No. 4 April 2007

In a recent article by Rick Johnson in Industrial Distribution magazine called “How to Survive in a Tough-Profit Market,” his first statement is one to remember: “It’s not the strongest of the species that survive; nor is it the smartest.” The survivors “are the ones most responsive to change.”

He goes on to say that we all need “to uncover some of the business sins that may have been covered by profitability in past years and correct them.”

I agree that if you’re not “sweating the details,” there are things going on in your business that are keeping you from being as successful as you could be. I guarantee it. Find them and fix them. And do it now!

It still amazes me when I read letters written to our industry trade publications and even an occasional dealer column in which that free forum is only used to complain about one thing or another. Many readers apparently think their life and their business are “going to hell in a hand basket.” I suspect they might be right if they’re only going to focus on complaining, and not about finding or offering solutions! I really believe that they do have great ideas and solutions for their business problems and that other readers would love to read them. Quite complaining so much and share what you do to overcome the obstacles in your business life. Readers will thank you for sharing your ideas. And you’ll feel more positive about yourself and the future of your own business!

There’s a new book out by Jason Ryan Dorsey for “twenty-somethings” entering the workforce titled My Reality Check Bounced! I don’t know whether to laugh or shake my head.

In the book The E-Myth Revisited, the author Michael Gerber tells the story about what Tom Watson, the founder of IBM, answered when asked what he attributed IBM’s success to. Tom Watson replied:

“IBM is what it is today for three special reasons. The first reason is that, at the very beginning, I had a very clear picture of what the company would look like when it was finally done. You might say I had a model in my mind of what it would look like when the dream—my vision—was in place.The second reason was that once I had that picture, I then asked myself how a company which looked like that would have to act. I then created a picture of how IBM would act when it was finally done.The third reason IBM has been so successful was that once I had a picture of how IBM would look when the dream was in place and how such a company would have to act, I then realized that, unless we began to act that way from the very beginning, we would never get there.In other words, I realized that for IBM to become a great company it would have to act like a great company long before it ever became one.From the very outset, IBM was fashioned after the template of my vision. And each and every day we attempted to model the company after that template. At the end of each day, we asked ourselves how well we did, discovered the disparity between where we are and where we had committed ourselves to be, and, at the start of the following day, set out to make up for the difference.Every day at IBM was a day devoted to business development, not doing business. We didn’t do business at IBM, we built one.”

Wow! Perhaps we should ask ourselves if we’re building a business or just running one.

A reader recently asked why he should bother reading the “Industry Forecasts” found in the January and February 2007 issues of OPE magazine. He was perceptive enough to distinguish PR from fact and opinion. And those opinions from people whose companies and jobs are dependent upon having a successful 2007 are the very reasons why we all should read them. Those OPE business leaders are informed and have up-to-date knowledge on issues affecting this entire industry, no matter what they do or the size of their businesses. I want to know what they’re concerned about, what actions they may take to respond to those concerns and challenges, and how they’re going to know in December whether it was a successful year or not.

How’s business? Drop me a few lines at anonymous.distributor@gmail.com.

A Few Notes From the Briggs & Stratton 3rd Quarter Report Webcast

Briggs and Stratton released their 3rd Quarter Earnings Report April 19, 2007. The entire report and a link to the recorded Webcast is available at this link: Briggs & Stratton Q3 2007 Earnings Report and Webcast.

Here are a few points that came out during the Webcast session that you may not find in the written report:

One big topic was the announced closing of Brigg’s Rolla, MO engine plant this year. The Rolla plant manufactured utility type engines and not produce high-quantity runs of lawnmower engines. Many different utility engines are produced with small production runs and higher inherent costs. Also mentioned as a contributing factor for closing the plant was the high cost of environmental regulations in the US. Briggs is currently rationalizing the existence of other US plants and decisions will be made regarding any other plant closings by year-end 2007.

Some analysts asked why more vertical engine production (for small lawnmowers) wasn’t being shifted to China. Briggs replied that for the time being the intense seasonality of vertical shaft engines for lawnmowers will mean that production will remain primarily in the US, at least for the next two or three years. Briggs suggested that US production and shipping logistics could respond much quicker if a mass merchant (OEM) needed 40,000 engines by next Thursday, than if production was in China or outside the US.

Other questions were focused on generators and the huge generator inventories “hanging over” the marketplace both at the retail level and at the OEM level. Briggs stated that a normal hurricane hitting land will create the retail sale of 35 to 40 thousand generators. The generator inventory level at retail is currently around 100,000 to 120,000, while the normal level at retail should be 60,000 or less. So Briggs believes it will take at least two hurricanes making landfall in 2007 to get retail inventory levels back to a normal level.

Europe is a 2 million engine sales area for Briggs. In 2006 they saw lower European engine sales due to increased Chinese engine usage by a major OEM. But with their Czech plant starting up with a capacity of 800,000 to 1,000,000 engines initially annually, Briggs believes they will be more competitive in 2007 and 2008. Labor costs will be lower than in the US and engine transportation costs will be lower to Europe from the Czech Republic than from the US or China.

Another analyst asked about the strength of Briggs & Stratton’s mower brands. Briggs responded that some years ago a poll was done that indicated that even though they were not producing any end-products at the time, Briggs & Stratton was in the top five brands of lawnmowers consumers were considering to purchase. Snapper also showed up as one of the top five considered brands. Briggs still considers Murray a viable brand in the mass market, viewed by consumers as a low-cost functional product. Simplicity is considered the aspiration brand and is very strong in the mid-west and the northeast. And Briggs particularly appreciates Simplicity’s excellent product development group. Ferris is considered one of the top tier high-quality commercial brands.

Briggs & Stratton continues to look for other equipment brands that may become available for purchase.

EPA Issues Proposed OPE Emission Standards

Today the EPA issued their “Proposed Emission Standards for New Non-road Spark-Ignition Engines, Equipment and Vessels."

These proposed standards include coverage of small land-based non-road engines and new evaporative emission standards for equipment using these engines.

The rule would take effect in 2011 for riding mowers and 2012 for push mowers and would apply only to new engines.

When fully implemented, the proposed standards would result in a 35% reduction in hydrocarbon and nitrogen-oxide emissions from the new engines’ exhaust.

Briggs & Stratton had said that adding catalytic converters to all its engines, which would have been required in California’s initial approach, would have been so costly that it would have resulted in the loss of US manufacturing jobs. Briggs now hopes to meet the new proposed standards without using catalytic converters.

One of the first changes by Briggs & Stratton would be improved fuel systems that reduce the amount of gasoline fumes leaked into the air. Other changes would come later, as new regulations are phased in.

The EPA suggests that the new rule could add up to $47 to the price of a lawn tractor, $280 to an outboard engine and $360 to a personal watercraft.

Briggs indicates that “there could be fairly significant price increases on (engines) that you see on riding lawn mowers and other large products. With other engines, the price increases could be slight.”

These proposed rules would have little, if any, effect on all-terrain vehicles and snowmobiles.

For a quick easily readable overview, I would recommend you click on the first bullet below called “Fact Sheet” which should give you a short four page PDF document.

If you look at the other links, you will notice that this document’s pre-publication “Preamble” is 280 pages, the pre-publication “Regulations” is 265 pages, and the “Draft Regulatory Impact Analysis” is 709 pages long.

And you wondered why engine manufacturer employees all have gray hair!

Fact Sheet: Proposed Emission Standards for New Non-road Spark-ignition Engines, Equipment, and Vessels (Also available as a PDF file, 4 pp, 85K, EPA420-F-07-032)

Preamble (Pre-publication Version (PDF) (280 pp, 2.5MB)

Regulations (Pre-publication Version) (PDF) (265 pp, 1.9MB)

Draft Regulatory Impact Analysis (PDF) (709 pp, 6.3MB, EPA420-D-07-004) Instead of downloading the entire document, you can access The Individual Chapters Of The Draft Regulatory Impact Analysis.

Is Your Business Off to a Good Start This Spring?

Our grass is green and after a slow beginning in February, outdoor power equipment and service parts sales to our dealer customers have really picked up. And business continues to be strong in the early days of April. That tells me you're staying busy.

Let readers know how your business is doing this month. Did you have an early spring? Can you see a difference in your customer's attitudes from last year? Do you have some new types of equipment to sell this year that customers really seem to like?

You don't have to identify yourself but please be sure to mention the section of the country or the state you're doing business in.

And thanks.