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On my 3rd reading of this book

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I read the book soon after it was published. It was a very interesting read, but, I hope she was more accurate on her union and management history than she was on her assessment of the 560 problems and introduction of the 06 series.  I certainly don't remember exactly how she came down on that but at the time, I thought, now that is not really the way it happened.  

I remember the morning my boss came back in the shop and said, Jim, you are now a Case mechanic. Whaaaaaaaaaaaaaaaattt. I had to sign the franchise agreement for him when it became official, I think in January as he was down in Florida. 

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The reprint of the book is available from Superscoutspecialists.com for $40.00. 

The Wisconsin Steel property was gradually cleared, not by Navistar as I understand it, bit around 2000 Navistar reacqired the site, probably under pressure from the EPA, and did the environmental cleanup required. This was completed in 2013 and there are now some other buildings on the property. 

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23 hours ago, iowaboy1965 said:

I get tired of the unions being blamed for every companies woes. The companies have became experts at blaming the unions and workers wages and benefits breaking them while hiding some of the other real problems tucked away in the closet. Are unions perfect? No of course not but if they are serving their function they are negotiating as good a living and fair as well as safe working conditions for their members as they can get. If a company agrees to a labor agreement that doesn't allow them to make a profit (almost never the case) its still on management for agreeing to it. And by the way ceo pay has went up something like 300 to 500% in the last 30 years or so. Why are stock holders in companies going for that? 

Could comment on deeres last contract from first hand point of view but breaks over lol

The union was a lot to blame on their selves. They struck IH at the worst possible time and then struck John Deere in the mid- eighty's when equipment sales were down and Deere didn't need the employees working.

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5 minutes ago, Eason said:

The union was a lot to blame on their selves. They struck IH at the worst possible time and then struck John Deere in the mid- eighty's when equipment sales were down and Deere didn't need the employees working.

True mistakes have been made in the past by unions. Unions locals are headed up by people elected from the shop floor by their coworkers. Sometimes very capable forward thinking people get put in, sometimes not so much.......the international advises during negotiations but the local still votes on it.

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I have read the book a couple times and enjoyed it. The author makes many good points, but with the advantage of hindsight, I would bet that many mistakes could be picked out even from "successful" companies. I think the thing that ultimately broke the company's back was bad timing. If they could have kept trudging forward for a couple years and gotten through the worst of the farm crisis, who knows what may have happened? After all, more than 30 years later the truck division continues as Navistar, and we all know how much "IH" heritage there has always been in "Case IH"

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I have a few comments on the failure of IH. To me it all started right after World War  II when John McCaffery and Fowler McCormick decided to broaden the scope of IH and not stick to their core business of farm equipment and trucks. McCaffery's efforts at creating an industrial equipment division were met with failure and Construction division was a perennial money loser until disposed of around 1980. The TD24 and the massive rehabilitation of their transmissions alone sucked precious dollars away from farm equipment. Similarly, the Frank G Hough company purchase to get the Payloader, Payhauler, and Payscrapers. The effect on farm equipment was no money to put the live hydraulics in the Farmall H and M in late 1945 (after they were introduced to the dealers that year) and the introduction of the M-8 tractor in 1948-49. This tractor had 8 forward speeds, live PTO, live hydraulics, and a 55 HP engine. These tractors would have been a hit with farmers back then. Similarly a WU4 (aka 300 utility) in 1946 would have created production for at least 30,000 tractors per year and stopped Ford from producing 100,000 models 8N per year in the late 1940s. Similarly, money for combine development would have went a long way to increasing self propelled combine sales. I remember the 123 125, and 127 combines and they could not sell them in eastern Canada. The 141 was more successful and finally the 303, 403, and 503 were reasonably good combines. Another mess up was McCaffery not providing money for endurance testing of the 40/60 series prototypes in 1957. Instead these tractors were released into production (without testing) in 1958 and you all know what happened.

To me the unions are a sidebar issue. Any well managed company can usually deal successfully with greedy unions. Take a look at Case IH. All they needed to do was shutdown the worst  union plants and move production to a non union plant in another jurisdiction.

Harry Bercher saw the writing on the wall in the early 1960's but could not get enough support to make the needed changes. Brooks McCormick also realized the problem but somehow rectifying it eluded him also. It was not until Archie McArdle's term of office in the late 1970's  that the problem became real severe and immediate action to shed the money losing sections of the company was mandatory. But that was too late as the value of these sections had dropped and little could be realized from their sale. 

 

 

       

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I agree with everyone's comments in that they all contributed to the downfall BUT White, Allis and Massey (and ordinary farmers )did not have a 560, McCafferty,Mc Cardle, a T/A etc but they too got restructured, refinanced , bankruptcy , sold off during the mid 80s as well. Don't forget double digit interest rates guys ( they couldn't cover their debit with that interest!), grain embargo , farm fore closures / Theres no way those companies could weather that perfect storm  . 

Remember Farm Aid? it had nothing to do with IH yet it could have  

 

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That song chokes Me up every time.  Grandpa sold out 1000 acre farm in 67 when I was 5, Dad sold His 315 acre farm when I was 11.  I have lived My life wondering if Dad had been able to buy the 1000 what would have come of it.  I graduated in 1980 and never wanted to do anything but farm so i would have been knee deep then.  Would have been adding on/starting My own in the 80s so not sure We would have survived.   No need to worry about stuff that never had a chance.  All of you that did/still farm, as bad as it is thank God every day cause anything else never takes the place of it.

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the 80s were terrible ! one of the comments on the video was -

 
My (then retired, but not for long) Grandpa killed himself in 1985, the year this song came out, when I was a teenager. He had farmed his whole life in Illinois near the Indiana border, which is why this song rips me to the core, because my Grandpa was part of an epidemic of farmer suicides that should have been prevented. I'm grateful for the lyrics even now, and the close relationship I had with my own Grandparents, and to the countryside where I spent so much time with them. John Mellencamp speaks to my heart and always has.

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Yep, who can make it very long paying 18%+ interest? There were many reasons that led them to the problems of the 80's, but HUGE debt & high interest was THE killer. Couple that with strikes, low sales & you had the perfect storm.

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On ‎10‎/‎14‎/‎2017 at 11:46 AM, George 2 said:

I have a few comments on the failure of IH. To me it all started right after World War  II when John McCaffery and Fowler McCormick decided to broaden the scope of IH and not stick to their core business of farm equipment and trucks. McCaffery's efforts at creating an industrial equipment division were met with failure and Construction division was a perennial money loser until disposed of around 1980. The TD24 and the massive rehabilitation of their transmissions alone sucked precious dollars away from farm equipment. Similarly, the Frank G Hough company purchase to get the Payloader, Payhauler, and Payscrapers. The effect on farm equipment was no money to put the live hydraulics in the Farmall H and M in late 1945 (after they were introduced to the dealers that year) and the introduction of the M-8 tractor in 1948-49. This tractor had 8 forward speeds, live PTO, live hydraulics, and a 55 HP engine. These tractors would have been a hit with farmers back then. Similarly a WU4 (aka 300 utility) in 1946 would have created production for at least 30,000 tractors per year and stopped Ford from producing 100,000 models 8N per year in the late 1940s. Similarly, money for combine development would have went a long way to increasing self propelled combine sales. I remember the 123 125, and 127 combines and they could not sell them in eastern Canada. The 141 was more successful and finally the 303, 403, and 503 were reasonably good combines. Another mess up was McCaffery not providing money for endurance testing of the 40/60 series prototypes in 1957. Instead these tractors were released into production (without testing) in 1958 and you all know what happened.

To me the unions are a sidebar issue. Any well managed company can usually deal successfully with greedy unions. Take a look at Case IH. All they needed to do was shutdown the worst  union plants and move production to a non union plant in another jurisdiction.

Harry Bercher saw the writing on the wall in the early 1960's but could not get enough support to make the needed changes. Brooks McCormick also realized the problem but somehow rectifying it eluded him also. It was not until Archie McArdle's term of office in the late 1970's  that the problem became real severe and immediate action to shed the money losing sections of the company was mandatory. But that was too late as the value of these sections had dropped and little could be realized from their sale. 

 

 

       

I have a question for you George and only because you give balanced and knowledgeable  replies ( not disagreeing or picking on you)

There is never any use in rewriting history but in your opinion if two things were different in the early 80s that were not in IH control : #1 8% interest rates , #2 $4.00 per bushel corn 

 How would IH's fate been different?

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On 10/11/2017 at 10:23 AM, bitty said:

I need two things first I need to acquire one of these books and second I need to have some spare time to read it

X2!

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1 hour ago, hillman said:

I have a question for you George and only because you give balanced and knowledgeable  replies ( not disagreeing or picking on you)

There is never any use in rewriting history but in your opinion if two things were different in the early 80s that were not in IH control : #1 8% interest rates , #2 $4.00 per bushel corn 

 How would IH's fate been different?

I hope George answers your questions,  always gives great thoughtful answers.  But,  If things were as you said in the early 1980's, 8% interest and $4 corn,   I would be getting ready to Retire From Farmall in about 1-1/2 years.  IH got themselves into businesses that were not profitable, but their ag equipment was profitable and allowed them to try to compete with Cat, and keep Solar Turbine after turbines proved impractical for trucks and tractors.

   The plant manager of Farmall had an all salaried & management meeting in the big conference room in the Farmall office building in the spring of 1981.  The salaried work force was trying to start a Clerical and Professional Union as many other IH plants had.  The big strike was over, the start-up of the 5x88 series was a couple months off.  Future looked bright for IH and especially Farmall.  We all knew IH was suffering from way too much debit at record high interest rates, and IH's stock rating had been lowered which increased intererst rates IH had to pay.  But the plant manager said, " If we could could increase production to 160-170 tractors per day, we could generate enough profit for IH to single handidly bail them out of debt in ONE YEAR".

Farmall used several truck loads of castings from Louisville and Memphis, and Indy every day, 160 tractors was four semi loads of engines from Melrose Park a day, couple truck loads of heavy weldments from Canton every day, and 8-9 loads of cabs and 3-4 loads of sheet metal parts like hoods, steps, battery boxes, from East Moline.   As Farmall did well, the corporation did well too.

 

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1 hour ago, hillman said:

I have a question for you George and only because you give balanced and knowledgeable  replies ( not disagreeing or picking on you)

There is never any use in rewriting history but in your opinion if two things were different in the early 80s that were not in IH control : #1 8% interest rates , #2 $4.00 per bushel corn 

 How would IH's fate been different?

Hillman: The answer to your question lies with John Deere. They survived the same bad financial conditions. So what was different with John Deere? Their product was no better than IH on the whole. The answer was Bill Hewitt's (JD President) extremely conservative view on how much debt a company could service. Hewitt had cleaned up the finances at Deere after he took over in the mid 1950's and positioned Deere as the low debt company in the farm equipment business. And by low, I mean really low. I remember seeing a comparative bar chart of debt as a percentage of sales for JD, IH, M-F, AC, White, etc in the mid 1970's. JD as I remember were at about 15 % on the curve, IH was about 50%, AC was slightly higher, and MF was over 60%.  So of all the companies, JD were best positioned to weather bad financial conditions by far. They had been operating with an 8 % to 10% (or more) profit margin during the good years of the 1970's while IH could barely eek out a 2% profit. As such IH was ill prepared to weather a downturn in the market. But things were rough for Deere also once bad market conditions started to occur in 1980. They had many layoffs and plant closings to consolidate manufacturing in their least cost plants. And they survived only through the best efforts of their management and emerged as a much leaner company by 1995. At the same time the JD management were much more adept at dealing with greedy unions than IH was and some of the plant closures they made were the plants with the highest labor costs. 

That policy, for example, is the reason why Deere waited so long to build an axial flow combine. Why spend the money if you already were a sales leader for that product? At the same time that decision worked against them as they had a huge catch up to do in technology to match their competitors. All they had going into the axial flow combines was the good reputation their walker combines had. However, they are still struggling against the well developed machines their competitors are selling. In my area for example there are several of what I call JD farmers who have only one major piece of equipment that is not JD. And that piece is usually the combine, disk ripper, and in some cases the planter. There are three of them close to me  that have CIH 8230 and 8240 combines for example. One of them had an unreliable S670 and traded it on an 8230. In another case another S670 was going to be traded for an 8230 but Deere and Company kicked in a $50,000 grant to the dealer to get the customer to stay with the JD product and move on up to a S680. That policy is practiced by many companies but I personally believe that it is detrimental in the long term as it starves the company of needed capital.  

I hope this explanation of why IH failed and JD did not is helpful.

BTW. The same situation occurred at the company I worked for in the 1990's (Ontario Hydro). They had become bloated and needed to tighten their belts.  We all had to apply for our jobs in 1995 and several of the people I worked with were soon gone when OPG was formed. And since then, with the current Liberal governments tight political control of the electricity production and distribution industry, they were free to do what they politically wanted. That is why we in Ontario now have the highest priced electricity in North America.

Cheers,

George

             

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what I was getting at is the final few things that killed IH were out of their control. after years of bad management IMO they were trying to steer that big out ship in the right direction  but they ran out of time due to factors out of their control 

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Another bad thing IH did was selling two very profitable divisions in the early 1980's to scrape enough money together to finalize and launch the 50 series. 1) Solar Aircraft, granted it wasn't a "core" business and they should've probably never bought it, but it had been very profitable over the years. 2) The Components Group (truck axles, gears, 50series MFD, transmissions, ect.) to Dana Corp. this also was a profitable division, but fairly easy to sell.

When you sell profitable assets without something to replace them, it's like shooting yourself in the foot. The worst thing is it all probably went to pay interest. 

Also in the early '80's the money pit Payline Division was sold also, way too cheap, but one sale that was overdue. 

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I think that Dr Evil has hinted at the straw that broke the camel's back numerous times.

Poor management was definitely present there but the thing that Dr Evil has said about is if there could make 150+ tractors a day they were profitable IF they had a market for them. Nothing was selling in the early '80s because of the economy swirling around the bowl. IH had way too much overhead and debt to enter the lower sales numbers of the consolidation of farms across the USA

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Was reading last night about the last strike.

Negotiations went to he!! and 2 other reasons were Harvester`s negotiator had a heart attack which put things in the hands of an unexperienced man, forget his name...

AND Hatford, Harvester`s 2nd man in power under Brooks McCormick, wanted 24/7 production from ALL the plants. "8760 " was the name of Harfords proposal. 

Union didn`t want to give up voluntary overtime either.

Funny thing is after ALL these months of striking, both sides became weary and settled without either side gaining much of anything.

But by then, the damage was too overwhelming to stay above water. 

Harvester overestimated the recovery timeframe also. 

A LOT of bullheadedness for sure.

This book is a GREAT read for even the non-tractor readers imo. 

 

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23 hours ago, hillman said:

what I was getting at is the final few things that killed IH were out of their control. after years of bad management IMO they were trying to steer that big out ship in the right direction  but they ran out of time due to factors out of their control 

That is always true of any company facing potential bankruptcy. Just look at what has happened to Sears Canada in the last few weeks. Protection from creditors didn't help as they couldn't find a buyer. Now it is liquidation sales that are scheduled to start this Thursday.   

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very true George, despite the ag equipment being  line in fine form the company was doomed. I live near Brantford, worked at WFE and we saw first hand around here that there was no saving White or Massey along with the 1000s of great jobs 

 

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On ‎10‎/‎12‎/‎2017 at 10:43 PM, pete23 said:

I read the book soon after it was published. It was a very interesting read, but, I hope she was more accurate on her union and management history than she was on her assessment of the 560 problems and introduction of the 06 series.  I certainly don't remember exactly how she came down on that but at the time, I thought, now that is not really the way it happened.  

I would  love to hear what you remember about the 560 and 06s

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2 hours ago, hillman said:

I would  love to hear what you remember about the 560 and 06s

Like I said, I can't remember just how she said it but it was something like, wow, the 06 series solved all complaints about IH tractor problems.   Well, they sure helped but with all the valve burning, oil burning, hard shifting complaints on the 706 it wasn't a rose garden.  Same engines required to put out more.  We sold a quite a few 560's and had a lot of satisfied customers with them as it was.  The 806 diesel was toooo bit a tractor for most at the time so it took a while for them to catch on here.  Then, of course, they were too small in a few years.   At any rate, it just struck me as an inaccurate assessment at that time and I hoped her other research was better as I have no personal knowledge of the business end of IH, just equipment. 

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I got mine from my local library from a interlibrary loan and I was able to read it for free. it was a shame that this great company was ruined by mismanagement.                                                                                                                                                                                      

 

 

 

 

 

 

 

 

 

 

 

 

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15 hours ago, hillman said:

very true George, despite the ag equipment being  line in fine form the company was doomed. I live near Brantford, worked at WFE and we saw first hand around here that there was no saving White or Massey along with the 1000s of great jobs 

 

I have a good friend who was a Project Engineer at Massey from 1969 to about 1984. He then became the Chief Engineer in about 1985 and was responsible for converting the White combines into the Massey 8660 and 8670 combines. He was especially impressed with the calibre of engineers White had working on the 9720 rotary combines. Unfortunately, he was the last person to get laid off in 1987 when Massey Combines folded their tent. Three months later he was working for the Toronto Transit Commission and had a 28 year career working with busses and subway engineering issues.  

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12 hours ago, pete23 said:

Like I said, I can't remember just how she said it but it was something like, wow, the 06 series solved all complaints about IH tractor problems.   Well, they sure helped but with all the valve burning, oil burning, hard shifting complaints on the 706 it wasn't a rose garden.  Same engines required to put out more.  We sold a quite a few 560's and had a lot of satisfied customers with them as it was.  The 806 diesel was toooo bit a tractor for most at the time so it took a while for them to catch on here.  Then, of course, they were too small in a few years.   At any rate, it just struck me as an inaccurate assessment at that time and I hoped her other research was better as I have no personal knowledge of the business end of IH, just equipment. 

As I have said before and as you imply the 806 was more tractor than the 4020 and it cost just enough more to slow down its sales rate. The real answer to a worthy competitor to the 4020 was the 826 but it wasn't introduced until 1970. Had IH introduced it in 1966 at the same time the 706 German diesel was introduced the sales picture for IH might have been a whole lot better in the 1967 to 1969 period. Price wise and HP wise it was bang on with the 4020 Synchro Range.  

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