International Harvester Co. officials, facing stockholders for the first time since reporting the company's $1.6 billion loss for fiscal 1982, attempted today to paint a picture of a company finally over the hump.
But Harvester executives conceded that, even as the company has been pulled back from the brink of bankruptcy, its two main lines of business are facing new difficulties because of recent government actions. The Reagan administration's plan to remove more farmland from production is bad news for IH's farm-equipment line, and new taxes on heavy-duty trucks spell trouble for that part of IH's business.
Harvester President Donald D. Lennox told the company's annual meeting here that IH "is not a company that is moving backwards . . . We are making progress." And many of the 500 stockholders in attendance sported company-supplied "IH--We're going on" buttons.
Since Harvester's last annual meeting, the company has replaced its top management, lopped off its construction-equipment business and several other smaller operations, renegotiated its $4 billion in bank loans on easier terms, received contract concessions from the United Auto Workers union, and let go more than one-third of its employes. Holders of common stock have not received dividends in more than two years, and none is anticipated in the near future.
Harvester says that, with its drastic restructuring of the past year, it can stay afloat even in a worst-case scenario of no growth in farm equipment and little growth in trucks this year.
"We are a function of the economy," Lennox told a press conference after the shareholders' meeting. "We see ourselves turning the company around in going forward, providing the economy makes the turn."
The administration's program to aid the farm economy presents a painful paradox for Harvester and other farm-equipment manufacturers. Under the administration's Payments in Kind (PIK) program, farmers are being encouraged to take more land out of production, thus reducing the nation's price-dampening grain surplus. In return, the farmers will receive surplus grain from the government.
But while the plan would boost the farm economy--something Harvester is counting on--it would not encourage farmers to purchase new equipment. The Farm and Industrial Equipment Institute, a trade group, says that, because of PIK, it expects tractor and grain combine sales to decline this year rather than reach the small increase it had projected originally.
Harvester is not saying what its projections are. But Lennox said today, "The PIK program is still up for grabs as to what the effect will be."
Similarly, Harvester officials are not entirely sure what effect the change in truck taxation will have on the company. The truck-tax bill passed by Congress late last year increases fuel, excise and use taxes for heavy trucks and eliminates the taxes on medium-duty trucks, both of which Harvester produces.
The outlook for the truck market was further clouded today when Transportation Secretary Elizabeth H. Dole said the Reagan administration is examining a proposal in Congress to roll back the heavy-truck excise tax and instead increase the tax on diesel fuel. That could be more troublesome for IH, a major producer of diesel trucks and of diesel engines for other truck makers.
In spite of the uncertainties, Harvester officials exuded cautious optimism at today's meeting, and the shareholders in attendance--mostly Harvester workers, ex-employes and dealers--indicated their loyalty to the old-line Chicago company, even in the face of a $165 million loss on continuing operations in the first fiscal quarter, announced Wednesday.
One stockholder, however, drew laughter and applause when he prefaced a question to IH Chairman Louis W. Menk by saying, "I'm a new stockholder--obviously I have a fair amount of courage."