The downfall of International Harvester

[Waldershrek]

So in my usual browsing of several tractor related places and magazines I came across a International magazine that had an article about how International was pretty much ran into the ground by poor management and trying to be into too many things at once.

Obviously when this all occurred I was very young and don't remember it. Seems a lot of IH fans were heartbroken about it because by most accounts IH had cutting edge stuff and employed a lot of people but got beat by themselves. It also seems they harbor a lot of hate towards John Deere and it's fans who in their eyes got the edge on IH with inferior products but better advertising and gimmicks.

I found this book on the subject and it looked interesting: http://search.barnesandnoble.com/Corporate-Tragedy/Barbara-Marsh/p/9780385192095

Anybody ever read it? Any guys on here remember it first hand? I was always raised around JD stuff but I certainly appreciate the effect the IH company had on agriculture.

 

[Isomade]

I have an old 60's model 90hp IH tractor. It is one of the best tractors I have ever driven. IH had some quality stuff in the day. I don't know about JD having inferior products though. The 4020 in my opinion put JD on the map, and is one of the best tractors ever made.

 

[cfpinz]

Wife's father has an International deep freeze that was had back when they were rationed out, still works. I've got an IH dozer, keep breaking stuff on it so it's for sale now.

I'd wager a conservative guess that 90% of the companies that go under in our country are not the result of an inferior product, just inferior jacklegs in suits.

 

[Waldershrek]

I have an old 60's model 90hp IH tractor. It is one of the best tractors I have ever driven. IH had some quality stuff in the day. I don't know about JD having inferior products though. The 4020 in my opinion put JD on the map, and is one of the best tractors ever made.

Well "inferior" is relative I guess.....IH folks seem to think they had the better product but JD just out marketed them and had better leadership. Seems what really screwed them was trying to be into too many things at once instead of just concentrating on their ag line.

 

[KMacGinley]

Unions, at least for part of the company. Had cousins that went on strike for a long, long time,,,, when they came back, the company closed down the plant.

 

[lavacarancher]

I think KMAC is spot on. I worked for a company in the '80's who had used International OTR equipment in their manufacturing of specialty trucks for many years. Union workers went on strike and darn near shut us down because we couldn't get trucks. We bought their off road construction equipment and forced them into keeping us supplied with truck cab and chassis. Don't know where IH got the rolling stock but we started getting trucks like clockwork.

I have an IH 1486. Fine old tractor.

 

[Waldershrek]

Yeah I heard the Union had a list of demands which the company refused to meet so they went on strike for over a hundred days and when they finally returned the company was pretty much bankrupt and had to sell out.

 

[JHH]

Yeah I heard the Union had a list of demands which the company refused to meet so they went on strike for over a hundred days and when they finally returned the company was pretty much bankrupt and had to sell out.

Unions can be good and bad. Union for Roquette ( may not have spelled that right) is on strike here right now. They really should wise up, The company will break the union this time I think. Then everyone will be working for 7.75 and hour and the town will really go down hill. They need to realize they have a good thing and try and not be so greedy.

People will go from having benifits to haveing none. Then it is like a chain reaction and the whole town goes, because they dont have people to support the local retailers.

 

[pdfangus]

well in this economy with 10% unemployment.....
only idiots would be out on strike.
I am the only one in my office today because of the holiday.....
Already had the chairman of the board call to wish us a Happy Thanksgiving.....and see who was here.
got my points....

 

[Caustic Burno]

Had companies not operated under the philosphy of kill a man hire another one, kill a horse buy another one the Unions would have never came to be. Started out good versus evil ended up greed versus good. We currently have the standard of living because of the Unions. It brought the countries middle class the highest standard of living in the world producing a quality product, this was halted by the greed of never enough driving companies into the ground.

 

[3waycross]

Had companies not operated under the philosphy of kill a man hire another one, kill a horse buy another one the Unions would have never came to be. Started out good versus evil ended up greed versus good. We currently have the standard of living because of the Unions. It brought the countries middle class the highest standard of living in the world producing a quality product, this was halted by the greed of never enough driving companies into the ground.

Been there done it and got the T-shirt. I was in a USWA negociation many years ago and the companies first offer was better than what we were going to ask for. I opened my mouth and said let's take it and go home. They(First VP of the Steelworkers) says "Son yer just not cut out to be a Union president". My reply was maybe if we leave them a little we won't be out of a job this time next year.

We hung in there and raped them for every penny and I was out of a job 4 months later and the company was bankrupt.......I know about greed...The union taught me!

I also know about Robber Barons. I was born less than 60 miles from the "Ludlow Massacre"

 

[TexasBred]

Unions, at least for part of the company. Had cousins that went on strike for a long, long time,,,, when they came back, the company closed down the plant.

Take a tour of beautiful deserted, delapidated,Detroit.

 

[Caustic Burno]

Had companies not operated under the philosphy of kill a man hire another one, kill a horse buy another one the Unions would have never came to be. Started out good versus evil ended up greed versus good. We currently have the standard of living because of the Unions. It brought the countries middle class the highest standard of living in the world producing a quality product, this was halted by the greed of never enough driving companies into the ground.

Been there done it and got the T-shirt. I was in a USWA negociation many years ago and the companies first offer was better than what we were going to ask for. I opened my mouth and said let's take it and go home. They(First VP of the Steelworkers) says "Son yer just not cut out to be a Union president". My reply was maybe if we leave them a little we won't be out of a job this time next year.

We hung in there and raped them for every penny and I was out of a job 4 months later and the company was bankrupt.......I know about greed...The union taught me!

I also know about Robber Barons. I was born less than 60 miles from the "Ludlow Massacre"

I as well have sat on both sides of the negociation table. I can remember times when a man had no sick leave, no medical and little to no vacation, if you missed work you missed pay. To the exteme on sick leave, vacation and benifits. The government has had a heavy hand in this as well in making companies provide benifits like the FMLA Family Medical Leave Act. I saw this abused to high heaven the act had merit, the politicans didn't see or ignored the potential abuses.

 

[SRBeef]

I worked across the street from the IH combine plant at the time this happened. There is more than enough blame to go around both the management and the labor sides.

One key point I recall was that IH hired a president from a completely different, non-farm, non-heavy manufacturing sort of company, Xerox I believe.

This was a time when the business school/management prevailing wisdom was that if you were a good "manager" you could manage anything and did not need to really know anything about the particular line of business or industry you were managing in...

This new outside president decided he needed to break the union and its tight control of the plant and workforce. Basically he felt he needed to prove who was boss. At least that is my recollection of the time.

Well you can imagine how the union reacted to this type approach. THEY were then going to prove who was boss...

In the end they both lost and killed the company in their nose to nose pi$$ing contest. As their customers got tired of this and went elsewhere, as described in another post above, no one would give in and they just rode the horse down until there was no choice but to sell what was left to the highest bidder. Factories were then closed, jobs permanently lost...

Trying to say who was at fault here is pretty difficult. One could say it was the IH board of directors and the whole approach to business at the time which let the situation get to this sort of standoff.

To their credit, John Deere dealt with many of the same types of issues but emerged very differently.

At some point there will be a realization by all parties that working together is the only way to succeed. Greed will eventually bring you down. There may be ways to postpone it but eventually greed will come back to bite you. This type of standoff is probably NOT going to happen in China, for example, and much production will just move there, which it has.

One of the real benefits to having a lot of kids to read bedtime stories to over the years is that I actually remember a lot of Aesop's fables. Such as the greedy dog carrying a piece of meat across a bridge who looked down and saw his reflection carrying what appeared to be a bigger piece of meat and opened his mouth to grab it away from that other dog. But in the process dropped his own piece in the river and ended up with none....

How's that for a cattle board story... Happy Thanksgiving everyone. Jim

 

[john250]

It is darned hard to stay in business when half your customers go broke. And your salesmen (dealers) go broke. Massey went broke at the same time. Allis, White. Victims of the ag bubble of the 1970's and the ag bust of the 80's. Deere had the deepest pockets and survived while the others consolidated.

 

[curtis]

The unions destroyed the small towns in the delta. We had 5 factories at one time, all gone now. Just ghost towns .

 

[upfrombottom]

The unions destroyed the small towns in the delta. We had 5 factories at one time, all gone now. Just ghost towns .

I vividly remember the Sanyo strike here, the company would not and could not give in to the demands of the union, because of the competition from other electronic companies that had moved south of the border. There was a very violent strike, in which the national guard had to be called out. The wage workers were striking as the salaried workers were disassembling the equipment and loading it on trucks headed south.

 

[curtis]

The unions destroyed the small towns in the delta. We had 5 factories at one time, all gone now. Just ghost towns .

I vividly remember the Sanyo strike here, the company would not and could not give in to the demands of the union, because of the competition from other electronic companies that had moved south of the border. There was a very violent strike, in which the national guard had to be called out. The wage workers were striking as the salaried workers were disassembling the equipment and loading it on trucks headed south.

The same thing happened to the other factories as well. People were making more money than they had ever made in their lives and cried out, We'll Strike, an sure enough they struck out.

 

[Waldershrek]

One key point I recall was that IH hired a president from a completely different, non-farm, non-heavy manufacturing sort of company, Xerox I believe.

This was a time when the business school/management prevailing wisdom was that if you were a good "manager" you could manage anything and did not need to really know anything about the particular line of business or industry you were managing in...

This new outside president decided he needed to break the union and its tight control of the plant and workforce. Basically he felt he needed to prove who was boss. At least that is my recollection of the time.

Well you can imagine how the union reacted to this type approach. THEY were then going to prove who was boss...

In the end they both lost and killed the company in their nose to nose pi$$ing contest. As their customers got tired of this and went elsewhere, as described in another post above, no one would give in and they just rode the horse down until there was no choice but to sell what was left to the highest bidder. Factories were then closed, jobs permanently lost...

I think you are talking about this guy:

In 1979 IH named a new CEO, who was determined to improve profit margins and drastically cut a ballooning cost structure. Unprofitable model lines were terminated, and factory production curtailed. By the end of the year, IH profits were at their highest in 10 years, but cash reserves were still too low. Union members became increasingly irate over production cutbacks and other cost-cutting measures. In the spring and summer of 1979, IH began short-term planning for a strike that seemed inevitable. Then on November 1, IH announced figures showing that president and chairman Archie McCardell received a US$1.8 million (in 1979 values) bonus. McCardell sought overtime, work rule, and other changes from the UAW, which led to a strike on November 2, 1979.[2]

Soon after, the economy turned unfavorable, and IH faced a financial crisis. The strike lasted approximately six months. When it ended, IH had lost almost $600 million (in 1979 value; over $2 billion today).[3]

By 1981 the company's finances were at their lowest point ever. The strike, accompanied by the economy and internal corporate problems, had placed IH in a hole that had only a slim way out.[4] Things only got worse until 1984, when the bitter end came.

International Harvester, following long negotiations, agreed to sell its agricultural products division to Tenneco, Inc. on November 26, 1984.

He was CEO of Xerox during the 60's and 70's

 

[SRBeef]

One key point I recall was that IH hired a president from a completely different, non-farm, non-heavy manufacturing sort of company, Xerox I believe.

This was a time when the business school/management prevailing wisdom was that if you were a good "manager" you could manage anything and did not need to really know anything about the particular line of business or industry you were managing in...

This new outside president decided he needed to break the union and its tight control of the plant and workforce. Basically he felt he needed to prove who was boss. At least that is my recollection of the time.

Well you can imagine how the union reacted to this type approach. THEY were then going to prove who was boss...

In the end they both lost and killed the company in their nose to nose pi$$ing contest. As their customers got tired of this and went elsewhere, as described in another post above, no one would give in and they just rode the horse down until there was no choice but to sell what was left to the highest bidder. Factories were then closed, jobs permanently lost...

I think you are talking about this guy:

In 1979 IH named a new CEO, who was determined to improve profit margins and drastically cut a ballooning cost structure. Unprofitable model lines were terminated, and factory production curtailed. By the end of the year, IH profits were at their highest in 10 years, but cash reserves were still too low. Union members became increasingly irate over production cutbacks and other cost-cutting measures. In the spring and summer of 1979, IH began short-term planning for a strike that seemed inevitable. Then on November 1, IH announced figures showing that president and chairman Archie McCardell received a US$1.8 million (in 1979 values) bonus. McCardell sought overtime, work rule, and other changes from the UAW, which led to a strike on November 2, 1979.[2]

Soon after, the economy turned unfavorable, and IH faced a financial crisis. The strike lasted approximately six months. When it ended, IH had lost almost $600 million (in 1979 value; over $2 billion today).[3]

By 1981 the company's finances were at their lowest point ever. The strike, accompanied by the economy and internal corporate problems, had placed IH in a hole that had only a slim way out.[4] Things only got worse until 1984, when the bitter end came.

International Harvester, following long negotiations, agreed to sell its agricultural products division to Tenneco, Inc. on November 26, 1984.

He was CEO of Xerox during the 60's and 70's

Yes. That is the guy. Nothing like the CEO getting a $1.8 million dollar (in 1979 dollars even) bonus to build trust among the troops and get you through a tight cash time, eh? Reminds me of United airlines more recently.

What management training school did these guys attend??? Can you blame the unions for being a bit pi$$ed??? That is one of the types of things that makes people feel they NEED a union.

I worked across the street at Deere at the time and it was sad to see this happen, even to a competitor.

At the time, the two largest combine manufacturing plants in the world were across the street from each other.

Jim

edit: this is also why I think the board of IH is one of the causes: why on earth do you hire a copier guy to run an agricultural equipment heavy machinery company??? his first day someone probably had to show him what corn looked like when it wasn't in a can at the supermarket.