Affairs of British Asia, 1910–1929, U.S. National Archives, College Park, Maryland (hereafter NARA).

13 Conlon, and Perkins, , “Protection and Canada's Role,” 81–103.Google Scholar

14 For an overall perspective behind the reasons for the rejection, see the Straits Times, Editorial, 4 Jan. 1927.

15 Director's minutes, Ford Malaya, 12 Nov. 1926, Ford Motor Company of Canada Ltd., Oakville, Ontario.

16 Ibid.

17 Anastakis, , “From Independence to Integration,” 32n.Google Scholar

18 Straits Times, 20 Nov. 1926.

19 Ford Malaya was a few months behind Ford India, which was set up in July 1926.

20 Chandler, Alfred D. Jr, Scale and Scope: The Dynamics of Industrial Capitalism (Cam bridge, Mass., 1990), 36.Google Scholar

21 In 1920, for example, the sales manager of Ford Canada, A. N. Lawrence, stated that Ford dealers worldwide, including Wearne, had no say in determining the price of vehicles and that a percentage of profit was given to dealers to cover the investments costs. However, Lawrence did add that dealers could suggest to Ford Canada an increase in car prices if there was depreciation in the exchange rate. Interview with Lawrence, A. N., Straits Times, 14 Feb. 1920.Google Scholar

22 “Cable from Ford Canada Approving the Amount of Dividends Declared for the Year 1927,” director's minutes, Ford Malaya, 28 Dec. 1928; letter from the president of Ford Canada to Ford Malaya, 2 Oct. 1933, stating the amount of remuneration for Mr. Stevenson at S$i,500 (US$739) per month, minutes of General Meeting of Directors, Ford Malaya, 1 Dec. 1933. Both items from Ford Motor Company of Canada Ltd., Oakville, Ontario. See also, Wilkins, and Hill, , Ford on Six Continents, 299–300.Google Scholar

23 Roy Stanley Milliken was appointed temporary director of Ford Malaya on 30 November 1926. A month later he became the chairman. H. A. Denne was assisted by another direc tor, Basil Stevenson of Ford Australia, probably because of the relatively close proximity of the two countries. Director's minutes, Ford Malaya, Singapore, 22 Dec. 1926 and 30 Dec. 1926, Ford Motor Company of Canada Ltd., Oakville, Ontario; Wilkins, and Hill, , Ford on Six Continents, 129.Google Scholar

24 While Wilkins and Hill mention Dutch companies as Ford distributors, none were to be found in Malaya at that time. As noted earlier, Gadelius was a Swedish company. Wilkins and Hill, , Ford on Six Continents, 129–30.Google Scholar

25 Hartland, A., Report on Economic and Commercial Conditions in Malaya (London, 1937).Google Scholar

26 Fyfe, , Wheels in Malaya, 111–12.Google Scholar

27 Wilkins, and Hills, , Ford on Six Continents, 321–22.Google Scholar

28 In an address, H. B. Phillips, vice president of General Motors Export Company for Southeast Asia, described GM as an international institution, stating that the company was using its vast resources to promote the products of Vauxhall Motors Ltd. Straits Times, Singapore, 15 Nov. 1929.

29 General Accounting and Financial Analysis, Overseas Division, Ford Motor Company of Canada Ltd., Oakville, Ontario; Wilkins, and Hill, , Ford on Six Continents, 442.Google Scholar

30 “Singapore Falls,” Ford Times, 18 Feb. 1942.

31 Ford Graphic 22 (15 Dec. 1952). At that time the Australian Ford program remained under the auspices of Ford Canada in Windsor, and Ford Australia continued to control the Ford subsidiaries in Malaya, New Zealand, South Africa, and India. See also Wilkins, and Hills, , Ford on Six Continents, 351–52.Google Scholar

32 Wilkins, Mira, “Ford Among Multinational Companies,” in Ford, 1903–2003: The European History, vol. 1, ed. Bonin, Hubert, Lung, Yannick, and Tolliday, Steven (Paris, 2003), 79–83Google Scholar; and The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970 (Cambridge, Mass., 1974) 147; Wilkins, and Hill, , Ford on Six Continents, 371–72.Google Scholar

33 Anastakis, , “From Independence to Integration,” 222–23.Google Scholar

34 The company met management challenges by appointing well-qualified and experienced managers from the Canadian parent company to launch Ford products in Malaya and to service Southeast Asia as a whole. Given the complexity of the region, the approach taken by Ford U.S. to allow existing managers from Ford Canada to oversee the Malayan operations is relevant. The managing directors of Ford Malaya continued to come from the Canadian company. The managing director of Ford Malaya from 1947 to 1951, Gordon Withell, for example, had been an employee of Ford Canada since 1935. However, he was also monitoring Ford's subsidiary activities in Southeast Asia and South Asia. Similarly, from 1951 to 1957, E. A. Sully, who replaced Withell, was also from Ford Canada. Minutes of General Meeting, Ford Malaya, Singapore, 23 Apr. 1955, Ford Motor Company Canada Ltd., Oakville, Ontario. Ford Graphic 13 (15 Dec. 1952); interview with Gordon Withell, managing director of Ford Malaysia from 1947 to 1951 and 1957 to 1964,1985. Ford Malaysia, Shah Alam, Selan-gor, Malaysia.

35 Dunning, John H., Multinational Enterprises and the Global Economy (Wokingham, 1993).Google Scholar

36 By 1870, Singapore was the hub of the world's communications network. Upon completion of the Singapore-Madras submarine cable in 1870, Singapore was in direct communication with India, continental Europe, Britain, and America. Ding, Chiang Hai, A History of Straits Settlements Foreign Trade, 1870–1915 (Singapore, 1978), 39.Google Scholar

37 Together with the highly efficient port facilities in Singapore and, to a lesser extent in Penang, the rail and road networks facilitated Malayan tin and rubber exports. In 1909, the Penang-Singapore railway link was completed, while the north-south highway was finished in 1922. By September 1923, the Johore causeway linked Singapore to the Malay states, and by 1930 there were 4,735 miles of road serving the Federated Malay States, Malacca, Province Wellesley, Johore, and Kedah. U.S. Consul General Quarterly Report, 31 Mar. 1919, Records of the Department of State Relating to the Internal Affairs of British Asia, 1910–1929, NARA. Thus, the foundations of Malaya's road system existed well before the outbreak of World War II and became a major factor in the growth of the Malayan automobile sector. For the phases of the development of the Malayan road system, see Kaur, Amarjit, Bridge and Barrier: Transport and Communications in Colonial Malaya, 1870–1957 (Singapore, 1985), 84–99Google Scholar; “Excellent Road System,” U.S. Vice Consul, Penang, 18 Sept. 1923, Records of the Department of State Relating to the Internal Affairs of British Asia, 1910–1929, NARA.

38 Pioneer companies achieved spectacular results. For example, the Selangor Rubber Company Ltd. paid dividends as high as 288 percent in 1909. See Muzaffar Tate, Desmond J., The RGA History of the Plantation Industry in the Malay Peninsula (Kuala Lumpur, 1996), 218.Google Scholar

39 Wilkins, and Hill, , Ford on Six Continents, 44–45.Google Scholar

40 Conlon, and Perkins, , “Australian Governments and Automotive Manufacturing,” 381Google Scholar; Wheels and Deals, 17.

41 This was due in part to the large population of Chinese in the major wealthy cities: as high as 35 percent overall, compared to 48 percent Malay in the 1921 census. For example, in the cities of the Straits Settlements, the wealthiest states, the Chinese outnumbered the Malays 5 to 1. In the next wealthiest states, the Federated Malay States, Chinese and Malays were equal in number. In the most rural states of the Unfederated Malay States, they were a minority. In 1938, the Malayan population figures (including Singapore) showed that the Chinese had become the majority at 42.1 percent compared with 41.8 percent Malays, 14.1 percent Indians, 0.5 percent Europeans, and 1.5 percent others (Japanese, Arabs, Armenians, etc.). Bureau of Foreign and Domestic Commerce, U.S. Department of Commerce, Library of Congress, Washington, D.C. (hereafter LoC); Irvine, William, “Automotive Markets in China, British Malaya and Chosen,” Special Agent Series, No. 221 (1923), 69;Google ScholarWillmot, R. B., Report on Economic and Commercial Conditions in Malaya (London, 1939).Google Scholar

42 Figures for Federated Malay States and Unfederated Malay States are unavailable. Phelps, D.M., Effect of the Foreign Market on the Growth and Stability of the American Automobile Industry (Ann Arbor, Mich., 1931), 683.Google Scholar

43 For a wider perspective, in 1930 every fifth person in the United States owned a car (186 cars per thousand people); in Canada, every tenth person owned a car (103 cars per thousand people), a rate five times higher than in Britain (23 cars per thousand people). In Germany and Italy, the average person-to-car ratio was 130 and 224 people per car, respec tively. Rostów, W.W., The Stages of Economic Growth (Cambridge, 1960), 171.Google Scholar

44 Mainly, but not exclusively, General Motors products.

45 “Motor Cars: Position of Canadian Manufactured Ford Cars,” 1928, CO323/1005/2, PRO; see also “Motor Industry: Discussions with U.K. Trade Organisations,” 1938, BT59/24, PRO.

46 Fyfe, , Wheels in Malaya, 97.Google Scholar

47 Ibid., 22.

48 British automobiles, such as Talbot, Arrol-Johnston, Humber, Argyll, Swift, Adam-Hewitt, Albion, Siddeley, Rover, and Orlean, were popular. Competing with the British-made cars were those of continental European design, such as the Italian Fiat, Bianchi, and Alfa Romeo, the French Citroen and Peugeot and the German Opel. Irvine, , “Automotive Markets in China, British Malaya and Chosen,” 89.Google Scholar

49 Dodge & Seymour Exports Shipments, 1911–26, Ford Motor Company of Canada Ltd., Oakville, Ontario.

50 Not to be confused with the Dodge brothers, makers of Dodge automobiles. Wilkins and Hill, , Ford on Six Continents, 44–45.Google Scholar

51 C. F. F. Wearne and Co. was established on 1 April 1906 with initial capital of S$700 (U.S. $229). The founders were Charles Wearne, who first arrived in Singapore in 1889, and his brother Theodore J. B. Wearne, who came in 1893. In 1912 they formed Wearne Brothers Ltd. (Wearne) with an initial capital of S$275,000 (U.S. $89,870). “50 Years' Progress Celebrated by Wearne's,” The Straits Times, 16 Dec. 1955, Borneo Company Ltd. (enclosure), MS 27236, Guildhall Library, London.

52 Fyfe, , Wheels in Malaya, 28.Google Scholar

53 Chandler, , Scale and Scope, 36.Google Scholar

54 Director's minutes, Ford Malaya, 1926–27, Ford Motor Company of Canada Ltd., Oakville, Ontario; Wilkins, and Hill, , Ford on Six Continents, 44.Google Scholar

55 Nicholas, Stephen, “Agency Contracts, Institutional Modes, and the Transition to For eign Direct Investment by British Manufacturing Multinationals before 1939,” Journal of Economic History 43 (Feb. 1983): 675–86CrossRefGoogle Scholar, and “The Theory of Multinational Enterprise as a Transactional Mode,” in Multinationals: Theory and History, ed. Hertner, Peter and Jones, Geoffrey (Aldershot, 1986).Google Scholar

56 As Wilkins points out, Ford built assembly plants worldwide to cut freight charges, since it was cheaper to export parts than an assembled car. Wilkins, , “Ford Among Multinational Companies,” 79–83.Google Scholar

57 Bonin, Hubert, Lung, Yannick, and Tolliday, Steven, eds., Ford, 1903–2003: The European History, vol. 2 (Paris, 2003), 8–11.Google Scholar

58 “Automotive Chart of Malaya,” Office of Trade Commissioner, Singapore to Director, 22 Apr. 1929, Records of the Bureau of Foreign and Domestic Commerce, 1914–58, box no. 2405, RG 151, NARA.

59 Jones, , Merchants to Multinationals, 248–49.Google Scholar

60 Fyfe, , Wheels in Malaya, 32.Google Scholar

61 Straits Times, 26 May 1919.

62 Fyfe, , Wheels in Malaya, 35–42.Google Scholar

63 “Modern Car Assembly,” Straits Echo, 15 Mar. 1927.

64 Annual Report, Wearne Brothers, 1926.

65 Ibid.; Fyfe, , Wheels in Malaya, 59–60.Google Scholar

66 Fyfe, , Wheels in Malaya, 110.Google Scholar

67 “Marketing of Parts and Accessories in British Malaya,” Commerce Reports 48 (1930): 551, LoC.

68 Chia Yee Soh founded this firm in 1902. This Chinese family firm evolved from bicycle to motorcycle and finally to automobile-repair works. United Motor Works Ltd. to Bureau of Foreign and Domestic Commerce, Department of Commerce, 20 Mar. 1951, Records of the Foreign Service Posts of the Department of State, 1945–55, Singapore Consulate, 1950–1952, box 19, record group 84, NARA.

69 United Motor Works continued to play an important role as GM's parts representative and was the largest single importer of U.S. automobile parts until the 1950s. “Singapore and Federation of Malaya Auto Parts from U.S. for 1951: Revision in Estimates and Recommendation for Allocations,” 24 Mar. 1951, Records of the Foreign Service Posts of the Department of State, 1945–55, Singapore Consulate 1950–1952, record group 84, NARA.

70 Straits Times, 8 Apr. 1950.