TRACTOR TRIVIA and other interesting stuff 2/11/2024

[953 nut 55,005]

International Harvester falling behind the times

 

 

in 1959 one of the first events that eventually led to the downfall of the "International Harvester Corporation" (IHC) presented itself. In June of that year, IHC recalled the 460, 560, and 660 tractors because their final drive components had failed. IHC, which wanted to be the first big-power manufacturer, had failed to drastically update the final drives on the new six-cylinder tractors.

 

These final drives were essentially unchanged from 1939 and would fail rapidly under the stress of the more powerful 60-series engines. IH's competitors took advantage of the recall, and IH lost customers in the ensuing months, with many customers moving to John Deere's New Generation of Power tractors introduced in 1960.

In the mid-1970s, the company was no longer expanding, and its profit margins were dwindling. Its competitors, like the John Deere Company, had surpassed them in the market.

The International Harvester Company also had a heavy debt burden that threatened to cripple the company.

Xerox President Archie McCardell was hired to reinvigorate the sleeping giant to avert this situation. The company now focused more on investing in new plants, innovative technologies, and new products, not knowing they were watering dead grass.

Customers, dealers, employees, and experienced executives should have been listened to when they tried to advise the company. Regardless, the company increased its debt load.

Another reason International Harvester fell is that it had less favorable contracts compared to its competitors like Deere and Caterpillar companies. These poor contracts also saw workers put down their tools and call a strike for about five months in the UAW, further weakening the case of the IH parts company.

Nonetheless, the company continued production of tractors and farm equipment, disregarding the market downturn. The managers miscalculated and assumed that farmers would order heavily to restock inventory after the strike ended, but this was not the case.

Around the same period, inflation and interest rates flared, making the company more susceptible to losses as farmers stopped buying International Harvesters Machines.

The inflation and high-interest rates slowed down the market, reducing demand in dealer territories. Another devastating factor entered the picture when President Jimmy Carter imposed a grain ban on the Soviet Union, further reducing farm equipment in the markets.

This saw the company possessing yards full of unsold inventory and large amounts of capital tied up. Due to this economic crisis and miscalculation, the company lost around $500 million in six months, narrowly surviving insolvency.

The unsold inventory and tied-up capital further constrained the International Harvesters Company as it desperately needed operating funds, prompting it to take out  loans.

The company’s source of income would manifest when dealers sold machines. Unfortunately, dealers’ opinions were not sought while improving the company and were subjected to comply with strict rules.

They had to comply with building a new facility, the prototype building, as the company wanted all dealers to look the same. From the losses the company made in subsequent years, International Harvester’s Board of Directors voted to eliminate the company’s annual $1.20 common share dividend, further demoralizing stakeholders.

In the year 1985, International Harvester was beyond salvageable. It sold its farm equipment division, and the remainder of the company was sold to Navistar International Cooperation in the subsequent year. Since the IH merger, customers have stayed loyal to the red equipment. Both dealers and customers feel that the merger turned out well for them. Customers can find Case IH parts and services for their equipment.

In conclusion the fact is that the International Harvester was a giant in the industry for years. However, these factors, among others, brought it crippling to its knees with weak and ineffective management over the years, evidenced by the lack of listening to customers’ and dealers’ opinions. High-interest rates and a heavy debt burden made surviving even more difficult.

[Sailman 1,291]

In 1924, International Harvester introduced a new row-crop tractor named the "Farmall". Its pioneering tricycle configuration would dominate US farms for the next 30 years. IHC used the Farmall brand for all their tractors with a row-crop front axle until the 1970s. At that point, the name was phased out before finally disappearing completely in 1975. CNH Global has revived the Farmall brand on some of their modern utility tractors.

I grew up on a farm in Iowa. We mainly used the John Deere and Farmall tractors for the heavy work. Ford Jubilee and C Allis Chalmers for the light duty.

[953 nut 55,005]

6 minutes ago, Sailman said:

used the John Deere and Farmall tractors for the heavy work

We had a Farmall as one of the first tractors on the farm. A few years ago my cousin pulled it out of a fence-row and did a mechanical restoration. The first show he took it to a fellow made him an offer that was too good to turn down, This picture is from about 1949 of me and dad.

[Handy Don 12,111]

While doing some consulting work at Case IH headquarters in Racine Wisconsin, I learned a lot about the company. In the late 90’s it was expanding by acquiring agricultural equipment makers all over the world.

I visited several of the plants, but one parts manufacturing plant in Canada really stood out. There two operators in shirtsleeves ran a complete computerized line that cut, shaped, treated, prepped, painted, and packaged cultivator and plow discs. They were able to run batches as small as ONE unit. Nearly everything made during a day was shipped out direct to dealers within an hour or so of the end of the workday. Urgent orders were slotted into production immediately often “hitting the dirt” the next day. The only significant inventory was raw materials and packing supplies.

Tractor makers have come a LONG way.