Local Factory Bows To Bad Times, 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.

(Get San Leandro Patch delivered by email. Like us on Facebook. Follow us on Twitter @sanleandropatch)