Five years ago Toronto's Massey-Ferguson Ltd. was on the brink of bankruptcy. Dragged down by unwieldy inventories and a slumbering dealer network, the 115-year-old implement manufacturer in 1957 lost $4,700,000 on $400 million worth of sales in five continents. This week Massey-Ferguson will happily report on its performance for the first half of fiscal 1962. With business up 15%, the company is expected to show sales of about $263 million and profits well above last year's first half net of $6,000,000. The secret of this rejuvenation: a change in corporate philosophy, which has converted Massey-Ferguson into one of the world's handful of genuinely international manufacturing concerns.
The Mature Market. The machinery firm that Ontario Farmer Daniel Massey founded in 1847— grew with the U.S. and Canadian West, scored a major competitive triumph in 1939 by producing the first self-propelled combine. In the lush years just after World War II. it made fat profits on the strength of pent-up demand for farm equipment, but as demand shrank, it piled up a $182 million inventory of unsold machines.
What saved the firm was the intervention in 1956 of Argus Corp. Ltd.. an aggressive Canadian investment trust. Argus, after getting a controlling interest in the company, put in as president Albert A. Thornbrough. a onetime farm boy from Kansas who was one of the assets Massey acquired when it merged with British Inventor Harry Ferguson's tractor company in 1953. Thornbrough promptly set the company on a new course. North American farms, he reasoned, were now so heavily mechanized that they must be considered a "mature" market. The real growth opportunity lay in the rest of the world, where agriculture was still heavily dependent on human labor.
A New Design. Massey already had a global network of distributors and assembly plants. But Thornbrough thought that M-F could make more money and keep better control of its product if it built its own manufacturing organizations around the world. In 1959 M-F took over Perkins. Ltd. of Peterborough, England, a company from which it had been buying 160,000 diesel engines a year. It quickly followed that with the purchase of the Standard Motor Co's tractor factories, in Coventry. England, and in France, then expanded into Italy, South Africa. India and Brazil. Today the company operates 26 factories in nine countries, manufactures 80% of what it sells v. only 25% in 1956. Design has been so meticulously standardized, says Thornbrough, that "we can get an engine from Peterborough, transmissions from Coventry, rear axles and hydraulics from France and fit them in with other parts in Detroit, India or Brazil, and make a completely assembled tractor to specifications."
The result of Thornbrough's accent on overseas markets has been spectacular: Massey-Ferguson is now No. 1 in farm implement sales in Britain, France and Scandinavia and accounts for virtually the entire tractor market in such emerging nations as Ghana, Ceylon and Nigeria. Thornbrough has also revitalized Massey's U.S. distribution system with aggressive new dealers and installed a centralized computer control system to keep track of spare parts across the continent. M-F has climbed from seventh place in North American implement sales in 1957 to third (after Deere & Co. and International Harvester) today.