Memories from Irv Aal

“A bit of history: I joined IH’s Ag Equipment Group as a senior VP on October 1, 1983, after several months of deliberating whether to make the career move after spending 22-plus years at Sperry-New Holland.

“I convinced myself the opportunity versus the risk was worth it, believing the worst of IH’s financial problems were behind it after IH negotiated a comprehensive refinancing package with over 200 banks. IH had a long history in the ag equipment market and was recognized worldwide as an icon of the industry.

“As 1984 started, the sales of tractors and combines, after 5 years of torpid sales, deteriorated another 15% from the prior year instead of the industry forecast of a flat or modest strengthening of the market.

“The ag equipment group was losing money, as was the entire IH corporation. Cash flow became paramount and as the season progressed, it became apparent more drastic decisions needed to be made. I received approval to look at any alternatives we could conceive to halt the hemorrhaging of cash.

From l to r, IH’s Irv Aal, broadcaster Orion Samuelson and author Paul Wallem, at Wallem International dealership in Belvidere, Ill., September 1984

“IH had recently introduced the 50 series tractors and due to weak sales, had significant excess production capacity at the Farmall plant in Rock Island. So, we discussed building tractors for other industry players. Since Case’s tractor lineup was dated, we speculated on whether they would even consider such a move. Keep in mind that everybody in the industry was hurting after several years of declining sales.

“I placed a call to Jerry Green, president of Case. He invited me to visit Racine and discuss business. I didn’t indicate precisely what I was going to propose during our phone call. I visited Green at his office toward the end of August 1984. After exchanging pleasantries and the state of the overall industry, I asked if he thought his organization would be willing to discuss the concept of IH’s building tractors in Case colors, and with some modifications they would want.

“Green immediately called Jim Ketelsen, Chairman and CEO of Tenneco corporation, the parent corporation of Case. Ketelsen, when hearing the proposal, said he would like to elevate the discussion to a higher level of management. (Note: It seems that Ketelsen and Don Lennox, then Chairman and CEO of IH, had a brief meeting in Chicago about a year earlier that didn’t produce any positive results, but Ketelsen remained interested in having more conversation and felt the door had been opened with the meeting Green and I had.)

I agreed to pursue this with the top management at IH. This resulted in a meeting being arranged to occur at the Farm and Industrial Equipment Institute’s annual meeting scheduled at The Homestead in Hot Springs, Virginia.

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“By the end of the annual meeting, an overarching framework had been reached by the companies’ leaders that culminated in Tenneco Corporation purchasing essentially all the assets of the Ag Equipment Group of IH Corporation  The plan was to merge the J. I. Case ag equipment division with IH’s ag equipment group. This resulted in a new brand name and logo: Case IH.

“A few months earlier, I had accepted an invitation to be the luncheon speaker at the Minnesota-South Dakota Equipment Dealers Assn.’s annual convention in Minneapolis in November. Ironically, the day of the press release announcing the acquisition was the day of my speech.

“Needless to say, that caused some anxiety because of the timing of the press release. It had to precede my speech to avoid any problems with the governmental agencies. News of this magnitude would cause ripples throughout the industry.

“Fortunately, I was given clearance to mention the announcement in my speech. That prompted more hand-wringing on my part, because I couldn’t imagine giving the same speech I had prepared. I doubted any person in the audience would hear or retain much of what I had prepared after the news was announced.

“I decided to ‘wing it,’ and after approaching the podium, I pulled out my prepared comments and told the audience I had some news to share before giving the speech, and I doubted they would be very interested in what I had to say after hearing the news.

“I then proceeded to provide a broad overview of the deal. Deafening silence followed. It was difficult, if not impossible, for the dealers who had their lives and livelihoods tied up in their businesses to comprehend the implications of the announcement. After a brief time for the audience to absorb what I had just said, I proceeded to try and put a positive spin on the deal. The rest of the speech was brief, to say the least!

“The rest of the story has played out over the years, with both winners and losers. It was the first of many consolidations of the industry players over the ensuing years, and when one thinks back to 1984 and compares it to today’s industry, it’s barely recognizable.

“Time has a way of leveling out the peaks and valleys, but to the people in the room that day in November of 1984, it will always be indelibly etched in their minds.

“When the announcement was made on November 26, it was a momentous time in the history of a proud corporate giant. Rumors had been circulating in the press that IH was looking at what further steps it needed to take to survive. But, when the announcement was made, the reaction within the company was utter disbelief. People were stunned to think that the company that traced its roots back to 1831 was now going to be part of Case. It was a challenging time for me, also, since I assumed (correctly) that I would not be part of the new organization. However, as president of the ag group that was sold, my main concern was for the employees and their families, in addition to the impact on the IH dealer organization.

“Since the sale had to be approved by the Justice Department in Washington, D.C., and not knowing how long that would take, it was incumbent on the management team to maintain a ‘steady as she goes’ attitude, and keep the lines of communication open to mitigate the myriad rumors that were floating around. We planned and executed a comprehensive communications plan for employees, dealers, farmers, suppliers and other constituents.

“We found out it is difficult to make lemonade out of lemons, but we strived to do our best, confident that, while this was a seismic move in the industry, IH had a long history in the marketplace and the products would still be in demand. The challenge was to make it from point A to point B and try to minimize and mitigate the fallout among the employees and dealers.

“The Justice Department approval was announced on January 31, 1985. IH’s ag equipment group was integrated into the Case Corporation and a new brand company was introduced. Case IH was, and continues to be, a strong number two in the industry.”

Up next... "Why IH Failed: Jim Hitchner" »

Looking to read more excerpts? Jump to any of the 9 sections below to continue reading more from "The Breakup — What Really Happened":

Part 1: "Shocking News of November 26, 1984"
Part 2: "IH Profit Margins ... Going South"
Part 3: "Leadership (or Lack of) During Final Years: Archie McCardell"
Part 4: "Memories from Irv Aal" (You are here.)
Part 5: "Why IH Failed: Jim Hitchner"
Part 6: "My Memories as Dealer in the 1980s (Wallem International, Belvidere, Ill., and Central Sands International, Plainfield, Wis.)"
Part 7: "International Harvester’s European Organization"
Part 8: "Dealers View on Why IH Failed"
Part 9: "Paul Wallem Bio & Observations on the Dealer"

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