Tecumseh has been having a rough time in all three of their business segments: compressor products for HVAC, electrical components, and especially in their engine and power train products.
I’m familiar with the engine and power train product division. It seems like over the years if something could go wrong for Tecumseh, it often did. My company considered Tecumseh a solid US engine manufacturer, although behind Briggs & Stratton and Kohler in reputation and design and production capabilities, and whose primary customers appeared to be Sears with Tecumseh-manufactured Craftsman-labeled engines, and specialized engines for snow removal equipment manufacturers. Today, US production has been mostly moved to Brazil, manufacturing start-up problems there were epic in proportion, and commodity prices have been painful. Tecumseh lost most of the Sears business several years ago. And I always thought their US marketing efforts were suspect and weak.
Once highly profitable, the nearly $2 billion-a-year manufacturer has struggled with substantial losses in recent quarters. That’s why AlixPartners was brought in, in August of 2005 to help turn around the company.
Tecumseh Products was founded in 1934 by Ray Herrick. His descendants, including his grandson Todd Herrick and his great-grandson Kent Herrick, control 44 percent of the voting stock through the nonprofit Herrick Foundation (25%) and family trusts (19%).
Todd Herrick was fired as CEO by the Board on January 19, 2007 and his son, Kent Herrick, was dismissed.
Todd Herrick remained Board Chairman, but responding to his move to replace three of five board members with his nominees at an upcoming shareholders meeting, other directors removed him as chairman February 28. In addition, the Board expanded Board membership by two from 5 to 7, thereby foiling his plan to gain a voting majority.
At that date the deadline had passed for Mr. Herrick and other shareholders to nominate board candidates in advance of voting connected to the meeting of shareholders April 25. This prevented Todd Herrick from regaining the upper hand by nominating a fourth candidate.
Todd Herrick filed a lawsuit on March 6 that seeks a court order overturning the Board’s decisions on February 28 that expanded the board to seven members from five and removed him as chairman. And if the court does not overturn the board’s actions, then Mr. Herrick has asked that he be allowed to nominate a fourth person. The suit also seeks a court order to stop the firm from hiring a new CEO and requiring the annual stockholders meeting to proceed as scheduled.
I think it’s easy to understand the emotions of these founding-family members who still own a large percentage of stock in this public company. But I wonder if it wouldn’t be better for the Herricks to let go of the company leadership and let others rebuild the company and in turn, its stock valuation. And there are other shareholders to consider whose investments are also at risk.
A friend of mine who leads one of the most respected and largest manufacturers in the OPE industy told me today that this situation is like a TV soap opera. Unfortunately it appears to be exactly that. But I believe the shareholders of Tecumseh and the OPE industry deserve better.
Tecumseh Products has suffered under the watch of these family descendents but most of us in the outdoor power equipment industry want it to survive and prosper - for many different reasons. Let's hope all these players find a way to make that happen.
3 comments:
Thank you very informative
While the entire "soap" is a joke to all of the Hollywood people and so called CEO's temps elected to their 1.16 million dollar post here's what I have to say: Educated in Michigan, born in Michigan, raised in Michigan, and so I Live in Tecumseh, Michigan.
The Herricks have been very generous to the mulitple families across this great town of Tecumseh and the great state of Michigan.
It's first and foremost that Todd, Kent, and the Herricks make their place in History and do their part to protect their family herritage from Corporate Thugs like Buker whom only care about his $289,000 salary and $875,000 bonus--Not worth it!
I have been following all transactions through the SEC reports, mailings, and public address' since Jan. 2007. If Burker wants to resolve the issues in front of the company he REALLY should step up to Todd Herrick and the Foundation and respect the the families' wishes~! At he end of the day a charitable foundation goes up against the very big corporation with roots to it's existence makes people like myself say go get em' Herricks!
Kinda sad Edwin Burker has such concern for his management team that he intentially moved his corporate team out of the hometown of Tecumseh,Michigan because of disputes/and or associated problems with facilities/and or with the Herrick foundation..Kinda sad the Tecumseh Products website derails the history of the Ray Herrick--founder (originally gave great attention to the founder). If you had an old website listing two years ago you would see that history--now gone..Any person going to the website now would not get that history lesson..--Burker at work! Does he even understand the history..No Respect!
We the people of Tecumseh hear things and really really despise that 'Edwin' has moved to a really nice brand new office in Ann Arbor, MI when in fact he had an office already in Tecumseh that was comfortable--Home office. I'm sure that Edwin is so green in this new job that he just wanted to distance himself from the Herricks..I'm sure if Ray could look down and cast a thougt to Edwin such a way that Mr. Edwin would find out verbally what a cowardly thing he did to the townshpeople! It's not that I dislike Edwin as a person, but I really disagree with his poor decision making. He's been proven wrong twice (public news) now by court as Todd Herrick was quoted saying..Court 'has ruled' against his decisions through procedings and in my opinion he's really not working with the Herricks at all~~! Give it up Edwin--work with them..Partner with them...Stabilize the ground..build a foundation..and see what happens if you work with Todd..I predict millions of dollars just in the Press release..Ha! Hell I'll write it..
Todd's recent letter dated April 13th 2009 was spoken from the heart of a concerned "Grandson","Shareholder",and family member. Can we Trust CEO's anylonger?
One more example to the Buker fans--you ready? ----1)Heritage and legacy of the company--were on the Tecumseh website two years ago now gone. 2) Michigan had Tecumseh, Michigan as the "refrigeration capital of the world"--gone..
If Edwin is concerned with overhead why leave Ray Herrick's hometown where the original Factory in which Ray Herrick created the corporation?--Go Herrick Foundation?!
My thoughts tonight go out to the ENTIRE Herrick family..I'm voting for them to one day retake the company and eliminate little jocks like Burker from their post of being the corporate bully and the manipulator of history. This town owns that piece of history and Burker is stripping our herritage off the map one piece at a time.. He could have kept the corporate office in this town and one day returned production. Todd and Kent should be proud of their efforts to continue on with their rightful company. I hear so many great stories about the wonderful generous gifts to the townspeople and the local colleges.
You should be ashamed of yourself Burker in the way your speaking to the "Herrick Foundation" due impart they are the public reason you have a job--44% of the total voting right is a lot! Go back to Birminham, Alabama if you can't find it in your heart to rally support for team with the Herricks involved (NO Kidding).I think you'd be surprised to find out what would happen if you gave it back--you would be the Hero! We could use that kind of man in the troubled times--trust me!...Gary Davis --Tecumseh, Michigan.
GREAT story that I found today. I know that they aren't in your line of business any longer, but I was wondering if you have a view on what has transpired over the past 2 1/2 years.
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