80's mergers

The post about IH below is interesting stuff. It seems like to me, that IH and AC suffered the worst. It also seems like IH and AC were very similar companies. I have read that AC spent tons of money in the 60's and 70's trying to compete with Caterpillar for dozers, and trying to get into the over the road engine market. The Ag division was carrying the company until the 80's farm crisis.
If IH was doing so bad, how did they hang on to the number 2 spot so long? How did Massey and White make it? How was Tenneco doing good enough to buy IH? Was the auto division the only thing keeping Ford going?
Any insight is appreciated!

Tenneco was basically an oil company that was looking to invest in other enterprises. That's why they bought Case & dumped all Case's struggling farm equipment line & kept only the profitable tractor & heavy construction equipment line. They bought IH @ bargain basement prices & had an instant line of equipment that had a good reputation. They then expanded the ag tractor line & C IH is what it is today. jal-SD.

How did Massey make it so long, they were the #1 seller world wide for over 50 years, plus they were big in construction equipment and were the owners of Perkins selling them world wide!

Morgan; Lets start with IH and AC. They both where conglomerate companies. They often had divisions that where losing money for decades but they shuffled money around to keep them going with few changes to the losing divisions. So even in good years they really did not generate a good profit company wide. AC was the worse at this. They had a iron ore mine in Upper MI that lost money just about the entire time they owned it. They kept it because one of the board members "Liked" it. The AC combine division in the 1950s, was the only agricultural segment that was making a profit. The tractor division was losing big money and losing market share fast. So there was little money for new product development. IH tried to be everything for everybody. So they had too many options on just about everything they made. They had few "standard products". This made their manufacturing cost be higher than companies like JD. JD was making 6-8% profit on it tractors in the 1960s, IH was making 3-4%. IH also had a terrible relationship with the United Auto workers. IH on average had a much higher labor cost per tractor than everyone else. So both AC and IH did not have the cash reserves to weather high interest rates with falling sales. Basically poor long term management in both companies.

Massey Ferguson made it by building more smaller tractors for a much more world wide market. So the US farm economy crash did not stop MF from still selling tractors in other countries. MF construction division actually lost them money.

White is a more interesting story. White Motor Company built trucks and heavy equipment for decades. Starting in the 1950s they started a long decline in profits. White owned Cletrec. So they did business with Oliver. In the mid 1950s White borrowed money from Oliver. Oliver became financially exposed and it was bought by White. Oliver's assets where worth more than its stock value. So a hostile takeover. Then White Motor Company kept falling and finally sold the Ag division to try and keep the truck division going.

The Ford Ag division was such a small percentage of the Auto division that the auto profits allowed Ford to weather bad farm economies.

Tenneco/Case was backed by oil/natural gas money. It was another conglomerate too. It had six unrelated divisions. So the profits from the oil/gas bought J.I. Case and IH. With the first Gulf war making oil/gas profits fall. Tenneco sold part of CIH in 1994 and all of it by 1996. Then Fiat bought them in 1999.

All of these companies all suffered the same fates because of management practices that failed for the economics of the time.

Each segment (business line) is either profitable or it is not. When emotion and history begins to drive your business decisions, you better be very lucky, to wait and survive until the next cycle (if it ever happens). In the 1970's and 80's Farming was changing forever. The old product lines were designed for the small farms of the past. Management was waiting for the old markets to be "great again"...it never happened. It is so difficult for the management to accept the fact that what used to make them great, will never make them great again. What is our new plan for a new business world??

Cummins tried to buy white truck division but the government blocked the sale claiming it would be a monopoly because only cummins engines would be in them. Somewhere I have a binder that had the logo that was to be used on it. My mom worked in marketing for Cummins at the time and kept a binder.

The 1980s were a tough time for ag related enterprises, especially ag equipment manufacturers. Almost all were in financial peril. I remember reading in WSJ at the time that even Deere was struggling financially, but they managed to recover without major re-organizations.