A very enjoyable and interesting book that begins with a history of the reaper and its impact on American farming. The McCormick family, descendants of its inventor, built the company through beneficial mergers and clever marketing. Henry Ford was selling his Fordson tractor at a loss to gain market share. Harvester went one better by throwing in a plow, too. Their salesmen would travel around looking for Fordson dealers and demos, offering to match their tractors against Ford's, and they usually won, building a devoted customer base. IH's Farmall line was immensely popular as it was just that, a machine that did it all. It took a multitude of attachments like the 4 row cultivator that saved the farmer a huge number of man-hours. *
I remember driving a Ford 9n on my uncle's dairy farm. It was a small, squat, tractor, useful for hauling wagons and small chores. He also had a Farmall MD (new in 1952); a diesel that used a small gas engine to get it started (the switch over with the lever was very cool), but my favorite was the Oliver 77 (might have been an 88, not sure) that was the absolute best because it had a six-cylinder engine. (I hated the two-cylinder John Deere tractors - they didn't switch to more cylinders until the early sixties. And we won't even talk about the stupid hand clutch.**) To my mind Oliver made the best tractors and only went under because of mismanagement, something that we will see more of in this book.
By the fifties the company was thriving, engaged in supplying multiple markets besides farm machinery, including trucks, home appliances, and industrial machinery. However, several battles on the management and labor side threatened its dominance. There was a management battle between McCaffrey and Fowler McCormack. McCormack had become a devotee of Carl Jung and would spend months each year in Switzerland at the master's feet while McCaffrey fumed in the states. He eventually took his concerns to the board who, much to Fowler's surprise, sided with McCaffrey, relegating McCormick to a titular post. Bad blood between the two continued for years. Unlike Fowler, McCaffrey was a salesman with little feel for reining in sales demands and soon IH was offering its customers 168 different models of trucks driving the factories crazy.
Harvester had a significant number of farmers who loved red and had the dealer network to support it. They were loyal because of excellent relationships with dealers who often carried them on equipment they needed immediately, but could not pay for right away. However, the company was falling behind John Deere, which produced superior equipment and service. The author also suggests that another reason for their success was the location of Deere's headquarters in Moline, Illinois closer to the farms they served rather than Harvester's dedication to Chicago as headquarters. Deere executives all live(d) on on near farms. They too had a strong dealership network. They did it by coddling the dealers rather than Harvester's tactic of hard sell of forcing dealers to do things their way.
In the meantime the company was also battling unions and the unions were battling each other in a fight between the FE (Farm Equipment union) and the UAW each seeking to oust the other. Strikes were often called just to hurt the other union and in the decade following the war, there were 1,200 work stoppages and 48,000 job grievances between 1954 and 1959. That was unsupportable. In the end, HUAC destroyed the FE whose leaders were investigated for purported Communist activities. The union's rank and file were caught up in the anti-Communist fervor. That coupled with management's desire to break the union was its death knell.
By the sixties and seventies, Harvester was running into problems endemic to older established entities. They had had a long and beloved history of paying substantial dividends, but as their factories aged and other lines required investment, the capital was being paid out in dividends, making shareholders happy, but starving the company for capital reinvestment. So they had to rely on borrowing but thanks to the Vietnam War and other factors, interest rates were at an all time high (I remember them as high as 17% when I was thinking about buying a farm) and that kind of interest rate will make borrowing exorbitantly expensive. It was a vicious cycle, the sales force kept pushing weakly designed and ill-tested new equipment out the door, which then failed pushing market share lower making even less capital available especially with the profits all going out the door as dividends.
Harvard Business School (you know the school that gave us the creators of derivatives and other high risk financial instruments) was invited to visit and review IH's attempts at rebound. "In a sense [they wrote] the problems at Harvester faces are the problems of American industry, and to that extent is prototypical of corporate American industry,...how to compete in a slow-growth, capital-intensive market when you're not the market leader." By this time John Deere, which had recognized much earlier recognized the need for higher horse power tractors, dominated the agricultural sector and had built highly automated factories. And, of course, the changes Archie McCardle, hired away from Xerox with a huge compensation package, wanted and needed to implement, met with resistance from those who had been with IH a long time. His strategy of giving employees targets beyond what they thought were acceptable and possible could be disconcerting and morale busting when they were unable to meet those targets.
But lest this review get completely out of hand, I will just summarize and say it's a fascinating examination of the rise and fall of an iconic American company, the kind of representative history that has happened to many other companies: Sears, Montgomery Ward, K-Mart, etc., etc. and that will no doubt happen to many others when their founders leave the scene. I only wish the book could have been updated past its 1985 publication. IH was sold to Tennaco in 1985 which merged the IH tractor line with their Case line becoming Case/IH. Fortunately they adopted red as the new paint scheme rather than Case's desert sand colors as well as the Farmall designation. Excellent read.
*The Moline Model D was probably the first to offer multiple attachments on a tractor. For its time it was incredibly versatile and to my knowledge the first articulated design. See http://molineplowco.com/tractors/
**In John Deere's defense, the old two-cylinder had incredible fuel economy and lugging power. The 730, out in 1959, had accessories that beat the competition - like their seat, far and away the most comfortable.
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