Downfall and Ending
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 $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.
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).
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. 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. Tenneco had a subsidiary, J.I. Case, that manufactured tractors, but lacked the full line of farm implements that IH produced (combines, cotton pickers, tillage equipment etc.)
Following the merger, tractor production at Harvester's Rock Island, Illinois Farmall Works ceased in May 1985. Production of the new Case IH tractors moved to the J.I. Case Tractor Works in Racine, Wisconsin. Production of IH Axial-Flow combines continued at the East Moline, Illinois combine factory. Harvester's Memphis Works in Memphis, Tennessee was closed and cotton picker production was moved.
The truck and engine divisions remained, and in 1986 Harvester changed the corporate name to Navistar International Corporation (Harvester had sold the International Harvester name and the IH symbol to Tenneco Inc. as part of the sale of its agricultural products division). Navistar International Corporation continues to manufacture medium- and heavy-duty trucks, school buses, and engines under the International brand name.
Read more about this topic: International Harvester, History
Famous quotes containing the word downfall:
“Show me one thing here on earth which has begun well and not ended badly. The proudest palpitations are engulfed in a sewer, where they cease throbbing, as though having reached their natural term: this downfall constitutes the heart’s drama and the negative meaning of history.”
—E.M. Cioran (b. 1911)