Archie McCardell
Encyclopedia
Archie R. McCardell was an American
business leader. He was best known for his tenure as chief executive officer
, president
, and chairman of the board
at the International Harvester
farm and heavy equipment manufacturing concern from 1977 to 1982. Although Harvester was the nation's fourth-largest company at the time he assumed control, McCardell triggered a strike by unionized employees which ended disastrously for the company and led to its eventual demise.
in August 1926. He served in the United States Army Air Forces
in World War II
. Following his time in the service, he attended the University of Michigan
(he was the first person in his family to attend college), where he earned a bachelor's degree
and a Master of Business Administration
.
, and was appointed secretary-treasurer of Ford's operation in Australia
and later director of finance for Ford's division in West Germany
.
in 1966. The post of executive vice president for operations was created for him in 1968, and he was named president of the company in 1971. During his tenure, Xerox introduced its first color copier.
During McCardell's reign at Xerox, the company announced record revenue
s, earnings
and profit
s in 1973, 1974, and 1975. 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. More troubling were signs that the company was actually stumbling financially: The cost of new products was zooming out of control, most of the company's growth was coming from overseas operations rather than the large American domestic market, and Xerox seemed to have no clear strategic vision.
McCardell departed Xerox for International Harvester in August 1977, just as the company's profits began dropping.
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. His actions boosted market share
, and led to record sales
of $8.4 billion and record profits of $370 million (up from $203 million). Despite McCardell's actions, IH's profit margin
s were still only half those of competitors like Caterpillar Inc.
and Deere & Company
.
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). 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. 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. When a final agreement came, the union retained nearly everything McCardell had sought to change, and International Harvester had lost $479.4 million during the strike and $397.3 million in the next fiscal year.
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. The company put its utility vehicle division up for sale to help cover the losses, 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. But International Harvester never recovered from the strike. In November 1981, IH asked the UAW for $100 million in wage and benefit concessions. 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. 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. McCardell announced $200 million in more cuts. On January 20, 1982, the UAW rejected Harvester's request for concessions because McCardell had just given $6 million in bonuses to salaried employees. But with the firm's financial condition rapidly worsening, the UAW reopened negotiations in March 1982. 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.
International Harvester was also sued over McCardell's $1.8 million forgiven loan, and was unable to have the suit dismissed.
On May 3, 1982, one day after the UAW ratified the concessionary contract, Archie McCardell was fired by International Harvester. Although McCardell asserted he had resigned, industry and press observers said that he was fired. Time
reported that the company's 16-member board of directors met in a two-hour meeting over the weekend. Pushed by the company's debtor banks, the board finally agreed to fire McCardell. "The real wonder was that McCardell had not been ousted much earlier," Time said. He was replaced by Louis W. Menk and Warren J. Hayford.
The company's downard 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. International Harvester sold its farm equipment division to Tenneco
in 1985, and changed its name in 1986 to Navistar International
.
, where he purchased Pepperidge Farm
, the 320 acres (129.5 ha) farm owned by Margaret Rudkin
which had lent its name to the baking company. McCardell began developing the farm into an affluent subdivision
known as The Ridge.
He was elected to the board of directors of Computer Communications Inc. in 1984, but the company later folded. He also ran a company which took tourists on scuba diving
trips, and owned several other small businesses.
Archie McCardell died at his home in Casper, Wyoming
on July 10, 2008, of complications from heart failure. His wife, Margaret McCardell (née Martin); children Sandra, Laurie and Clay; and two brothers and a sister survived him.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
business leader. He was best known for his tenure as chief executive officer
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
, president
President
A president is a leader of an organization, company, trade union, university, or country.Etymologically, a president is one who presides, who sits in leadership...
, and chairman of the board
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
at the International Harvester
International Harvester
International Harvester Company was a United States agricultural machinery, construction equipment, vehicle, commercial truck, and household and commercial products manufacturer. In 1902, J.P...
farm and heavy equipment manufacturing concern from 1977 to 1982. Although Harvester was the nation's fourth-largest company at the time he assumed control, McCardell triggered a strike by unionized employees which ended disastrously for the company and led to its eventual demise.
Early life
Archie McCardell was born in Hazel Park, MichiganHazel Park, Michigan
Hazel Park is a city in Oakland County of the U.S. state of Michigan. As of the 2010 census, the city population was 16,422. Hazel Park was incorporated in 1941 and bills itself as "The Friendly City"....
in August 1926. He served in the United States Army Air Forces
United States Army Air Forces
The United States Army Air Forces was the military aviation arm of the United States of America during and immediately after World War II, and the direct predecessor of the United States Air Force....
in World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
. Following his time in the service, he attended the University of Michigan
University of Michigan
The University of Michigan is a public research university located in Ann Arbor, Michigan in the United States. It is the state's oldest university and the flagship campus of the University of Michigan...
(he was the first person in his family to attend college), where he earned a bachelor's degree
Bachelor's degree
A bachelor's degree is usually an academic degree awarded for an undergraduate course or major that generally lasts for three or four years, but can range anywhere from two to six years depending on the region of the world...
and a Master of Business Administration
Master of Business Administration
The Master of Business Administration is a :master's degree in business administration, which attracts people from a wide range of academic disciplines. The MBA designation originated in the United States, emerging from the late 19th century as the country industrialized and companies sought out...
.
Business career
After leaving school in 1949, McCardell became a financial analyst at the Ford Motor CompanyFord Motor Company
Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK...
, and was appointed secretary-treasurer of Ford's operation in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
and later director of finance for Ford's division in West Germany
West Germany
West Germany is the common English, but not official, name for the Federal Republic of Germany or FRG in the period between its creation in May 1949 to German reunification on 3 October 1990....
.
Xerox
McCardell became group president for corporate services at XeroxXerox
Xerox Corporation is an American multinational document management corporation that produced and sells a range of color and black-and-white printers, multifunction systems, photo copiers, digital production printing presses, and related consulting services and supplies...
in 1966. The post of executive vice president for operations was created for him in 1968, and he was named president of the company in 1971. During his tenure, Xerox introduced its first color copier.
During McCardell's reign at Xerox, the company announced record revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
s, earnings
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
and profit
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
s in 1973, 1974, and 1975. 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. More troubling were signs that the company was actually stumbling financially: The cost of new products was zooming out of control, most of the company's growth was coming from overseas operations rather than the large American domestic market, and Xerox seemed to have no clear strategic vision.
McCardell departed Xerox for International Harvester in August 1977, just as the company's profits began dropping.
International Harvester
McCardell was appointed president and chief operating officer of International Harvester on August 3, 1977. He received a then-exhorbitant salary of $460,000 (making him one of the highest-paid CEOs in the country), a $1.5 million signing bonus and a $1.8 million loan at 6 percent interest. He was named chief executive officer in January 1978.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. His actions boosted market share
Market share
Market share is the percentage of a market accounted for by a specific entity. In a survey of nearly 200 senior marketing managers, 67 percent responded that they found the "dollar market share" metric very useful, while 61% found "unit market share" very useful.Marketers need to be able to...
, and led to record sales
Sales (accounting)
In bookkeeping, accounting, and finance, Net sales are operating revenues earned by a company when it sells its products. Revenue are reported directly on the income statement as Sales or Net sales....
of $8.4 billion and record profits of $370 million (up from $203 million). Despite McCardell's actions, IH's profit margin
Profit margin
Profit margin, net margin, net profit margin or net profit ratio all refer to a measure of profitability. It is calculated by finding the net profit as a percentage of the revenue.Net profit Margin = x100...
s were still only half those of competitors like Caterpillar Inc.
Caterpillar Inc.
Caterpillar Inc. , also known as "CAT", designs, manufactures, markets and sells machinery and engines and sells financial products and insurance to customers via a worldwide dealer network. Caterpillar is the world's largest manufacturer of construction and mining equipment, diesel and natural gas...
and Deere & Company
Deere & Company
Deere & Company, usually known by its brand name John Deere , is an American corporation based in Moline, Illinois, and the leading manufacturer of agricultural machinery in the world. In 2010, it was listed as 107th in the Fortune 500 ranking...
.
In the fall of 1979, rather than undertake more traditional cost-cutting measures, McCardell pressed for concessions from the United Auto Workers
United Auto Workers
The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, better known as the United Auto Workers , is a labor union which represents workers in the United States and Puerto Rico, and formerly in Canada. Founded as part of the Congress of Industrial...
(a trade union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
which had represented Harvester's workers since the early 1950s). 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. 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. When a final agreement came, the union retained nearly everything McCardell had sought to change, and International Harvester had lost $479.4 million during the strike and $397.3 million in the next fiscal year.
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. The company put its utility vehicle division up for sale to help cover the losses, 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. But International Harvester never recovered from the strike. In November 1981, IH asked the UAW for $100 million in wage and benefit concessions. 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. 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. McCardell announced $200 million in more cuts. On January 20, 1982, the UAW rejected Harvester's request for concessions because McCardell had just given $6 million in bonuses to salaried employees. But with the firm's financial condition rapidly worsening, the UAW reopened negotiations in March 1982. 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.
International Harvester was also sued over McCardell's $1.8 million forgiven loan, and was unable to have the suit dismissed.
On May 3, 1982, one day after the UAW ratified the concessionary contract, Archie McCardell was fired by International Harvester. Although McCardell asserted he had resigned, industry and press observers said that he was fired. Time
Time (magazine)
Time is an American news magazine. A European edition is published from London. Time Europe covers the Middle East, Africa and, since 2003, Latin America. An Asian edition is based in Hong Kong...
reported that the company's 16-member board of directors met in a two-hour meeting over the weekend. Pushed by the company's debtor banks, the board finally agreed to fire McCardell. "The real wonder was that McCardell had not been ousted much earlier," Time said. He was replaced by Louis W. Menk and Warren J. Hayford.
The company's downard 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. International Harvester sold its farm equipment division to Tenneco
Tenneco
Tenneco is a $6.2 billion Fortune 500 company that has been publicly traded on the NYSE since November 5, 1999 under the symbol TEN...
in 1985, and changed its name in 1986 to Navistar International
Navistar International
Navistar International Corporation is a United States-based holding company that owns the manufacturer of International brand commercial trucks, MaxxForce brand diesel engines, IC Bus school and commercial buses, Workhorse brand chassis for motor homes and step vans, and is a private label...
.
Later career and death
McCardell moved to Fairfield, ConnecticutFairfield, Connecticut
Fairfield is a town located in Fairfield County, Connecticut, United States. It is bordered by the towns of Bridgeport, Trumbull, Easton, Redding and Westport along the Gold Coast of Connecticut. As of the 2010 census, the town had a population of 59,404...
, where he purchased Pepperidge Farm
Pepperidge Farm
Pepperidge Farm is a commercial bakery in the U.S. founded in 1937 by Margaret Rudkin, who named the brand after her family's property in Fairfield, Connecticut, which in turn was named for the pepperidge tree, Nyssa sylvatica. Since 1961, the company has been owned by the Campbell Soup Company...
, the 320 acres (129.5 ha) farm owned by Margaret Rudkin
Margaret Rudkin
Margaret Rudkin , of Fairfield, Connecticut, was the founder of Pepperidge Farm.Born in New York City, she was the eldest of five children of Joseph and Margaret "Healey" Fogarty. She was taught to cook by her grandmother, who started her off with cakes and biscuits. She moved to Long Island when...
which had lent its name to the baking company. McCardell began developing the farm into an affluent subdivision
Subdivision (land)
Subdivision is the act of dividing land into pieces that are easier to sell or otherwise develop, usually via a plat. The former single piece as a whole is then known in the United States as a subdivision...
known as The Ridge.
He was elected to the board of directors of Computer Communications Inc. in 1984, but the company later folded. He also ran a company which took tourists on scuba diving
Scuba diving
Scuba diving is a form of underwater diving in which a diver uses a scuba set to breathe underwater....
trips, and owned several other small businesses.
Archie McCardell died at his home in Casper, Wyoming
Casper, Wyoming
Casper is the county seat of Natrona County, Wyoming, United States.. Casper is the second-largest city in Wyoming , according to the 2010 census, with a population of 55,316...
on July 10, 2008, of complications from heart failure. His wife, Margaret McCardell (née Martin); children Sandra, Laurie and Clay; and two brothers and a sister survived him.