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.

Manpower Inc. Survey Confirms OPE Technician Shortage

I wanted to share some facts with you I read today in a Manpower Inc. press release about how employers are really beginning to struggle to find the skilled workers they need.

41% of the 2400 US firms Manpower Inc. surveyed recently said they’re struggling to find qualified workers for at least one position.

Sales representatives topped the list. That includes retail sales and business to business sales, but not telemarketers. The US Bureau of Labor Statistics projects that by 2014 an additional 736,000 retail sales people and an additional 187,000 sales representatives are going to be required.

Number two on the list was teachers. By 2014, the BLS projects an additional need for 524,000 post-secondary teachers and 265,000 elementary-school teachers.

Mechanics were third on the list, including automotive service technicians, diesel service technicians, small engine mechanics, aircraft and avionics equipment mechanics and industrial machinery repair. More mechanics are retiring than replacement workers are coming in and taking apprenticeships or getting the specialized training they need.

Many job seekers lack sought-after skills. Also there is an increasing number of retiring or soon to be retired baby-boomers. Plus lower birth rates are not keeping up with the numbers who are retiring.

The top ten list looked like this:

Sales representative
Teacher
Mechanic (include OPE and Small Engine)
Technician
Management/executive
Truck Driver
Driver/delivery
Accountant
Laborer
Machine operator

Tecumseh - A Soap Opera or an Opportunity Waiting?

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.

Toro Goes Green

Toro has taken environmental responsibility to heart and has announced products that use economical alternatives to petroleum-based fuels.

First, they announced that all their diesel-powered golf course and sports fields and grounds equipment will be “Biodiesel Ready” by 2008. In addition, that they are creating upgrade kits available in June, 2007 to convert diesel models in production or in the field to be compatible with biodiesel fuel.

What is biodiesel fuel? It is an alternative fuel source derived from biological sources that are completely biodegradable and non-toxic. Toro diesel products will be able to use biodiesel fuel blends of up to B20. B20 biodiesel fuels represent a mixture of 80 percent petroleum and 20 percent bio-fuel.

The second Toro announcement involves a partnership with the State of New York. Toro will provide Niagara Falls State Park with three hydrogen-powered utility vehicles by mid-2007. (See picture of hydrogen fuel cell above)

The New York State Energy Research and Development Authority included hydrogen fuel cell vehicles in their project because they reduce noise pollution; increase machine efficiency over gasoline or diesel-powered equipment; allow rapid refueling versus slow recharging of battery-operated equipment; and have low emissions because hydrogen fuel cells emit water vapor as a byproduct.

Do you suppose this is a "bandwagon" with one industry player on board?

The real question is whether our customers are ready to pay a premium for alternative fueled OPE products? We know they will pay a premium for hybrid automobiles, with the extra cost spread out over multi-year payments. Perhaps in the commercial and higher-end product arena of the outdoor power equipment industry, today's customers will be willing to pay a premium for equipment that is more environmentally responsible. Time will tell.

www.biodiesel.org/

www.eere.energy.gov/hydrogenandfuelcells/

And You Thought You Had Snow Problems?

No. 3 March 2007

I recently read that Wal-Mart wants to use a computerized employee scheduling system to ensure that employees are in the stores when consumers are shopping. They would use historical data to create employee work schedules that would increase customer satisfaction and improve productivity. Can you believe employees are objecting to this?

There are distributors I know in our industry that are already using software that looks at historical phone traffic hour by hour over the past week, month, or year; incorporates vacations, meal time and breaks, and creates schedules for call center employees that have them on the job when customers normally call. The results are more satisfied customers and call center employees with pre-planned schedules, a win-win situation if there ever was one.

Even in the warehouse, a flexible work schedule that has people working when there is work to do results in warehouse efficiencies and ultimately increased customer satisfaction.

Having people on the job when there is work to be done and customers to be helped? Gee, what a neat concept!

Briggs & Stratton says that its engine sales were down 30% for the first half of its fiscal year and engine units were down 33% year over year. Besides the obvious lack of hurricanes hitting the US and early snow, Briggs stated that “manufacturers of lawn equipment have chosen to assemble closer to the spring selling season.” It appears that retailer focus on managing tighter inventories and delaying orders closer to the selling season is affecting both engine and equipment manufacturers.

Mass retailers are a “900-hundred pound gorilla” affecting our entire industry daily. Never doubt for a minute that what affects one OPE industry participant won’t ultimately affect us all.

Make sure you read the industry forecasts in the January and February 2007 issues of OPE magazine. Here's a few thoughts that caught my attention In the January issue. The suggestion that dealers focus on maximizing cash flow in 2007 is a good one. There are even a few ideas on how to get started planning your cash flow. The new combined Green Industry and Equipment EXPO (GIEE) in Louisville is generally seen as very positive, but there is still an underlying sentiment that, like the former Green Industry Expo (GIE), the show should move around the country and eliminate the perception that dealer attendance is predominately regional. 2007 will be flat, but there is an expectation that consumers cannot delay OPE purchases indefinitely. Also the ongoing debate continues about whether a dealer should only offer a single product line exclusively, or be able to offer their customers a choice of brands and service multiple product lines. Grab the January and February issues of OPE and read these forecasts. Then, create a plan to help you to be better prepared to react quickly to developing industry, marketplace and weather conditions in 2007.

Globalization continues to affect the our industry and US manufacturing in particular. Briggs & Stratton is “evaluating the future direction of (their) Rolla, Missouri (engine) plant.” Briggs cites the success of their China engine operations, the continued cost pressures from the market (competition), and cost increases brought about by government regulations as the reasons it is evaluating the future role of this engine plant. They’ll announce a decision in about 6 months. At the same time they are putting a new plant in Newbern, TN, to produce products for their Power Products segment. And in December, 2006, Briggs began assembly of engines for walk behind mowers in the Czech Republic for the European market.

Major companies in our industry are always planning ahead and reacting quickly to a rapidly changing business environment. You should too.

When you have a free minute, email a few comments to anonymous.distributor@gmail.com about how your business is doing this spring and include where you’re located. Or go to the Anonymous Distributor Blog at http://anonymousdistributor.blogspot.com/ and leave a comment at the question “How’s Business?” I’d like to hear from you.

How's Business This Spring?

Daylight Savings Time begins on March 11 this year. And warmer weather is on the way, at least according to a knowledgeable groundhog or two.

I know many readers would love to read about how your business is doing this spring.

You can leave a few comments anonymously if you wish, but I would ask that you indicate what state you're in and what kinds of products you sell or service.

Your answer of "I'm in a state of confusion," isn't acceptable - even if it's true!

OPEESA's Annual Meeting - Feb 25-28, 2007

The Outdoor Power Equipment and Engine Service Association (OPEESA) held their annual meeting February 25-28, 2007 at the Fairmont Southampton in Southampton, Bermuda. The weather was chilly and very windy. But our speakers were excellent and gave us lots of good ideas to think about. Let me share a few with you.


Jeff Thredgold, President, Thredgold Economic Associates’ (http://www.thredgold.com/) topic was “Your Money, Your World, You Family – The Future.”

“One half of the world population has never made a phone call and less than 2% are college graduates.”
“Seven out of every eight people entering the US labor pool over the next 30 years will be minorities.”
“One out of every three US college students today is over 40.”
“In 1980 the average college graduate made 25% more than a high school grad.”
“Today, the average college graduate makes 90% more than a high school grad.”
“US labor markets will get extremely tight over the next 10 to 20 years. And you will be scrambling for workers like you never thought possible.”
“By mid-year 2007, the long term interest rate will be in the high 5 to low 6 % range.”
“Where will the new jobs be in the US in the coming years: health care, financial planning, and leisure and recreation.”


Nancy Friedman, President, The Telephone Doctor (http://www.telephonedoctor.com/) spoke on “Sales & Customer Service from a Management Point of View.”

FIVE FORBIDDEN PHRASES IN THE CALL CENTER
(1) “I don’t know.”
When you answer “I don’t know” there is no safety net.
And you never want to use negative words at the beginning of a conversation.
The Best Answer to a question you don’t know the answer to is to say “Gee, that is a very good question, let me find out for you. When do you need that information?” You may find out there is not real hurry to supply the answer anyway.
(2) “I can’t…….”
When you say “I’m sorry, I can’t do that,” you are injecting negativity.
Don’t ever tell them what can’t be done. Provide a positive alternative. Reject gently.
The Best Answer is “Let me see what I can do.”
If it is absolutely an impossible situation, you would say “I wish we could do that. Unfortunately that is not an option I have.”
(3) “Hang on a second, I’ll be right back.”
Ask if they are able to hold, then wait for a response.
The Best Answer is “If you’re able to hold, I’ll get you that information. If you cannot hold, I’ll be glad to call you back.”
(4) “You have to…………….”
Don’t ever say what the “have” to do. Always tell them what they “need” to do.
(5) “No.”
Never, ever start a sentence for any reason with the word “no.”

What consumers hate most when calling a business – 1st the use of an automated attendant, 2nd rude employees, and 3rd being put on hold.

SWITCHBOARD
Answer first with a buffer – “Good Morning. Thanks for calling. This is Marsha.” You don’t have to identify the business
DO NOT ever say “How can I help you?”

VOICE MAIL
An automated attendant should always zero out to a person
Never Use the following terms on voice mail:
“I’m not at my desk right now.”
“Your call is very important to me.”
“I’m sorry I missed your call.”
“I’ll call you back as soon as possible.”
The Best Answer is “This is ____. Please leave a message and I will return your call.”
Your teeth must always be visible when you are recording your message (i.e. smile.)
When you leave your name and number on a voicemail, always say your name and the phone number twice, clearly and distinctly.

YOUR ON-HOLD MUSIC OR?
Ask you customers what they want to hear on hold. Then follow their advice.


Michael Workman, President, Michael E. Workman Associates, (http://www.mworkman.com/) spoke on “Profit-Enhancing Collaboration.”

“The purpose of a business is to create and maintain a customer.”
“Profit is only a test of management decision-making ability.”
“Leadership is much stronger than management skills in a small business.”
“In relationships between a manufacturer and a distributor, if a common goal is shared, communication is never a problem.”
“Manufacturers say “ I cannot pay you for your effort. I can only pay you for your performance.”
“If sales go up while margins are declining and people costs are going up, the business is in trouble.”
“Where there is no accountability, there is no change.”
“When the salesman owns the customer, your business is in trouble.”
“The less information I know and have about my customer, the more inventory I must have to serve him.”
“In a 2003 National Association of Wholesalers (NAW) sponsored study, there was no correlation found between how the type of compensation a sales person received and their sales results.”
“You can’t take a C player and make him an A player by paying him more.”
“An A player is always an A player no matter how you pay them.”
“The only true motivator proven to work is: setting goals.”
“You can’t pay a sales person the same for maintenance that you pay him for growth. You always pay a lot less for maintenance.”
“Know why your customers buy from you.”
“Never let your customers decide how they will measure your value to them. Your sales people should show them what the value is you provide and how they should measure it.”
“Never let your accountants make your strategic decisions.”
“Good – Cheap – Fast. You can only excel at any two of these with a profitable customer.”
“Manufacturers are always driven by ‘share,’ distributors are driven by profitability, dealers always want ‘all of it,’ and consumers always want a better deal.”
“Self-selecting teams are always much more effective than teams with members selected by management. Your people know better than you who belongs on their team.”
“Outside sales is becoming the training ground for inside sales. And inside sales is always much more profitable.”
“Ask your customer how they want to be served and then do it. You may find that many don’t need or want outside sales personnel calling on them.”
“The Chinese are building manufacturing plants in Mexico to reduce delivery time to North America to a max of six days. It’s happening now and is the wave of the future.”
“Jim Collins said ‘Great companies focus on profit maximization, not growing market share.’”

No. 2 February 2007

When retailers get really big and sales begin to level, they go off into new directions or they eventually disappear or even become irrelevant. Wal-Mart discovered groceries. Home Depot created HD Supply by buying up industrial distributors who sell to industrial and commercial builders. Today, HD Supply is a $12-billion business - 13 percent of Home Depot's total revenue - and this past third quarter, was 90 percent of Home Depot's growth. Apparently, even when you disdain doing business with distributors, it's okay to become one. Oh, the irony of it all...

Wonder if Home Depot noticed that the margins for HD Supply are just a "bit lower" than for its retail business? The shareholders certainly have.

Have you noticed an item in our industry that's becoming disposable? Good for you! You are paying attention! So how do you feel about it? Probably like I do - all kinds of mixed emotions. Just like the low-costs, disposable razor, low-cost lawn mowers, trimmers and even chain saws are making it economically logical for consumers to throw them away when they're "used up" rather than pay to have them serviced and restored to a "like-new" condition. What is the effect of this trend on our industry? We can be assured of fewer parts sales and fewer service opportunities. And more and more low-cost products will continue to be sold, and the cycle will continue. So, if we agree on these conclusions about the increasing availability of disposable equipment, what should you and I be doing differently in our businesses in response, if anything? Tell me what your think.

The U.S. unemployment rate for December 2006 remained unchanged at 4.5 percent. In 2006, payroll employment increased by 1.8 million, or an average of 153,000 per month. Meanwhile, service jobs kept increasing, while the number of manufacturing jobs continued to trend down. No surprises here.

Speaking of Home Depot, its innovation center in Atlanta still has lawn equipment in it. Thus, you could surmise that Home Depot's future still includes selling outdoor power equipment. But what about service?

Today, Home Depot's equipment sales have created enough service business for both Altaquip and independent service centers. There was speculation at one time that Home Depot might include OPE service in its in-store tool rental sections. But I wouldn't bet on that happening. Why not? My opinion is that whenever a mass merchant rationalized other reasons for having in-store service and put it in place, it discovered that at the end of the day those reasons were simply not as compelling and important as revenue and profit derived from its real business - retailing.

Big or small, multiple-store retailers have a huge impact on our industry, our country and our lives. I think that it's important to know what they're doing, how they're doing it, and how they are changing their business models, because I believe that it will most certainly affect our businesses and our lives sooner than later. And we can learn a lot from them, both good and bad.

If you are the only person left in North America who still hasn't read "The World is Flat - A Brief History of the Twenty-First Century" by Thomas L. Friedman and you want to understand why it seems like any business news we read or discuss has global implication, read this book - as soon as you finish Jim Collins' two books mentioned last month. This book is a great read and deserves your attention because today, the world is truly "connected" and "flat." And we are all affected whether we want to be or not.

Friedman also writes a foreign affairs column for The New York Times, and it is a weekly must read if you want a clear understanding and logical solutions for what's going on around us in the world. You can find his columns on the Internet.

No. 1 January 2007

I think it's service school season again. I know it always precedes and follows Christmas, and generally lasts at least 11 months, or so it seems. Know the difference between teaching and learning? Teaching is conveying information. Learning requires some kind of engagement of the students while they are receiving the information - understanding it, if you will. Some teachers think, "If I taught you this, then you must have learned it." But that never works. Teach students to understand, not merely to pass a test, and the proof will always be if they can teach it back. That being said, thank goodness this industry is blessed with some terrific trainers and teachers who really care about whether you understand what they're teaching.

Here are a couple of facts that you might not know about your customers from the book "Satisfaction - How Every Great Company Listens to the Voices of its Customers" by Denove and Power:
(1) Customers who run into problems but whose problems are handled swiftly and politely actually wind up being more loyal than customers who never encounter a problem.
(2) Exceeding your customers' expectations matters much more than performing at a consistently high or even an extremely high level.

2006 has to be the most unusual year that I've ever seen in the OPE (Outdoor Power Equipment) industry. But wait a minute, sow was 1996. And come to think of it, so was 1992 and 1987 and 2003 and 1984 and 1971 and ...

Jim Collins wrote two of the best business books of all time, "Good to Great" and "Built to Last." If you haven't read both of them, stop what you're doing and read them NOW! They are that good and quite readable. And both will forever change how you think about and run your business.

"People are not your most important asset. The right people are." -- Jim Collins, "Good to Great"

Tecumseh finally released its third-quarter financials. The company has been having a rough time in all three of its business segments: compressor products for HVAC, electrical components, and especially in its engine and power train products. Tecumseh brought in AlixPartners in August 2005 to help turn around the engine division. Now, with the guidance of AlixPartners and with the hard work of Tecumseh management and employees, it appears that the engine division is now stabilized and better days lie ahead in 2007. It's still not getting any easier for most engine manufacturers. Lack of hurricanes in 2006 depressed generator sales, and lack of snow and customer aggressive inventory management policies this winter has depressed snowthrower sales. One important sign for Tecumseh in 2007 will be how much snowthrower engine market share it can retain against other domestic and import engine manufacturers' renewed interest in that engine category. We know many good people at Tecumseh, and we wish them much success as they continue their journey into better times.

Recently, I've been thinking about LESCO and the effects it felt when it eliminated and later reinstated its direct sales force. Not only did direct sales decline, as LESCO expected, when it eliminated its sales force, but same-store sales declined too, which was unexpected. LESCO very quickly re-established its direct sales force. How important are the relationships between your direct sales force and your customers? What would the impact be on your business if you eliminated your direct sales force and the relationships it had with your customers. LESCO discovered the hard way that it was a whole lot more important than it thought.