Archie McCardell, who led International Harvester Co. into a disatrous six-month strike 2 1/2 years ago, resigned Sunday as chairman, only days after Harvester won concessions from its union workers and leniency from its bankers in its struggle to stay alive.
Harvester provided no reason for McCardell's resignation in its announcement yesterday, but industry analysts said McCardell appeared unable to pull together the banking and union interests whose support is crucial to the company's future.
McCardell's departure came less than five months after he predicted the company would return to profitability in 1982 after two years of heavy losses. Latest estimates are that Harvester will lose more than $500 million this year, more than in either 1980 or 1981.
McCardell was lured from the presidency of Xerox Corp. in 1977 to head Harvester, the nation's leading manufacturer of medium and heavy-duty trucks and the second-biggest agricultural equipment manufacturer. The company had been directed primarily by family members since its founding by American inventor Cyrus McCormick in 1831, but the board decided it was getting stodgy and turned to a high-powered executive from the outside.
McCardell received a $1.5 million bonus as well as a $1.8 million loan at low interest to buy Harvester stock. That loan, which the board forgave in 1980, became one of many raw edges between McCardell and the company's United Auto Workers employes.
McCardell will be succeeded by Louis W. Menk, retired chairman of Burlington Northern Inc. who is a member of the Harvester board.
Sources at the company said that Menk, who retired from the giant railroad-natural resources company last year, is seen as a caretaker.
Last March, Harvester President Warren Hayford resigned after failing to convince McCardell that the prospects for Harvester were more dismal than McCardell believed. Hayford urged more extensive cost-cutting. The Harvester board replaced him with former executive vice president Donald D. Lennox.
McCardell quickly became a target of union ire after bull-doggedly pushing the United Auto Workers for changes in labor practices, taking a six-month strike in 1979 and 1980 that netted little, then announcing $6 million in white collar bonuses in January, only weeks after he had asked the UAW to renegotiate its contract to reduce labor costs by $100 million.
The union broke off negotiations then, but last week agreed to a new pact (union members formally ratified it yesterday) because of fears that Harvester would be forced out of business. The contract, which covers 30,000 union workers (a third of them on layoff), will save Harvester $200 million between now and Sept. 30, 1984. It includes a profit-sharing plan for union members the moment the company goes into the black.
After the inconclusive 1979-80 strike--during which Harvester lost $400 million and watched its short-term debt climb from less than $450 million to nearly $1.1 billion--Harvester returned to operations in the worst markets it has ever seen for its major products: trucks, farm equipment and construction equipment.
Today's its indebtedness is $4.2 billion, sales continue to weaken and nearly 10,000 of its 30,000 blue collar workers are on layoff (some were recalled recently).
Harvester renegotiated its loan agreements last December, at which time McCardell--in shirtsleeves brandishing a cigar--confidently told reporters that the company would run profitably again by the second quarter of 1982. In November he predicted Harvester would have 1982 profits of about $300 million. By February, his December confidence had ebbed considerably bankers said. He then predicted a loss of nearly $460 million. Last month, McCardell said the once-proud Harvester would lose $518 million.
The company, which has been slashing costs and white collar employes with a vengeance, said yesterday it wants to cut costs another $650 million this year (beyond the union savings).
"Basically, to save Harvester, you need the cooperation of management, the banks, labor, customers and suppliers. McCardell was just not a figure to bring those groups togther," according to Eli Lustgarten, an analyst with Paine Webber Mitchell Hutchins.
"We've been saying that McCardell would be the sacrifical lamb" for Harvester, which lost $397 million in 1980, $393 million in 1981 and $299 million in its first quarter of 1982 (which ended Jan. 31), Lustgarten said. "He chose the terms of the slaughter."
Some analysts speculate that the union leaders demanded McCardell's resignation as a condition for renegotiating the contract. Other sources said McCardell's business judgments were just as likely to have infuriated the bankers and the board as his hard-nosed management was seen upsetting the union.
"There was some agitation among bankers for a change," said one source close to the financial institutions. But many bankers felt that it would merely be change for change's sake. "He is the spectre of a lot of problems," the source said. "Perhaps the board said, 'Archie, we're in a position where we can stay afloat for a period of time. Now it's time to get rid of the vestiges of those problems.' "
But whether McCardell was sacked or was prescient enough to resign before he was fired, the problems at Harvester will not go away.