Just south of Loch Lomond in West Dunbartonshire, Scotland is a beautiful building that was once the largest car factory outside the United States.

In the early 1900s, Argyll Motors Limited was a flourishing motor car manufacturer. Between 1901 and 1906 their business expanded thirty-fold. Argyll Motor Works opened in 1906 to manufacture Argyll cars. These were to be safe and reliable cars offered at a reasonable cost so that the average person could enjoy motoring.

The Works – as it came to be known – was a significant project. Construction and equipment installation took 14 months at the cost of £220,000 – that’s £24,640,000 today! The finished plant covered 12 acres, with allowances made for extensions. The workshops were also designed to be forward thinking. The workshops could receive additions without disrupting production as they were laid out at right angles to the main building.

The owners spared no expense on the building, nor on amenities for their 1,300 to 2,700 employees. Inside the front entrance is a marble staircase with a grand corridor. There was a kitchen, dining rooms, recreation rooms, a reading room, and a 500-seat hall. Most rooms had telephones, and all had large windows or skylights. Company leadership also encouraged recreation for its workers. The Works had an orchestra, choir, ambulance class, magazine, cycling club, rifle club, and a sizable football club.

In 1907, the Works and its employees produced over 800 cars. This was the highest figure of any car manufacturer in Europe. Success led to new models, including the Torpedo, the Double Phaeton, and the Landaulette. Although innovative, Argyll Motors’ success was short-lived.

The company was unable to offer its cars at prices that the average motorist could afford. The Works was designed to produce 2,500 cars per year, but it never came close to that figure. The factory wasn’t designed with mass production in mind. It was more of a palace where craftsmen came together to build cars by hand.

Customers could select from 29 bodies, seven chassis styles, and five colour schemes. Once the car entered the finishing shop, it still needed about 30 coats of paint and varnish before embarking on a 100-mile road test!

These cars were too expensive to produce. Argyll’s prices couldn’t compete with those of Henry Ford’s Model T in America or those produced in the English Midlands. While his factory wasn’t as impressive as the Works was, in 1914, Henry Ford doubled his employees’ wages to compensate for high turnover. This turnover occurred when Ford implemented his famous assembly line, which all but eliminated the emphasis on craftsmanship that Argyll Motors prided itself on. The assembly line also doubled Model T production without adding a single worker, enabling Ford to pay his workers radically higher wages.

That same year, the Works sold to the British Admiralty for £153,000, with a new lease on life as a torpedo factory. What can we say about this failure?

First, it highlights the importance of adapting to change. The automobile industry was moving away from craftsmanship towards mass production, but Argyll’s commitment to “quality” over quantity left it flat footed.

It also serves as a reminder that the customer defines quality. While Argyll felt it was building quality cars, not enough customers saw the value that accompanied the price tag.

Finally, the case of Argyll Motor Works is a warning of what can happen when employees become an organization’s #1 asset over customers. Ford’s approach to sharing the productivity gains he made with his employees is instructive. You have to earn it before you can share it.