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Local Factory Bows To Bad Times, Outsourcing

Through great exertion the Best family brings a renowned factory brand to San Leandro, where it survives for decades until the onset of outsourcing.

 

(This three-part series is based on “Making Tracks,” a book by Ed and Sue Claessen, who tell how Daniel Best and his son, Clarence Leo (C. L.) created steam, diesel and gas-powered tractors that replaced horse power and transformed many industries -- and San Leandro. Part One and early career. Part Two described .)

By Fred Reicker 

Despite being groomed as the heir to the family business, C.L. Best was not fed by a silver spoon. Quite the contrary, he endured a painful takeover by the rival Holt Manufacturing and felt obliged to quit the firm his father built and start his own company.

To do this, C.l. Best needed the help of outside investors -- who got nervous and wanted to sell out.

The buyer was a cash-rich former sales manager for a sewing machine company who had become familiar with the new Best company and its gas-powered products.

C. L. Hawkins  -- not to be confused with the Best heir -- saw and seized his opportunity. Hawkins bought 51 percent of the new Best company’s shares, including some from the Woodland investors, and became president in March 1917. C.L. Best was relegated to the position of vice president in the company he had founded.

But when Hawkins’ personality, character and business tactics began to jeopardize the business, C.L. Best mounted a successful effort to regain control. This included buying shares of stock still in the company’s treasury, which gave him a majority position, a move Hawkins unsuccessfully challenged in a suit.

In the meantime, Best and Holt continued their litigious relationship and remained fierce competitors in business -- and on the baseball diamond.

Both companies fielded semi-professional teams—the Best Tractors and the Holt Caterpillars.

But the ninth inning in this business rivalry was within sight.

Using its family connections, Holt secured World War I contracts to the exclusion of Best. But the cost was a loss of domestic market share.

By 1919, with new cash in hand and litigation settled, C.L. Best was ready to take the leadership in the track-type tractor market.

The company’s signature tractor Model A Sixty went into production, the first in a long line of constantly improved, more powerful and more versatile machines.

Business boomed for Best while Holt, the larger of the two with its Stockton and Peoria plants, had difficulty competing in the post-war market.

An internal Holt report in 1924 warned that its “volume would be menaced” if Best’s progress in 1925 matched that of the prior year.

Meanwhile, C. L. and his management team felt that a new plant east of the Rockies was imperative to get closer to suppliers and customers. They cast an opportunistic eye on Holt’s Peoria plant.

Best was now financially robust. Not so Holt. Sales were soft, capacity was underutilized and part of a short- term loan was coming due.

The Best management team and its investment banker got busy.

They developed a strategy to side-step the bitter rivalry between the two companies: it called for C.L. staying in the background, and for a business combination in which both companies would cease to exist and a third new company would take control and be headquartered in San Francisco.

Leading from its position of strength, Best initiated talks that were conducted in “total secrecy.” But Bay Area newspapers were soon speculating about them and their outcome.

The suspense ended with the announcement that the new Caterpillar Tractor Co., with headquarters in San Francisco, had been incorporated in California on April 15, 1925.

The book’s authors note that with Best’s dominance in the track-type tractor field, and with seven Best managers and associates on the nine-member board, it “was clear who held the reins at the new company.”

The company’s offices were moved to San Leandro that July.

“Making Tracks” goes on to recount Best’s growth through the 1930s, including the pivotal development of the first Diesel engine for track-laying tractors. “Old Betsy”, serial number 1 A 14 was completed at the San Leandro plant in June 1930 and is now in the Smithsonian Institution.

The engine was the catalyst for a major change in the business. Tractor production would be concentrated at the larger Peoria operation.

San Leandro, where so much had been invested in refining and adapting Diesel technology, became the Research Division and continued as home office.

By the mid-1930s, the authors state, “Caterpillar Diesel was the acknowledged leader in its field.”

C.L. Best died on Sept. 22, 1951. Daniel predeceased him on Aug. 22, 1923. These visionaries and the people they brought together launched an enterprise that had world -wide sales of $58.7 billion in 2011 and 104,000 employees. (VALUE LINE Investment Survey)

Caterpillar contintued to maintain a strong presence in San Leandro until the end of the 1970s, when employment at the local facility was about 2,000. But by 1985, with a weak economy and a wave manufacturing outsourcing, Caterpillar laid off the last 50 workers at "a once-bustling plant opened by a young sharpshooter named Daniel Best," according to a Los Angeles Times report.

Should “Best” be to tractors as “Ford” is to automobiles? Read this handsomely designed and meticulously researched book to answer that question for yourself. Excellent reproductions of photos, drawings and compelling marketing materials provide great visual interest. There’s also an engaging Best family history enlivened by numerous anecdotes

The San Leandro Public Library is acknowledged for the photos and art that it made available from its Historical Photograph Collection. Librarian Mary Lee Barr and Assistant History Researcher Kay Arnold assisted the authors.

Making Tracks” is written by Ed and Sue Claessen and can be purchased for $35.  It is also available in the library. Fred Reicker is a former member and chair of the San Leandro Library and Historical Commission.

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Fran May 25, 2012 at 03:29 PM
In other words, David, Become more like China.
David May 25, 2012 at 04:40 PM
Or you could just become more like the Midwest and the South. Last time I checked, people there weren't dropping dead due to pollution nor were workers suffering waves of injuries etc due to a lack of $200k bureaucrats at a state OSHA office. It's amusing how certain segments of the population bemoan the "loss of manufacturing jobs," but are the same ones throwing roadblocks in front of manufacturers actually setting up shop. (and those roadblocks also block the creation of other non-manufacturing jobs too, hence employers like Apple, Intel, Google, all setting up far more expansion plans elsewhere in the US, instead of California).
Fran May 25, 2012 at 07:26 PM
Give it time. Also, I do recall a bridge collapsing in Minnesota. And really, Texas has good schools? that is laughable. Prices for housing in California are driven up because people want to live here.
David May 25, 2012 at 07:41 PM
Texas has better schools than California. And in terms of educating minorities, their public schools do a better job than the upper Midwestern states (and California for that matter). Oh, and they do it for less money. House prices here are driven up by land-use policies restricting building. http://depts.washington.edu/teclass/landuse/housing_020408.pdf The added costs to California housing due to regulations is in the 200K+ range, compared to $40-$50k in Texas and the midwest.
David May 25, 2012 at 07:44 PM
I recall a bridge collapsing in California too, and a freeway overpass or two. And a gas pipeline exploding (despite paying higher utility rates than anywhere else but Hawaii). You really don't want to start comparing infrastructure between California and the rest of the country. California roads rank 45-48, depending on the survey (yet we spend more per mile than any state, of course), etc etc.
David May 25, 2012 at 07:46 PM
People want to live here? http://economy.ocregister.com/2011/06/20/870000-californians-leave-the-state/58853/
Mike May 25, 2012 at 08:07 PM
yet the population has grown by 2 or 3 million in the same time. selective link David?
Mike May 25, 2012 at 08:07 PM
http://www.factmonster.com/ipka/A0004986.html
David May 26, 2012 at 12:29 AM
Due to people having kids. Adults, who have choices, are leaving. Middle class folks aged 30-50, especially.
David May 26, 2012 at 12:33 AM
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/09/BABV1GOF7B.DTL "Also, over the past few years, more people have left California for other states than have come here, though foreign immigration and natural increases due to births have kept the Golden State's population on an upward trend to 38.8 million, ... Overall, the California population increased by about 350,000 in the past year, with 81 percent of that growth new births. ... We still think people are going to come from the outside and save us for free, but the migration data suggests that nobody is coming from outside." ... "California used to be far and away the leading state of destination," Johnson said. "We still are ... but California is not nearly so favored as it once was." Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/09/BABV1GOF7B.DTL#ixzz1vvoA9fa7 Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/09/BABV1GOF7B.DTL#ixzz1vvo1sblV
Mike May 26, 2012 at 12:37 AM
Adults who have no choice but to leave i would say due to employment issues, not being employable. I have been to Texas and the south, California would have to resemble the Escape from LA scenario for me to move to Texas or any southern state. And I would also ask you, if California is no horrible why do you stay. If you would like to move to a southern state I can introduce you to a Managing Director at Stephens in Little Rock.
David May 26, 2012 at 12:53 AM
Good old Robbie Stephens, eh? You can think like that, except the folks who move seem to have jobs in Texas and elsewhere, given those states' 7-8% unemployment instead of California's 11% unemployment rate. You should also realize how bad it must be here for people to leave the gorgeous climate, mountains, ocean etc, to go the baking dry plains of Texas or fetid swamps of South Carolina, or the frigid northern plains of Minnesota. I stay in California because I like it more than Boston, which is really my only other choice, and for some reason Boston and I never got along. I'd love to have been able to stay in Chicago, but opportunities there for my specialty are limited to say the least. Obviously there are reasons particular people live here, and you can argue by anecdote. Or you can look at the facts above, that foreign migration into California has slowed to a crawl, the only reason California is increasing in population is due to birthrates, and there is a net out migration of adults out of the state. People are voting with their feet.
Mike May 26, 2012 at 12:55 AM
Stephens Inc, the investment bank behind Walmart
Mike May 26, 2012 at 01:00 AM
Also lots of Hedge Funds in Dallas, maybe the Koch Brothers can use an analyst in Wichita or Houston, but I believe they are primarily into commodities, though they do have an equity desk in their Houston office.
David May 26, 2012 at 01:11 AM
There are a few hedge funds in Dallas, yes. And, yes, most of them, are commodity or other stock focused. There are precisely 6 that deal with the stuff I deal with. But thanks for the job hunting efforts. Find me a real spot, and I'll pay you the finder's fee (25% of first year salary).
Paul Vargas May 26, 2012 at 06:32 AM
Oh please Fran. You must have come to California in the 1930's ala Grapes of Wrath. Do you really believe that housing costs in California are high because "people want to live here"????? California housing costs were comparable to the rest of the USA until 1975 when "controlled growth" policies of the late 60s and early 70's started playing with supply and demand. Remember when that $40,000 house in 1975 became an $80,000 house in 1979?
Paul Vargas May 26, 2012 at 06:33 AM
It's called illegal immigration by the South of the Border crowd MIke.
Paul Vargas May 27, 2012 at 05:11 PM
Interesting side note, the City of San Leandro has sucessfully run out Peterson Tractor. They're moving their operations to Livermore. This City is pathetic.
Barry Kane May 27, 2012 at 05:38 PM
No argument here and recent drive down E14th from Juana to 150th...OMG...looked like a combination of a 3rd world country and the Tenderloin. Just unpleasant and no where you would want to be...scruffy down on their luck people, dirty/trashy looking steetscape, dilapidated buildings, vacant lots, just absolutely depressing. I do not think I have seen this city look dirtier and more worn out since I have lived here. Definitely on its way down hill, I have seen the signs elsewhere so many times, and they are here in every combination. Sad.
Mike May 27, 2012 at 06:24 PM
Peterson recently said they had no intention to leave San Leandro. But even if they do because they need more property to expand what could the city do? SL is built out no place to build.
Paul Vargas May 27, 2012 at 06:29 PM
Barry, do you know what the really sad, sad part about it is? Well that stretch of E. 14th that just described, well ex-City Manager John Jermanis and the idiots on the City Council put a moratorium on new developments from E.14th/San Leandro Blvd. to 150th about 10 years ago. Why? Well, Jermanis and these fools purposely wanted this area to be run down even further than it was 10 years ago. It was pretty heinous 20 years ago, let alone 10. But anyway. Jermanis and these fools wanted it to be further destroyed because in their warped little minds they wanted to run those Transit Oriented Buses down from Berekley to Bay Fair. They figured if they allowed it to become so disgusting that people would be upset and they would have an easier time getting this TOD down E. 14th under the guise that "well we're trying to improve the area". This City is run by fools. It's very sad that we had to literally wait until that greasy old cugines Jack Maltester kicked off in order to bring some sanity to this town and possible save it from ruin I'm glad that Auto Zone is building a new place on the Bancroft/150th/E. 14th corner. It shows that somone is willing to take a gamble in the area.
Paul Vargas May 27, 2012 at 06:34 PM
Really? It was in the Daily Review last year. Peterson is building a new place right off the freeway. A ludicrous argument that they "need" more property to expand, considering; 1. They've been there for over 60 years. 2. San Leandro is not "built out", just demolish what is not useful and build new. Obviously, you don't know the slightest about what the City was doing on Marina Blvd. and how they purposely have been wanting Peterson out for years. This City doesn't give a crap about jobs, all they care about is being able to find new and uncreative ways of increasing the pay and benefits of Ctiy Employees.
Paul Vargas May 27, 2012 at 06:45 PM
Yep, corrupt, ignorant, fools habitate City Hall... http://www.bizjournals.com/sanfrancisco/stories/2010/04/05/story16.html
Jack Kincaid July 11, 2012 at 01:44 AM
Jack Kincaid To David and paul: You guys sound like small business guys who really can't just make it to the "big time" on your talent/skills (and most especially -LUCK) and try to make up with it by "hard work" and blaming others (Gov't. etc.). You have my sympathy but not everyone is gifted to make it into the 1%. If you would support the asperations of all of us you would wind up in the "Middle of the pack" middle class with rest of us an not be so bitter. Stop being so greedy!
Tom Abate (Editor) July 11, 2012 at 02:25 AM
If Peterson is moving or does move its because their 20 acre site is too valuable to use as a showroom for big vehicles. But the city would love them to stay and I am not aware of any action by the city to inconvenience them. If anyone is, please be explicit.
Paul Vargas July 11, 2012 at 02:26 AM
Greedy? Are you refering to City Workers, more specifically Fireman and Policeman who knock on doors every time there is a tax increase in order to feather their own beds? Are you refering to other posters here such as Richard Mellor, Craig WIlliams and Marga who all they do is blame, complain and whine about others? David and I merely look at the results of various actions and come to the sound conclusion, government at all levels in California runs out businesses. Plain and Simple. No bitterness there. But thanks for your input. =)
Paul Vargas July 11, 2012 at 02:29 AM
Well, Tom. To be specific about the City of San Leandro wanting to run Peterson out of town, one only has to have been following the entire Auto Mall/ Eminent Domain fiasco of the last 16 years. If anyone has been paying attention then they would have known that former City Manager Jermanis made no secret of his desire to get Peterson out of there.
David July 11, 2012 at 12:24 PM
Jack, the question was put as to how to "revive" manufacturing, I pointed out the numerous (and higher) hurdles the government puts in place here to any and all businesses, driving up the cost of doing business, and therefore driving out both businesses and my potential customers. The government here does this for no quantifiable benefit. As pointed out, we are in the top 5 for road spending, yet our roads are near the bottom in quality. We pay our teachers the most, yet are barely above Mississippi in quality. We pay our cops 2-3 TIMES what they are paid elsewhere (including significantly more than NYC cops!) and our crime rates are higher than average. You must like paying a lot for sub par ****. Hey, now that you mention it, I have some stuff in my garage, you want to buy it? How about $2000 for an old radial arm saw? You like paying top dollar for bad roads, schools and underpolicing why not top dollar for some garage sale items?
Paul Vargas July 11, 2012 at 08:20 PM
David, I was in Orange County a couple weeks ago. I could believe how clean the highways were coming from John Wayne Airport. The airport itself was also clean. I couldn't believe I was in California. It is obvious that Orange County was settled by illiterate squaters in the late 19th Century like those peasants who settled the Bay Area.
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