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Baldwin Locomotive Works: Evolution of the American Locomotive, 1907

Industrial Organization

During this time, the owners of the Baldwin Locomotive Works were learning and inventing the principles of factory management in one of the earliest examples of integrated industrial organization. There were about four hundred workers, craftsmen, and general laborers, supervised by foremen who were in turn responsible to a trio of company owner/managers. The divisions of the factory included machine shops, boiler and smith shops, a foundry, and a paint shop. The new factory model replaced the earlier craft-based system and its family workers with a group of unrelated wage earners brought together for the single manufacturing purpose.

Booming railroad expansion caused increased competitors in Baldwin's field and railroads now exploited this choice of suppliers by introducing competitive bidding and sourced locomotive designs rather than those of the manufacturer. To combat manufacturing inefficiency, Baldwin aimed for cost control and an assured capital base with major changes. They managed labor costs by instituting piece work and streamlined processes by dropping the manufacture of stand-alone steam engines and standardizing the parts used in locomotive assembly.

Using Baldwin's superior experience and data to expand model choices, the company flourished through the 1850s and by 1857, six hundred employees produced sixty-six locomotives. Then suddenly, in August, the financial Panic of 1857 hit, causing multiple failures in the overextended railroad business and locomotive orders plummeted. The recession following this crisis lasted a number of years during which Baldwin laid off workers, leading to the formation of a worker's union and an 1860 strike by skilled workers. In response, Baldwin maintained production with apprentices and replacement hires and spread salesmen far afield to obtain orders. The unionization of the Baldwin Works failed and never resumed.