Archie McCardell

McCardell became group president for corporate services at Xerox in 1966.[7] The post of executive vice president for operations was created for him in 1968,[8] and he was named president of the company in 1971.[9] During his tenure, Xerox introduced its first color copier.[10]

During McCardell's reign at Xerox, the company announced record revenues, earnings and profits in 1973, 1974, and 1975.[11][12] Although these accomplishments were lauded by the press as a sign of McCardell's management expertise, the company had been setting records in key financial indicators for 20 years.[11] More troubling were signs that the company was actually stumbling financially: The cost of new products was zooming out of control,[13] most of the company's growth was coming from overseas operations rather than the large American domestic market,[14] and Xerox seemed to have no clear strategic vision.[15]

McCardell departed Xerox for International Harvester in August 1977, just as the company's profits began dropping.[16]

McCardell was appointed president and chief operating officer of International Harvester on August 3, 1977.[17] He received a then-exorbitant salary of $460,000 (making him one of the highest-paid CEOs in the country),[2] a $1.5 million signing bonus and a $1.8 million loan at 6 percent interest.[18][19] He was named chief executive officer in January 1978.[20]

He instituted an aggressive cost-cutting program which immediately cut spending by $640 million and a modernization program which poured $879 million over three years into the company's plants.[18][21] His actions boosted market share, and led to record sales of $8.4 billion and record profits of $370 million (up from $203 million).[6][18] Despite McCardell's actions, IH's profit margins were still only half those of competitors like Caterpillar Inc. and Deere & Company.[6][22]

In the fall of 1979, rather than undertake more traditional cost-cutting measures, McCardell pressed for concessions from the United Auto Workers (a trade union which had represented Harvester's workers since the early 1950s).[2] McCardell's inexperience at labor relations, his rigid bargaining stance, misjudgments about the union's ability to withstand a long strike, and other factors trigged a 172-day strike which began on November 1, 1979, and ended on April 20, 1980.[23][24] The strike was the longest ever at International Harvester, and as of August 2008 is still the fourth-longest strike in United Auto Worker history.[25] When a final agreement came, the union retained nearly everything McCardell had sought to change,[6] and International Harvester had lost $479.4 million during the strike and $397.3 million in the next fiscal year.[6]

The strike severely impacted the company's financial status. International Harvester lost $257.2 million in the second quarter, for a total of $479.4 million in the first half of the year, while sales slid 47.3 percent.[18][26] The company put its utility vehicle division up for sale to help cover the losses,[26] and by the end of April 1980 was forced to take out loans which increased its short-term debt from $442 million to a staggering $1 billion.[18][27] But International Harvester never recovered from the strike.[18] In November 1981, IH asked the UAW for $100 million in wage and benefit concessions.[1] Rising interest rates, demand weakened by the early 1980s recession, and high manufacturing costs pushed the company's total debt to a whopping $4.5 billion.[6] On December 23, 1981, the company reached an agreement with 200 of its lenders to refinance $4.15 billion of its debt in a bid to avoid bankruptcy.[1][6] McCardell announced $200 million in more cuts.[28] On January 20, 1982, the UAW rejected Harvester's request for concessions because McCardell had just given $6 million in bonuses to salaried employees.[1] But with the firm's financial condition rapidly worsening, the UAW reopened negotiations in March 1982.[1][29] Negotiators reached a tentative agreement nearly two years to the day after the 1979–1980 strike ended, giving Harvester $200 million in wage, benefit, pension, and other savings over three years.[1]

International Harvester was also sued over McCardell's $1.8 million forgiven loan, and was unable to have the suit dismissed.[30]

On May 3, 1982, one day after the UAW ratified the concessionary contract, Archie McCardell was fired by International Harvester.[1] Although McCardell asserted he had resigned, industry and press observers said that he was fired.[6][24] Time reported that the company's 16-member board of directors met in a two-hour meeting over the weekend.[3] Pushed by the company's debtor banks, the board finally agreed to fire McCardell.[3] "The real wonder was that McCardell had not been ousted much earlier," Time said.[3] He was replaced as chairman and CEO by Louis W. Menk and president Warren J. Hayford was replaced by Donald D. Lennox.[31][32]

The company's downward financial spiral continued. For fiscal year 1980, 1981, and 1982, International Harvester incurred a combined three-year loss of $2.4 billion—the largest such three-year loss for any American company in history at the time.[33] International Harvester sold its farm equipment division to Tenneco in 1985, and changed its name in 1986 to Navistar International.[6]