Manufacturing the Future: A History of Western Electric

Published by EH.NET (February 2000)

Stephen B. Adams and Orville R. Butler, Manufacturing the Future: A History

of Western Electric. New York: Cambridge University Press, 1999.

xi + 270 pp. $34.95 (cloth), ISBN: 0-521-65118-2.

Reviewed for EH.NET by Eric

John Abrahamson, The Prologue Group.

For more than a century, Western Electric supplied equipment to AT&T’s long

distance and local telephone companies as the manufacturing arm of the old Bell

System. Regulators around the country hated the situation. Many believed that

AT&T hid excess profits or bureaucratic inefficiencies in Western’s charges to

Bell System customers. Repeatedly, the federal government tried to force AT&T

to divest the company. AT&T fought these efforts and made enormous concessions

to the government to retain its vertical integration – until 1995. That year,

AT&T announced that it would divest what remained of Western Electric and

portions of Bell Laboratories to create a new company – Lucent Technologies.

Dan Stanzione, who became the president and chief operating officer of Lucent,

recognized in the birth of this new company both a need and an opportunity to

confront the past. He commissioned historians Stephen B.

Adams (Gordon Cain Fellow at the Chemical Heritage Foundation) and Orville R.

Butler (historian for the Academy of Management’s International Management

Division) to research and write Manufacturing the Future: A History of

Western Electric, and he gave them license to tell the story

“warts and

all.” Stanzione hoped that their story would convey the heritage of Western

Electric to both retirees and employees of the newly independent Lucent. But

Adams and Butler have done much more.

Manufacturing the Future chronicles the history of Western Electric

from the formation of its predecessor, Gray & Barton, in 1869 to the creation

of Lucent Technologies in 1996. It offers a classic story of vertical

integration, but treats that integration as a process that evolved over nearly

four decades, rather

than as a single event. Throughout the book,

Adams and Butler show the enormous influence of the regulatory environment on

the evolution of the Bell System’s strategy and structure. They also trace the

tension between innovation and implementation within

the context of an enormous bureaucratic culture.

Indeed, Western Electric and Bell Laboratories (formed as a joint venture

between Western and AT&T in 1925) proved capable of tremendous innovation in

science, manufacturing, and human relations. The company was an early leader

in global manufacturing. It developed breakthrough technologies in typewriters,

vacuum tubes, radio, television, motion pictures, radar, and transistors. One

could almost say that they invented the things that made the twentieth century

work. In manufacturing, Western Electric supported groundbreaking innovations

in the field of statistical process control and exported these methods to Japan

to give birth to the modern Total Quality movement. In human resources, studies

from 1924 to

1933 at Western Electric’s enormous Hawthorne plant outside of Chicago sparked

the development of the field of industrial psychology. And in the 1960s,

Western Electric emerged as a leading corporate advocate of civil rights and

affirmative action. According to the authors, AT&T’s desire to remain in the

good graces of the federal government motivated many of these initiatives as

scientific discovery, manufacturing efficiency and even defense contracting

became hallmarks of the Bell System’s commitment to universal service and good

public relations.

Yet Western Electric was often unable to reap the

returns from its own

innovations, and in many ways Western Electric’s story is a spectacular tale of

paths not taken. As Adams and Butler point out, corporate pressures to

maintain the company’s focus on domestic equipment manufacturing led to the

divestment of businesses in radio, motion pictures, electrical supplies, and

international manufacturing. To settle the government’s antitrust suit in 1956,

AT&T agreed to confine its manufacturing business to telephone equipment and

license any new technologies it developed to others. Statistical process

control languished in Western Electric manufacturing until the 1950s, despite

regulatory pressure on the Bell System to provide assurances of Western

Electric’s efficiency. And not withstanding the enormous amount of information

collected from the Hawthorne studies, the creation of a counseling program for

employees marked the only visible outcome of this effort. As Adams and Butler

conclude, the company’s monopolistic situation produced “an abundance of ideas

and innovation, but slow implementation or change.”

Manufacturing the Future provides a valuable overview of Western

Electric’s history, an excellent teaching tool for undergraduates studying the

American economy. Adams and Butler deftly summarize important chapters in

Western Electric’s history that have been covered more richly in the

historiography of the Bell System. They also enrich that literature by

refining our understanding of historical processes, especially on vertical

integration and affirmative action. However, many historians will finish the

book feeling unsatisfied.

In many ways Manufacturing the Future raises as many questions as it

answers. How did Western Electric influence the Bell System and its culture of

engineering, especially in the 1950s and 60s when two of Western Electric’s

presidents went on to become presidents of AT&T? Given the drumbeat of

literature extolling the virtues

of competition and its influence on innovation, why were Western Electric and

Bell Labs so prolific with new ideas? And what about the regulator’s concerns

about efficiency and profits? Adams and Butler suggest that the past is

traditionally believed to foreshadow the future. With Lucent, however, the

future may inform the past. Perhaps Western Electric achieved “a pattern of

efficiency” that explains Lucent’s success on Wall Street and in the

marketplace today.

However, even the authors acknowledge that

this is not a sufficient answer.

The question of Western’s efficiency and AT&T’s use or abuse of its captive

relationship leads to many of the issues at the heart of regulatory politics

and antitrust activity in the United States. Indeed, the history of

Western Electric and the Bell System opens windows onto many aspects of the

culture and economy of the United States in the twentieth century. The writing

of Western Electric’s history remains an unfinished project, but Adams and

Butler have given us an admirable guide to the territory ahead.

Eric John Abrahamson is founder and principal historian of the Prologue Group,

a California-based historical consulting firm. Among many projects,

he has written a history of the breakup of the Bell System and its

impact on California for the Pacific Telesis Group. With Lou Galambos, he is

currently working on a history of AirTouch Communications and the global

wireless industry.