Trucks At Bingham - Euclid

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The following comes from the Historical Construction Equipment Association:

The company that became Euclid was founded in 1907 in Wickliffe, Ohio, by George A. Armington as the Armington Electric Hoist Company. It was renamed Euclid Crane & Hoist Company when the plant was relocated to Euclid, Ohio. Euclid built experimental tractors (one crawler and several wheeled) c. 1920s, and entered the construction equipment industry when it introduced the Automatic Rotary Scraper in 1924. Acceptance of the scrapers led to the creation of the Road Machinery Division in 1926, and the Division was incorporated as the Euclid Road Machinery Company, a subsidiary of the Euclid Armington Corporation, on Jul 11, 1931. The Euclid Road Machinery Company became independent of Euclid Armington on Jan 1, 1933, and no record is known to exist of Euclid Crane & Hoist after this.

General Motors, which had been exploring entry into the heavy construction equipment market, acquired Euclid on Sep 30, 1953 and made it a division of GMC on Jan 1, 1954; in the mid-1950s, GMC built a new factory for Euclid at Hudson, Ohio.

The U. S. Department of Justice filed an anti-trust action against GMC on Oct 15, 1959 on the allegation that GMC threatened to control the off-road hauler market. To settle, GMC negotiated with White Motor Corporation during 1967 for the sale of certain parts of the Euclid Division, and on Feb 15, 1968 White purchased the Euclid off-road truck lines. GMC retained the right to build and market haulers from Canadian plants and the former Euclid factories in Hudson and Scotland, but was barred from re-entering the US market until Jul 1, 1972. The former Euclid tractor, scraper and loader lines were also retained by GM and were produced by its Earthmoving Equipment Division, which became Terex. The British operation retained the Euclid (Great Britain), Ltd. name until December, 1968, when it was renamed General Motors Scotland, Ltd. Euclid lost its international manufacturing and marketing in the deal.

White operated Euclid as a subsidiary under the name of Euclid, Inc., then sold it to Daimler-Benz AG as a subsidiary in Aug 1977. Daimler-Benz sold Euclid to the Clark Michigan Company, the construction machinery subsidiary to Clark Equipment Company, in Jan 1984.

In answer to poor economic conditions, Clark formed a 50/50 joint venture company with Volvo AB in 1985.  The new firm was called VME, an acronym for Volvo Michigan Euclid, and operated in separate units, Volvo BM Company in Europe and VME Americas in North America. The European unit became simply VME in 1989. In 1991, VME Americas was divided into VME Industries North America to handle Euclid products and VME Sales North America to handle wheel loaders and articulated trucks.

VME Industries North America formed a joint venture with Hitachi Construction Machinery Company Ltd. of Japan in Dec 1993. Hitachi acquired a 19.5% share of the Euclid US operations, and the venture was called Euclid-Hitachi Heavy Equipment Ltd. The VME name was eliminated in May 1995 when Volvo's parent company purchased Clark's share of the VME venture, and the former VME was renamed Volvo Construction Equipment Corporation.  By 1996, Hitachi had increased its shares of Euclid to 40%. On Jan 1, 2004. Hitachi renamed its Euclid-Hitachi Heavy Equipment Ltd. of Guelph, Ontario to Hitachi Construction Truck Manufacturing Ltd., abolishing the Euclid name.

The following comes from Diesel Progress, North American Division, March 1, 1999:

Volvo has been involved in manufacturing construction machines since the mid-1800s, but the initial catalyst to its surge in recent years was the formation in 1985 of VME, a joint venture between AB Volvo and Clark Equipment. The venture grew substantially, along the way making several acquisitions that increased its presence in the mobile equipment markets even further.

In 1990, Volvo purchased 25 percent of Zettelmeyer, a German manufacturer of smaller construction equipment, including compact wheel loaders. A year later, Volvo moved to majority ownership and in 1993, acquired the remainder, making Zettelmeyer a wholly owned subsidiary.

Also in 1993, VME and Hitachi formed Euclid-Hitachi, a joint venture dedicated to the production of rigid haulers from 36 to 260 tons used in construction and mining applications. At the beginning, VME held an 80 percent share of the venture, which changed only recently. More on that later.

In 1995, Clark opted out of the VME joint venture, selling its 50 percent of the company to Volvo for $573 million. The company was re-christened Volvo Construction Equipment, and established as a wholly owned subsidiary of AB Volvo.

Being on its own obviously didn't dampen Volvo's growth ambitions. Late in the same year, it acquired Group Pel-Job, a mini-excavator manufacturer based in France. In 1997, it purchased Champion Road Machinery, a Canadian manufacturer of grading and paving equipment, for $125.5 million.

Midway through 1998, Volvo Construction Equipment acquired 90 percent of Samsung Heavy Industries' construction equipment business for $572 million. Samsung's primary products are 10 different types of hydraulic excavators, most ranging from 5 to 45 tons.

The acquisition also gives Volvo access to an industrial structure in Asia and an efficient distribution network in South Korea, a significant market for construction equipment in Asia. The operations acquired also included a 1.3 million sq .ft. manufacturing facility.

"If you go back to when Volvo and Clark first formed VME, our total turnover was in the neighborhood of about $750 million," said Narveson. "We started with wheel loaders and rigid haulers in our product range. Over a period of time, we added additional products.

"We have grown it both generically and through acquisitions to $2.5 billion in 1998, nearly three times what we started with, in a period of about 12 years."

Volvo has made a number of other strategic moves. In 1998, it reduced its ownership share in Euclid Hitachi Heavy Equipment Inc., from 60 percent to 20 percent. Hitachi's share is now 80 percent and it agreed to purchase the remaining 20 percent in October of 2001, making the company a wholly owned Hitachi subsidiary. In addition, Volvo agreed to sell its rigid hauler business in Australia to Marubeni Construction & Mining Equipment Ply. Ltd., Australia.

The following comes from Re-Creating The Corporation, A Design of Corporations for the 21st Century, by Russell L. Ackoff, Oxford University Press, 1999, ISBN 0-19-512387-5

In the mid-1980s, the Clark Michigan Company, a wholly owned subsidiary of the Clark Equipment Corporation, was in serious financial trouble. The Japanese company Komatsu had entered Clark's market with better mobile earthmoving equipment that sold at a lower price than Clark's. Clark reduced its price to Komatsu's with the hope of retaining at least some of its market share while studying the possibility of redesigning its products and its production processes in order to compete effectively with Komatsu. In the meantime, it sold products for less than the cost of producing them. This resulted in negative cash flow. Clark's creditors threatened to put the company into bankruptcy and liquidate its assets in order to get their money out. Clark was not given enough time to modify either its subsidiary's products or production processes so as to become profitable. Therefore, it adopted the strategy of dressing up the subsidiary and trying to sell it.

Clark Equipment's board blamed its CEO for this mess and relieved him of his duty. It then had to find a new one very quickly. Because of the rush, it did something unusual: it hired a good one, James Rinehart, then president of General Motors Canada. After joining the company and familiarizing himself with its mess, he called a meeting of its managers. He explained the nature of idealized design to them--a concept with which he was familiar from his earlier experience as head of Packard Electric. He asked the assembled managers to spend several days producing an idealized design of Clark Michigan. They objected, pointing out their studies had indicated that there was nothing they could do to save the company within the amount of time available to them and that he was asking them to imagine they could do whatever they wanted. They wanted to know why. He replied that they would find an answer to that question when engaged in the idealized-design process. They turned to it reluctantly.

A week later, they reported their results to Rinehart, saying that now they understood why they had been asked to prepare such a design. For the first time, they had been able to use all they knew about their industry and, as a result, felt that a company of their design could dominate its industry if it came into existence. But, they added, there was no conceivable way they could get from where they were to that design.

Rinehart told them that was not the right problem to consider. He said he wanted them to work back from their design to where they were, not forward from where they were. They did not understand. He explained. He said there were a number of other companies in their industry in states similar to theirs. What combination of these companies with Clark Michigan would give them the closest approximation to their idealized design?

Again they objected, pointing out there was no way they could acquire another company because of their financial condition, and no other company would he willing to acquire them for the same reason. Again Rinehart pressed them.

A week later, after completing this assignment, they expressed surprise over the fact that by combining three companies with Clark Michigan--a German company, a Swedish company, and a Japanese company--they could get a very close approximation to their idealized design. But again they did not see how they could get close to realizing such a union. Rinehart argued that since the companies identified in their design had not seen the design, their reaction to it could not he accurately predicted. Therefore, he organized a visit to the firms to discuss the design they had prepared.

At Daimler-Benz (D-B), they discussed the Euclid Truck company, an American company D-B had acquired a while back. It had never been profitable. D-B, after seeing Clark Michigan's idealized design, decided that survival of the Euclid Truck Company would be considerably enhanced if it become part of the joint venture envisaged in that design; they offered to sell it to Clark. Rinehart explained that they could not buy it for lack of cash, and a deal was arranged using an exchange of stock. Clark Michigan got Euclid.

At AB Volvo, the discussion focused on Volvo BM, a subsidiary that produced earthmoving equipment. The Volvo executives were impressed by the marketing potential of the joint venture designed, but expressed skepticism about the ability of a cross-cultural management to work effectively. Rinehart admitted to such a possibility but suggested a team of Volvo, Clark, and Euclid managers be formed to design their closest approximation to the four-firm joint venture Clark had prepared. (For legal reasons, the Japanese firm was unable to become involved, although it was greatly interested.)

In April of 1985, such a task force was formed and began work with the help of two professors from the Wharton School as facilitators. By September, a detailed design of a joint venture had been completed with no cross cultural difficulties at all. A proposal to create the joint venture was made to the boards of Clark and Volvo, and they accepted it. After the legal work was completed, in April of 1986, the VME Corporation was created--Volvo, Michigan, Euclid.

After a break-in period of a bit more than a year, VME became profitable and worked well. Then, with the support of Clark Equipment Corporation's senior management, Volvo increasingly sought and gained control over its agenda. It gradually converted Clark Michigan into what was largely a sales organization with only one manufacturing facility. Subsequently, Volvo bought out Clark's share of VME at a price very favorable to Clark.

Clark Michigan had avoided bankruptcy, had survived well for a while, and eventually was sold very profitably by its parent company because it worked backward from where it wanted to be rather than forward front where it was.

The following comes from Construction Equipment magazine, April 1, 1997:

Euclid began as part of the Euclid Crane & Hoist Co. In 1931, Euclid split from its parent company to become Euclid Road Machinery. Then, in 1953, the Euclid Road Machinery Co. was acquired by General Motors.

In 1968, Euclid became a subsidiary of White Motor Corp. following a Justice Department ruling that GM had to divest itself of the Euclid Road Machinery Co. Daimler-Benz acquired Euclid in 1977 and sold it to Clark Michigan Co. in 1984.

When Clark entered into a joint venture with Volvo AB in 1985, the VME Group was formed and Euclid became part of that organization. The group became VME Americas in 1986. And in 1992, Euclid teamed up with Hitachi to form Euclid-Hitachi Heavy Equipment, which is what it is today.