This case focuses on the social dimension of a large-scale plantation project of Ford Motors Company in Brazil. With its Fordlândia plantation, Henry Ford aimed to trigger an industrial revolution in the Amazon basin just like he had done in the United States two decades earlier. However, upon arrival, the company encountered unforeseen challenges linked to the attempted export of the Ford way of thinking and doing business – that had worked so well at home in Michigan – into the remote and underdeveloped Amazon basin. Yet, when failure became clear, the company decided to buy a new stretch of land nearby with the intent of reconsidering its way of doing business at the plantation. At its new operations, the company needed to better balance the trade-off between its own core values and those of its local workforce. The case is suitable for both undergraduate and graduate management courses as well as a wider audience. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.
In the early 20th century, a cartel of Dutch and English rubber barons had a stranglehold on the vast majority of the world’s supply of rubber. At that time the sole source of rubber was the South American tree Hevea brasiliensis, whose sap is natural latex. In the 1870s a gaggle of entrepreneurial smugglers had secreted a stash of wild rubber tree seeds out of the Amazon rain forest, which they used to establish sprawling plantations in East Asia. These smothered the output of Brazil, causing their owners to eventually enjoy the majority of the world’s rubber business.
But by the late 1920s, the infamous automobile tycoon Henry Ford set out to break the back of this rubbery monopoly. His hundreds of thousands of new cars needed millions of tires, which were very expensive to produce when buying raw materials from the established rubber lords. To that end, he established Fordlândia, a tiny piece of America which was transplanted into the Amazon rain forest for a single purpose: to create the largest rubber plantation on the planet. Though enormously ambitious, the project was ultimately a fantastic failure.
In the year 1929, Ford hired a native Brazilian named Villares to survey the Amazon for a suitable location to host the massive undertaking. Brazil seemed the ideal choice considering that the trees in question were native to the region, and the rubber harvest could be shipped to the tire factories in the US by land rather than by sea. On Villares’ advice, Ford purchased a 25,000 square kilometer tract of land along the Amazon river, and immediately began to develop the area. A barge-toting steamer arrived with earth-moving equipment, a pile driver, tractors, stump pullers, a locomotive, ice-making machines, and prefabricated buildings. Workers began erecting a rubber processing plant as the surrounding area was razed of vegetation.
Scores of Ford employees were relocated to the site, and over the first few months an American-as-apple-pie community sprung up from what was once a jungle wilderness. It included a power plant, a modern hospital, a library, a golf course, a hotel, and rows of white clapboard houses with wicker patio furniture. As the town’s population grew, all manner of businesses followed, including tailors, shops, bakeries, butcher shops, restaurants, and shoemakers. It grew into a thriving community with Model T Fords frequenting the neatly paved streets.
Outside of the residential area, long rows of freshly-planted saplings soon dotted the landscape. Ford chose not to employ any botanists in the development of Fordlândia’s rubber tree fields, instead relying on the cleverness of company engineers. Having no prior knowledge of rubber-raising, the engineers made their best guess, and planted about two hundred trees per acre despite the fact that there were only about seven wild rubber trees per acre in the Amazon jungle. The plantations of East Asia were packed with flourishing trees, so it seemed reasonable to assume that the trees’ native land would be just as accommodating.
Henry Ford’s miniature America in the jungle attracted a slew of workers. Local laborers were offered a wage of thirty-seven cents a day to work on the fields of Fordlândia, which was about double the normal rate for that line of work. But Ford’s effort to transplant America— what he called “the healthy lifestyle”— was not limited to American buildings, but also included mandatory “American” lifestyle and values. The plantation’s cafeterias were self-serve, which was not the local custom, and they provided only American fare such as hamburgers. Workers had to live in American-style houses, and they were each assigned a number which they had to wear on a badge— the cost of which was deducted from their first paycheck. Brazilian laborers were also required to attend squeaky-clean American festivities on weekends, such as poetry readings, square-dancing, and English-language sing-alongs.
One of the more jarring cultural differences was Henry Ford’s mini-prohibition. Alcohol was strictly forbidden inside Fordlândia, even within the workers’ homes, on pain of immediate termination. This led some industrious locals to establish businesses-of-ill-repute beyond the outskirts of town, allowing workers to exchange their generous pay for the comforts of rum and women.
While the community struggled along month-to-month with its disgruntled workforce, it was also faced with a rubber dilemma. The tiny saplings weren’t growing at all. The hilly terrain hemorrhaged all of its topsoil, leaving infertile, rocky soil behind. Those trees which were able to survive into arbor adolescence were soon stricken with a leaf blight that ate away the leaves and left the trees stunted and useless. Ford’s managers battled the fungus heroically, but they were not armed with the necessary knowledge of horticulture, and their efforts proved futile.
Workers’ discontent grew as the unproductive months passed. Brazilian workers— accustomed to working before sunrise and after sunset to avoid the heat of the day— were forced to work proper “American” nine-to-five shifts under the hot Amazon sun, using Ford’s assembly-line philosophies. And malaria became a serious problem due to the hilly terrain’s tendency to pool water, providing the perfect breeding ground for mosquitoes.
In December of 1930, after about a year of working in a harsh environment with a strict and disagreeable “healthy lifestyle”, the laborers’ agitation reached a critical mass in the workers’ cafeteria. Having suffered one too many episodes of indigestion and degradation, a Brazilian man stood and shouted that he would no longer tolerate the conditions. A chorus of voices joined his, and the cacophony was soon joined by an orchestra of banging cups and shattering dishes. Members of Fordlândia’s American management fled swiftly to their homes or into the woods, some of them chased by machete-wielding workers. A group of managers scrambled to the docks and boarded the boats there, which they moved to the center of the river and out of reach of the escalating riots.
By the time the Brazilian military arrived three days later, the rioters had spent most of their anger. Windows were broken and trucks were overturned, but Fordlândia survived. Work resumed shortly, though the rubber situation had not improved. A British journalist writing for the Indian Rubber Journal visited in 1931, and wrote, “In a long history of tropical agriculture, never has such a vast scheme been entered in such a lavish manner, and with so little to show for the money. Mr. Ford’s scheme is doomed to failure.”
The intervening months offered little evidence to counter the journalist’s grim depiction. In 1933, after three years with no appreciable quantity of rubber to show for the investment, Henry Ford finally hired a botanist to assess the situation. The botanist tried to coax some fertile rubber trees from the pitiful soil, but he was ultimately forced to conclude that the land was simply unequal to the task. The damp, hilly terrain was terrible for the trees, but excellent for the blight. Unfortunately no one had paid attention to the fact that the land’s previous owner was a man named Villares— the same man Henry Ford had hired to choose the plantation’s site. Henry Ford had been sold a lame portion of land, and Fordlândia was an unadulterated failure.
Never one to surrender to circumstance, Ford purchased a new tract of land fifty miles downstream, establishing the town of Belterra. It was more flat and less damp, making it much more suitable for the finicky rubber trees. He also imported some grafts from the East Asian plantations, where the trees had been bred for resistance to the leaf blight. Starting from scratch, the new enterprise showed more promise than its predecessor, but progress was slow. For ten years Ford’s workers labored to transform soil into rubber, yielding a peak output of 750 tons of latex in 1942— far short of that year’s goal of 38,000 tons.
Be that as it may, Ford’s perseverance might have eventually paid off if it were not for the fact that scientists developed economical synthetic rubber just as Belterra was establishing itself. In 1945, Ford retired from the rubbering trade, having lost over $20 million in Brazil without ever having set foot there. A company press release announced the abandonment of Belterra with a bland epitaph: “Our war experience has taught us that synthetic rubber is superior to natural rubber for certain of our products.” The Ford Motor Company sold the land back to the Brazilian government for $250,000— a token sum.
The solid structures of Fordlândia and Belterra were left largely empty for the decades following the towns’ demise. Teams of Brazilian workers were tasked with maintaining the areas to preserve the buildings, but their remote locations left the Brazilian government wondering how it could possibly take advantage of the modern facilities. Until recently the resources have gone largely untapped; today the plantation towns are being marketed as stops on Amazon tours. At Belterra, a building once used to coagulate rubber was briefly reanimated for the purposes of producing surgical gloves and condoms, but it was a short-lived enterprise. Much of the plantation land is now used for local agriculture, producing crops such as beans, rice, and corn. Many of the towns’ residents today are squatters.
Henry Ford’s losses in Fordlândia and Belterra are equivalent to $200 million in modern dollars. Certainly he was unable to buy his way into rubber royalty, and his efforts to spread his American “healthy lifestyle” were met with resentment and hostility… but history has repeatedly shown that obscene wealth gives one the privilege— perhaps even the obligation— to make bizarre and astonishing mistakes on a grand scale. From that perspective, Fordlândia could not have been more successful.