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American Motors. "First, we had to stop the bleeding," said American Motors Chairman W. Paul Tippett, 51. "Second, we had to deliver new products. Now we have to expand in the marketplace." Detroit's smallest automaker has gained ground on all three fronts. For the fourth quarter of 1983, AMC reported a $7.4 million profit, its first after nearly four years of red ink. Losses for 1983 still added up to $146.7 million, but Tippett was nonetheless pleased. "It has been a long dry spell," said he.
AMC is striving to diversify beyond what it was for so long: a supplier of so-called niche cars for a limited market. Best known: the Jeep, which AMC bought from Kaiser Industries in 1969. Sales of the profitable four-wheel-drive vehicle are phenomenal. They more than doubled, to 16,500 through mid-February, from the same period a year ago.
Tippett believes AMC's future is in its connection with Renault. That link began in 1979, when the French automaker acquired a small interest in AMC. It now owns 46.1%. The companies together brought out the subcompact Alliance in 1982. It was an instant success, and 126,008 were sold last year, or 65% of AMC's total. That helped pull AMC back from losses of $645 million from 1980 through the first nine months of 1983. As Tippett candidly told last year's shareholder gathering, "If it wasn't for Renault, there probably wouldn't be an annual meeting."
Together, the Jeep, the Alliance and a new sister car, the Encore, are finally giving AMC a broader appeal. Previous offerings, like the gremlin-plagued Gremlin and the Pacer, consistently missed that target. The well-built Alliance is also countering the legacy of another AMC albatross: poor quality. Indeed, the company's total sales could rise from last year's $3.3 billion to $4 billion in 1984, a lofty height never attained by AMC.
International Harvester. The second-largest maker of farm implements in the U.S., after Deere, was all but plowed out of business in 1980 and 1981. Sales were erratic down on the farm, and losses piled up; by 1981 Harvester had an accumulated debt of $3.5 billion. Recalls Chief Financial Officer James Cotting, 50: "The most difficult time was when I had to go tell the banks, 'I know x million is due tomorrow, and we're not going to be able to pay.' " Says he of his company's ensuing comeback: "In my heart, I always thought we would pull it off."
Name an economic problem, and Harvester had it: labor troubles, skyrocketing interest rates, tough competition from firms with lower costs, and poor management. In 1977 Harvester brought in former Xerox Executive Archie McCardell, and then made him chairman in 1979, to pull it out of its slump; instead, things got worse. McCardell was ousted in the spring of 1982. Donald Lennox, another Xerox alumnus, became boss in 1983.