Archie McCardell, Harvester Chief Who Clashed With Union, Dies at 81

July 16, 2008

By DOUGLAS MARTIN

Archie R. McCardell, whose gruff, bottom-line approach as the new chief of the International Harvester Company in the late 1970s drew praise from Wall Street but the enmity of labor, culminating in a bitter five-and-a-half-month strike, died Friday in Casper, Wyo., where he lived. He was 81.

The cause was complications of heart failure, said his grandson, Scott Arcenas.

Mr. McCardell knew success early, as senior class president in high school and the first in his family to attend college. After earning an M.B.A., he rose to director of finance for the Ford Motor Company in Germany, then moved to Xerox, where he was promoted to president.

He joined Harvester, based in Chicago, in August 1977 as president and chief operating officer, explaining that he thought he would have a better chance of being the top executive there than at Xerox. He became chief executive the following January and chairman in June 1979.

Upon his arrival Mr. McCardell began an aggressive program to cut costs and engineered a profit increase in his first year, to $370 million from $203.7 million.

But Harvester’s margins were only a little more than half those of its competitors Caterpillar Inc. and Deere & Company. This had resulted in part from past concessions to labor and a tradition of paying out most earnings as dividends rather than reinvesting them.

When the United Auto Workers contract expired on Nov. 1, 1979, Mr. McCardell saw an opportunity to improve efficiency by persuading the union to give up rights it had won in past negotiations, particularly on overtime.

The union went on strike for nearly six months and eventually retained most of the work rights Mr. McCardell had sought to take away. Harvester had lost $479.4 million during the strike and $397.3 million in its 1980 fiscal year.

Union members complained that Mr. McCardell and his lieutenants only heightened tensions by acting arrogant and aloof during the strike, in one instance, they said, sending armed guards to watch dismissed workers clean out their lockers, The New York Times reported in 1982.

Another flash point was Mr. McCardell’s compensation package, which included a $1.5 million signing bonus and a $450,000 annual salary — astronomical figures for executive compensation then but modest ones by today’s standards. Workers as well as shareholders were also furious when the company forgave a $1.8 million loan to Mr. McCardell.

The labor problems only added to the company’s woes. Climbing interest rates, weak markets and high-cost plants had helped push Harvester’s debt to $4.5 billion. Only through an agreement with 200 lenders in 1981 did Harvester escape bankruptcy.

Mr. McCardell resigned in May 1982, although Time magazine and other publications suggested that his departure was really a firing. “The real wonder was that McCardell had not been ousted much earlier,” Time said.

International Harvester did not recover, and in 1985 it sold its farm equipment division, which had started with Cyrus McCormick’s reaper factory. Its crimson tractors and combines had long been a familiar feature of the American heartland. The remainder of the company, its truck and engines division, became the Navistar International Corporation in 1986.

Archie Richard McCardell was born in Hazel Park, Mich., on Aug. 29, 1926. He served in the Army Air Forces, then used the G.I. Bill to earn undergraduate and M.B.A. degrees from the University of Michigan. He joined Ford as a financial analyst. In 1960, he was appointed secretary-treasurer of Ford of Australia, and three years later became director of finance for Ford of Germany.

In 1966, he joined Xerox as group vice president for corporate services, rising to president in 1971. At Xerox, he helped set up a program for employees to get paid leave in order to serve their communities.

His ability to cut costs and shepherd technological innovation attracted the attention of Booz Allen Hamilton, which was helping revamp Harvester. Booz Allen recruited him for the Harvester job.

Mr. McCardell later worked in real estate development, scuba-diving expeditions and other business ventures.

He is survived by his wife, the former Margaret Edith Martin; three children, Sandra, Laurie and Clay, all of whom have the last name McCardell and all of whom live in Casper; two brothers, Allan, of Milford, Mich., and Arnold, of Perry, Mich.; one sister, JoAnne Iwanicki, of Warren, Mich.; and four grandchildren in addition to Mr. Arcenas.

Six months after Mr. McCardell left Harvester, he spoke to a group at Harvard Business School. He said he had two regrets: the controversial nature of his compensation deal, and not getting to know union people better before the strike.

Asked to grade himself, Mr. McCardell nonetheless replied, “I think I rate myself superb.”

New York Times

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