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Case 3.docx

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Department
Administrative Studies
Course
ADMS 1010
Professor
Alison Kemper
Semester
Winter

Description
CASE 3 Canada’s First Great Manufacturing Enterprise: The Story of Massey-Harris Massey’s Entrepreneurial Roots (1802–67) Daniel Massey, Sr - emigrated from New York State with his wife Rebecca and their children and settled near Cobourg, a small port town on Lake Ontario - brute strength needed to cut down hardwood trees, uproot stumps, and remove rocks and boulders; burned the trees he cut down since there was no market for them - bet their futures on farming Daniel Jr Spots Opportunity Daniel Jr. - recognized opportunity in clearing land as a profitable venture in 1817 o population was growing quickly in Upper Canada, which increased the demand for virgin pine and other wood in the forests around Cobourg o arrival of men from Ireland and Scotland were looking for immediate work - at nineteen left the family farm, rented nearby land, hired labourers – at times he employed as many as 100 men – and cleared it, selling the trees at enough profit to buy the land which he then farmed until he found a buyer - clear-sighted enough to realize that change was coming, that the market for his trees was declining as was the number of land buyers - 12 years and 1,200 acres of cleared land after, became full-time farmer, taking a keen interest in the labour-saving tools that the budding industrial revolution was beginning to generate – implements that he knew could bring vast change to a world that still relied on obsolete farming tools - decided to import the American thresher, a machine that was operated by twelve men and used to separate grain from husks to help with the wheat harvest - did not produce the results Daniel Jr had hoped for - perfected his skills as a machinist, fixing equipment and outfitting his neighbours with tools he made or imported The Launch of the Newcastle Foundry and Machine Manufactory Company Daniel Jr. - in 1847, sold the farm to his son Hart and bought a nearby foundry that had gone bankrupt, which allowed for the launching of a new farm-implements-making firm, one that could count on Daniel Jr’s experience along with some help from a new tariff regime imposed by the government of Upper Canada on all imported farm machinery, a move inspired less by protectionist ideals than by the dire need of the government to raise revenues o during this time, there was an influx of impoverished immigrants to the New World seeking relief and a better life due to crop failure, economic hardship, and famine in Europe, especially Ireland o in Britain, lawmakers were embroiled in a fundamental debate about that country’s Corn Laws, tariffs on wheat that were designed primarily to give protection to British growers and members of the British Empire over foreign countries such as the United States and Germany o Canadian wheat producers generally benefited from British protection against American growers until 1831, when the British government removed all tariffs on U.S. wheat shipped using the St Lawrence o When extensive crop failures that hit Britain in 1845 and price exacted on Britons’ living standards proved more than most were willing to bear to protect British and colonial farmers, the tide against the Corn Laws grew o British government finally repealed Corn Laws in 1846, leaving farmers in the Province of Canada to compete on the merits of their wheat and its price against Americans and the whole- wheat producing world - foundry was moved to Newcastle and the firm named the Newcastle Foundry and Machine Manufactory Company 2 years after - new company supplied the modest but expanding market for farm implements by buying manufacturing licences for equipment designed in the United States that, if made south of the border and imported, would have faced a tariff - limited capital expense to process innovation to increase efficiencies in production, rather than spending precious money on research - made some modest improvements to the American-designed machinery so it would better suit Canadian conditions, a strategy that proved enough for the company to secure its footing in a market that was sure to become more competitive in time as farmers looked for ever more efficient ways to grow, harvest, and transport crops A New Generation Hart - abandoned farming and took full ownership of the foundry as his father’s health faltered - renamed the company H.A. Massey and Company, in recognition of the new leader - hard working, hands-on manager who was pious and frowned upon all liquor - displayed many of his father’s characteristics, such as a commitment to hard work, but he would put his own stamp on the firm’s management, bringing to bear the formal education his father lacked and a new salesmanship born of his own self-confidence - proved more of a risk taker - constantly seeking the latest machinery to import and, in so doing, pre-empted his competitors - oversaw improvements to tailor the imported designs to suit the needs of Canadian farmers and worked to ensure that his firm developed a reputation not only for innovation but also for excellence and quality - first to bring to Canada the Manny Combined Hand Rake Reaper Mower, a machine that combined the revolutionary Ketchum mower and the Burrell reaper - around the time of his ascent, significant events took place that made agriculture more attractive o Cobourg was linked by rail to Montreal and Toronto via the Grand Trunk Railway, giving the Massey firm a more reliable means to transport its wares to dealers and its own supplies to its Newcastle factory – gave them advantage as they tried to keep at bay a new rival, the Harris Company of Brantford, Ontario, that entered the field in 1857 o development in 1842 of Red Fife, a hardy variety of wheat suited to Canada’s climate – by Scottish immigrant David Fife – and its wide use by the 1850s made farming more profitable and helped expand the market for Hart’s wares o New Brunswick was the first of the colonies to launch meetings in 1849 about negotiating a trade pact with the Americans. By 1850, limited reciprocity was in effect between the United States and New Brunswick, Nova Scotia, and Prince Edward Island. Four years later, a much broader reciprocity deal included the Province of Canada Scarcity of Labour - farmers had more incentive to use capital to purchase productivity-enhancing equipment - labour shortages due in part to the manpower needs of rail construction and a reflection of the vastness of the land and its small population created a need for labour-saving equipment - flurry of activity in the production of farming implements, with most of the innovation originating in the United States, was spurred by o the need to save on labour: land was abundant and labour scarce in North America, so farmers attempted to make the most of their labour as opposed to Europe where land is scarce and labour abundant, such that farmers attempted to make the most of their land o opening up of attractive markets for produce - innovation taking place in the United States led to the rapid development of new machines and patents - patent wars ensued due to intense rivalry between manufacturers/implement makers - American firms readily licensed their inventions to Canadian implement makers since they were more preoccupied with one another than with foreigners A Localized Market Canadian implement producers - advantage on account of the localized nature of industry in the mid-nineteenth century since transportation between regions was difficult in British North America and played against the forces of concentration and foreign competition in the farm-implement market - completion of Canadian Pacific Railway in 1885 increased competition both nationally and internationally - Consequently, the Massey firm grew largely unimpeded by competition from the United States prior to the late nineteenth century and would likely have thrived without the added benefit generated by a 15 per cent duty imposed by the Province of Canada on manufactured foreign imports Reciprocity Treaty of 1854 - US was drawn to a reciprocity trade deal – one where parties would agree on a mutual list of goods that they would trade between themselves tariff free – with British North America primarily serving as a means of winning access to new fishing rights in the waters off the shore of Britain’s Maritime colonies - allowed for the free trade of largely primary, non-manufactured items such as fish, grain, meat, breadstuffs, timber, and minerals - duties remained on manufactured goods, while special provisions for fishing rights and joint use of the Welland Canal were agreed to - 15 per cent duty remained on U.S. manufactured goods imported into British North America – the Galt Tariff of 1858 was later raised to a duty of 20 per cent - first year of reciprocity brought a 96 per cent increase in duty-free trade items between the United States and British North America, but that kind of growth was not sustainable - terminated in 1866 - allowed the Massey firm to import natural products, such as timber from the United States, free of duty o Massey’s freedom to choose between Canadian and American sources weakened local suppliers’ power and reduced his input costs o coal was included in the treaty and this benefited Massey in the sale of steam-powered implements that relied on coal – if farmers could access coal more cheaply, they would be better able to afford Massey machinery - duties on manufactured goods benefited Massey as well o British North America enjoyed lower prices for iron and steel imported from Britain, compared to the prices faced by U.S. buyers. Britain had considerably better quality iron and steel as well as more efficient manufacturing processes compared to U.S. producers, placing ‘British Steel’ in high demand Marketing Massey enhanced demand for wheat - US Civil War resulted in sustained high prices for wheat, driving more farmers into wheat growing - presented an opportunity to grow market share so Hart o developed innovative promotional campaigns  launched sales catalogue in 1862 that established a direct link between manufacturer and consumer, a move that defied the usual commercial practice in which retailers acted as brokers between producers and consumers o built sophisticated distribution channels for his equipment  used railways to move equipment quickly to local shops run by agents of the Massey firm who offered sales and service o expanded Massey’s market  extended credit to his customers so they could buy an ever-increasing assortment of Massey goods using three-year instalment plans to pay for them - Hart’s expansion efforts were geared to the surging number of farms in Ontario Canada’s First Great Manufacturing Enterprise (1867–1910) Export (1867–90) 1867 International Exposition in France - Hart Massey’s harvesting equipment was chosen by the Toronto Industrial Exhibition to represent Canada - Won two gold medals at the exposition: 1) a medal for his exhibit (a testament to his salesmanship) and 2) an award recognized the excellent performance of Massey’s harvesters (a measure of his ability as a manufacturer) - Massey
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