A Corporate Tragedy: The Agony of International Harvester Company

Cyrus McCormick's invention of the reaper revolutionized farming in North America and western Europe in the 19th century and the McCormick Harvesting Company's marketing of agricultural machinery made it one of the richest firms in America. But, as the company continued to grow and diversify in the 20th century, problems began to emerge: management tended to be rigid and inept in cutting costs; after a background of enmity toward labor, the company did an about-face and signed contracts that granted union workers extremely costly benefits; executives failed to forecast how the cyclical nature of the agricultural machine business might affect sales; the firm became overextended with debts. In the early 1980s, a combination of a recession, surplus farm commodities and a strong U.S. dollar brought disaster. Harvester barely escaped bankruptcy, and now a smaller, leaner, reorganized company is attempting a comeback. Marsh has done a fine job of telling this story, one of great interest beyond the business community. November 8