Husqvarna Interim Report January - September 2010 - Excerpts

Stockholm October 22, 2010

Magnus Yngen, President and CEO:

”End-user demand continued to recover in most of our markets during the quarter. Sales as well as operating income for the Group as a whole increased. Europe & Asia/Pacific and Construction showed strong performances. Operating income for Americas was negative due to lower sales and increased costs. Despite a recovery in the market, our sales for Americas decreased due to the reduced listings of low-end lawn mowers with a major retailer in North America for the 2010 season.

Strong growth in sales to the dealer channel continued to be an important driver for the Group’s positive earnings development during the year, as were innovative new product launches. Our estimate is that we have gained market shares for lawn and garden products during the season in Europe.

In the fourth quarter, which is the smallest quarter of the year for the Group, we expect Group shipments to be slightly higher than in the fourth quarter of 2009.”

THIRD QUARTER

Net sales

Net sales for the third quarter increased by 3% to SEK 6,907m (6,709).  Adjusted for exchange-rate effects, sales increased by 5%. Prices were unchanged. Europe & Asia/Pacific accounted for 6 percentage points of the adjusted increase and Construction for 1 percentage point while Americas accounted for a decrease of 2 percentage points.

Efforts to grow sales in the dealer channel continued to be successful and increased double digit both in Europe and Asia/Pacific and in Americas. In North America, the reduced listings with a major retailer for the 2010 season had a negative impact on sales, which were partly offset by sales to other accounts. Sales of forestry and construction products are relatively more important in the third and fourth quarter when the gardening season in most of our markets normally comes to an end. Sales of garden products in the third quarter predominantly consist of replenishment orders from the trade.

Operating income

Third quarter operating income increased by 137% compared to the corresponding quarter 2009 and amounted to SEK 411m (173). Currency had a positive effect of approximately SEK 17m and the net positive effect from items affecting comparability was SEK 59m. Adjusted operating income increased by SEK 162m.

The increase in operating income for the Group was mainly a result of a favorable mix as well as higher sales. Selling and administrative costs increased, mainly due to higher distribution and IT costs. The operating margin, excluding items affecting comparability, increased to 5.9% (3.5). Third quarter operating income 2009 included restructuring charges of SEK 59m.

Operating income and operating margin for Europe  and Asia/Pacific and Construction increased. Operating income and operating margin for Americas decreased, due to lower sales and production volumes as well as higher distribution and IT costs.

Changes in exchange rates, including both translation and transaction effects net of hedging, had a total positive effect on operating income of SEK 17m (-74). Hedging contracts had a positive effect of SEK 36m (-30).

FIRST NINE MONTHS

Net sales

Net sales for the first nine months declined by 6% to SEK 27,446m (29,342). Adjusted for exchange-rate effects, sales were unchanged. Prices were also unchanged. Europe & Asia/Pacific accounted for a sales increase of 2 percentage points of the adjusted change and Americas for a negative 3 percentage points while Construction’s contribution was 1 percentage point. Efforts to grow sales in the dealer channel continued to be successful.

Operating income

Operating income for the first nine months increased by 21% compared to the first nine months of 2009 and amounted to SEK 2,508m (2,075). Currency had a positive effect of approximately SEK 130m and the net negative effect from items affecting comparability was SEK 95m. Adjusted operating income increased by SEK 398m.

Operating income 2010 includes charges of SEK 207m for the previously announced closure of one factory in North America and one in Greece and costs related to a legal case in North America. For further information see page 6. The first nine months of 2009 included items affecting comparability totaling SEK 112m related to restructuring charges.

The increase in operating income was mainly a result of favorable mix and currency effects, lower costs for direct material and higher sales, which was partly offset by higher IT and distribution costs. The operating margin, excluding items affecting comparability, increased to 9.9% (7.5)

NET FINANCIAL ITEMS

Net financial items for the third quarter amounted to SEK -101m (-65) and for the first nine months to SEK -258m (-433). The higher net financial cost in the third quarter is mainly due to a negative mark-to-market impact of the interest rate component in the Group’s hedge contracts. The improvement for the first nine months is primarily due to lower net debt. The average interest rate on borrowings at the end of the third quarter was 3.6% (3.2).

INCOME AFTER FINANCIAL ITEMS

Income after financial items for the third quarter increased by 187% to SEK 310m (108) corresponding to a margin of 4.5% (1.6). For the first nine months income after financial items increased by 37% to SEK 2,250m (1,642) corresponding to a margin of 8.2% (5.6).

TAXES

Taxes for the first nine months amounted to SEK -377m (-287), corresponding to a tax rate of 17% (17) of income after financial items. The tax rate is affected by utilization of tax-losses carried forward. The utilization of tax-losses carried forward are mainly related to the third quarter.

EARNINGS PER SHARE

Income for the third quarter increased by 209% to SEK 402m (130), corresponding to SEK 0.70 (0.23) per share after dilution. For the first nine months, the increase was 38% and amounted to SEK 1,873m (1,355), corresponding to SEK 3.25 per share (2.50). Due to the rights issue implemented in 2009, the average number of shares for the first nine months of 2010 has increased compared with the first nine months of 2009.

OUTLOOK FOR THE FOURTH QUARTER 2010

Due to seasonality, the fourth quarter is the smallest quarter of the year in terms of sales and operating income. Inventories in the trade of the Group’s products at the end of the third quarter were estimated to be on low levels in both the dealer and retail channels. To date in 2010, end-user demand has increased in most markets compared to the preceding season. However, the trade remains reluctant to build inventory.

The positive development for Europe & Asia/Pacific and for Construction is expected to continue, while shipments in Americas are expected to be down. In total, Group shipments in the fourth quarter of 2010 are expected to be slightly higher than in the fourth quarter of 2009.

PERFORMANCE BY BUSINESS AREA

As of 1 January 2010, external reporting comprises three business areas:

• Europe & Asia/Pacific, comprising forestry and garden products sold in Europe, Asia and the

Pacific region.

• Americas, comprising forestry and garden products sold in North America and Latin America

• Construction, comprising products for the global construction and stone industries.

Restatement of the third quarter 2009 between Americas and Europe & Asia/Pacific

Operating income for the third quarter as well as for the first nine months 2009 has been restated between Americas and Europe & Asia/Pacific due to correction of an intercompany transaction. The restatement had no impact on the Group’s operating income.

Third quarter operating income for Europe and Asia/Pacific has been restated from SEK 135m to SEK 190m and the first nine months of 2009 from SEK 1,649m to SEK 1,704m. Operating income for the third quarter for Americas has been restated from SEK 47m to SEK -8m and for the first nine months of 2009 from SEK 597m to SEK 542m.

Europe & Asia/Pacific

Sales for Europe & Asia/Pacific in the third quarter increased 8%. Adjusted for exchange-rate effects the sales increase was 11%. In the first nine months, sales decreased 1%. Adjusted for exchange-rate effects, sales in the first nine months increased by 5%. Prices were unchanged.

Sales to the dealer channel developed strongly throughout the first nine months. Most regions, except for UK and France, had higher sales than in the preceding year. Several new products, including Husqvarna branded lawn mower range, mini rider and an expanded Automower® range, contributed to the increase.

Sales of watering products were also strong. It is estimated that the Group gained market share in Europe

during the first nine months.

Operating income and operating margin increased substantially in the third quarter. Performance was especially strong for watering products and accessories. The higher operating income was mainly a result of higher sales and an improved mix.

Operating income for the first nine months the preceding year was charged with restructuring costs amounting to SEK 111m, whereof SEK 59m in the third quarter. Operating margin for the first nine months, excluding items affecting comparability, increased to 17.0% (12.9).

Americas

Sales for Americas in the third quarter decreased 4%. Adjusted for exchange-rate effects the decrease was 5%. In the first nine months, sales decreased 14%. Adjusted for exchange-rate effects, sales in the first nine months decreased by 7%. Prices were stable during the period.

The reduced listings with a major retailer in North America for the 2010 season had a negative effect on sales, especially for low-end lawn mowers. Efforts to grow sales in the dealer channel and with other retail accounts continued to pay off, but could not compensate for all of the reduced listings.

Operating income in the third quarter was negative and the margin amounted to -3.7% (-0.3). Operating income was negatively affected by lower sales and production volumes and higher costs for distribution and IT.

Operating income for the first nine months in 2010 includes items affecting comparability amounting to SEK 160m. SEK 110m is related to the closure of the factory in Beatrice and the transfer of the production to the Group’s plant in Orangeburg in the second quarter. SEK 50m is related to the settlement of an engine-capacity lawsuit in the first quarter. Operating margin for the first nine months, excluding items affecting comparability, decreased to 3.1% (4.1)

Construction

Sales for Construction in the third quarter increased 6%. Adjusted for exchange-rate effects the sales increase was 8%. In the first nine months, sales increased 2%.  Adjusted for exchange-rate effects, sales in the first nine months increased by 7%.

The market for construction products improved in both North America and Europe during the first nine months.

Sales to rental companies increased. A number of new products have been successfully launched during the year and the Group’s market shares are estimated to have increased.

Operating income and margin in the third quarter improved, mainly as a result of higher sales and production volumes as well as new products with higher margins. The third quarter operating income includes a cost of SEK 16m related to a legal settlement. Operating margin for the third quarter increased to 5.9% (4.3).

Operating income for the first nine months was charged with restructuring costs amounting to SEK 47m, whereof all was charged in the second quarter. Operating margin for the first nine months, excluding items affecting comparability and the above mentioned charge of SEK 16m, increased to 5.7% (-2.6).

PARENT COMPANY

Net sales in the first nine months of 2010 for the Parent Company, Husqvarna AB, amounted to SEK 8,416m (7,049), of which SEK 6,452m (5,352) referred to sales to Group Companies and SEK 1,964m (1,697) to external customers. Income after financial items amounted to SEK 2,505m (2,187). Income for the first nine months was SEK 2,093m (1,857).

Investments in tangible and intangible assets for the first nine months amounted to SEK 205m (191). Cash and cash equivalents amounted to SEK 503m (1,311) at the end of the period. Undistributed earnings in the Parent Company at the end of the period amounted to SEK 17,985m (16,416). A dividend payment to shareholders in the amount of SEK 574m (0) was made during the second quarter.

RESTRUCTURING

In the second quarter 2010, the Group announced further restructuring in line with its strategy which includes increasing efficiency by consolidating the manufacturing footprint. The factory in Beatrice, Nebraska, will be closed and the production will be transferred to the factory in Orangeburg, South Carolina. The factory for construction equipment in Athens, Greece will also be closed.

Annual savings from the initiatives will amount to SEK 60m and will be realized gradually with full effect from the first quarter of 2012. Second-quarter operating income was charged with SEK 157m, of which the closure of the Beatrice factory accounted for SEK 110m.

In October 2009, the Group announced the implementation of a number of structural changes in 2009-2011. These measures are aimed at eliminating overlaps and increase efficiency within production and administration and involve consolidation of production in Sweden and the US, and of the sales organization in Europe & Asia/Pacific. The total cost of these measures amounts to SEK 399m and annual savings from these activities are expected to amount to approximately SEK 400m, and will be realized gradually from the second half of 2010 with full effect from the first quarter of 2012. Capital expenditure related to the restructuring is expected to amount to approximately SEK 400m, of which a new plant in Poland will account for approximately SEK 250m.

In September 2008, an initiative to reduce fixed costs through personnel cut-backs was announced. The total costs for the cut-backs were SEK 369m and the annual savings are SEK 450m as of the third quarter 2009.

Operational risks

Operational risks include general economic conditions, as well as trends in consumer and professional spending, particularly in North America and Europe, where the majority of the Group’s products are sold.

An economic downturn in these markets may have an adverse effect on Group sales and earnings. Shifts in product technology as well as shifts in distribution structure could also have a negative impact on Group sales and earnings.

Demand for the Group’s products is also dependent on weather conditions. Dry weather can reduce demand for such products as lawn mowers and tractors, but can stimulate demand for irrigation products.

Demand for chainsaws normally increases after storms and during cold winters.

Husqvarna’s operations are also subject to seasonal variations. Demand for consumer garden products and commercial lawn and garden products normally peaks in the second quarter, while the peak season for chainsaws is normally in the third quarter. Husqvarna has adapted its production processes and supply chain to respond to these conditions. However, parameters such as cash flow and production levels follow the seasonal variations in demand, which results in relatively greater risk exposure for the Group over short periods of time.

The Group is currently implementing a number of structural changes as well as a new organization.  Restructuring and organizational changes always involve the risk of creating higher costs than anticipated and losing key personnel.

Financial risks

Financial risks refer primarily to exchange rates, interest rates, financing, and credit risks. Risk management within the Husqvarna Group is regulated by a financial policy established by the Board of Directors. A higher indebtedness resulting from the seasonality of the Group’s operations involve greater exposure to changes in exchange rates and interest rates, as well as financing risks.

Acquisitions

Husqvarna has completed a number of acquisitions. Although the Group has historically demonstrated ability to successfully integrate acquired businesses, such integration always involves certain risks. Net sales can be adversely affected and costs can be higher than anticipated.

Briggs and Stratton Announces Fiscal 1st Quarter Financial Results

MILWAUKEE, Oct 21, 2010 -- Briggs and Stratton Corporation today announced financial results for its first quarter ended September 26, 2010.

Highlights:

• First quarter fiscal 2011 consolidated net sales of $334.1 million, representing an increase of $9.5 million or 2.9% from the first quarter of fiscal 2010.
• First quarter fiscal 2011 consolidated net loss of $8.1 million, or $0.16 per diluted share, improved from a consolidated net loss of $8.7 million, or $0.18 per diluted share, one year ago.
• Net debt outstanding as of September 26, 2010 is down $106.5 million, or 40.5%, from September 27, 2009.

"We are pleased with our fiscal 2011 first quarter results as we move forward executing our strategy despite continued economic uncertainty," commented Todd J. Teske, Chairman, President and Chief Executive Officer of Briggs and Stratton. "We improved sales and operating results through a period of continued slow growth in consumer spending. Along with these improved operating results, our balance sheet remains strong as we continue to focus on efficiently managing our capital."

Consolidated Results:

Fiscal 2011 first quarter consolidated net sales were $334.1 million and the consolidated net loss was $8.1 million or $0.16 per diluted share. The first quarter of fiscal 2010 had consolidated net sales of $324.6 million and a consolidated net loss of $8.7 million or $0.18 per diluted share.  

The $9.5 million consolidated net sales increase was due primarily to increased international engine shipments as well as improved lawn and garden and snow thrower product sales volumes within our Power Products segment, offset by lower sales of pressure washers and portable generator products. The reduced net loss of $0.6 million compared to the prior year fiscal first quarter was primarily the result of increased engine sales to third party customers and improved engine plant productivity on higher production volumes, offset by Jefferson plant transition costs and lower production volumes in the Power Products segment and increased costs stemming from higher salaries and benefits expenses.

The higher salaries and benefits expenses include a $3.0 million net increase in pension and other post-retirement benefits as well as an increase in salaries and 401(k) company match benefits of $5.0 million, which have been fully restored since being temporarily reduced early in the first quarter of fiscal 2010.

Engines Segment:

Fiscal 2011 first quarter net sales were $205.0 million, which was $0.9 million or 0.4% less than the prior year. This decrease from the same quarter last year is primarily due to a reduction in intercompany sales of engines to our Power Products segment due to lower sales and production of pressure washers and portable generators, offset by an increase in international engine unit volumes to European and Asian OEMs.

The fiscal 2011 first quarter loss from operations was $5.5 million, which is $0.7 million more than the $4.9 million loss from operations experienced in the first quarter of fiscal 2010. This increase in the loss from operations over the prior year was the result of higher salaries and benefits expenses of $6.8 million, offset by improved absorption as engines produced increased 9% over the prior year first quarter.

The increase in salaries and benefits is primarily attributed to temporary reductions in salaries and 401(k) match implemented in the first quarter last year; such salaries and benefits have since been restored resulting in the increase between years.

Power Products Segment:

Fiscal 2011 first quarter net sales were $168.2 million, which was $2.3 million or 1.4% greater than the prior year. The improvement in sales compared to the same quarter last year primarily resulted from increased unit shipment volumes of lawn and garden products, offset by reduced shipment volumes of pressure washers and portable generators as retailers reduce their inventories in these categories.

The fiscal 2011 first quarter loss from operations was $5.0 million, or $7.5 million lower than the income from operations of $2.5 million in the first quarter of fiscal 2010. This decline in income from operations between years resulted from higher manufacturing spending including transition costs from the closure of our Jefferson manufacturing facility, lower absorption primarily related to the decreased production of portable generators and pressure washers, as well as increased expenses of $1.5 million related to salaries and benefits.

The increase in salaries and benefits is primarily attributed to temporary reductions in salaries and 401(k) match implemented in the first quarter last year; such salaries and benefits have since been restored resulting in the increase between years. Higher manufacturing spending is attributed to higher material costs and increased freight expense.

Corporate Items:

Interest expense was lower between years because of lower outstanding borrowings. The effective tax rate for the fiscal 2011 first quarter was a benefit of 33.4%, or $4.1 million, versus a benefit of 36.1%, or $4.9 million, in the first quarter last year. The effective tax rate benefit for the first quarter of fiscal 2011 was lower than the 2010 period because 2010included the favorable tax impact of the settlement of audits.

Financial Position:

The 8.875% Senior Notes that are due in March 2011 are classified as Short-Term Debt in the consolidated balance sheet as of the end of the fiscal 2011 first quarter. The company believes it will be able to replace these borrowings with new financing at or prior to the maturity date of the Senior Notes. In the unlikely event the company is unable to replace these borrowings with new financing upon the maturity of the Senior Notes, we believe that the availability within our existing revolving credit facility will be sufficient to pay off the outstanding Senior Notes.

Net debt at September 26, 2010 was $156.4 million (total debt of $204.1 million less $47.7 million of cash), an improvement of $106.5 million from September 27, 2009. Cash flows used by operating activities for the fiscal 2011 first quarter were $55.5 million compared to cash provided by operating activities of $11.9 million in the fiscal 2010 first quarter. The increase in cash used for operating activities is primarily due to working capital requirements to replenish inventory from lower levels at the end of fiscal 2010.

Outlook:

The company continues to project that fiscal 2011 net income will be in the range of $60 to $70 million or $1.20 to $1.40 per diluted share. Consolidated net sales are projected to be approximately 2% to 4% higher than in fiscal 2010. Engines Segment sales are forecasted higher on modest volume and pricing improvements while the Power Products Segment sales are forecasted higher primarily due to higher expected volumes of lawn and garden equipment. Demand for portable generators and the related engines due to landed hurricane activity have not been included in our fiscal 2011 sales forecast.

Operating income margins for fiscal 2011 are projected to be in the range of 5.0% to 6.0%, and interest expense and other income are forecasted to be in the range of $23 million to $25 million and $4 million to $5 million, respectively. The effective tax rate for the full year is projected to be in a range of 32% to 35%.

Husqvarna Plans Continued Beatrice Operations With Tentative Closure Dec. 31, 2010

HUSQVARNA CONTINUES OPERATION

October 16 -- Not much has changed for Husqvarna Turf Care Company since the lawnmower manufacturer announced it would be closing its Beatrice location and merging business to South Carolina in May.

The Swedish company said the consolidation would streamline its business.

Husqvarna spokesperson Beth Wiseman said the plant closure date is tentatively set for Dec. 31, 2010.

“A few employees may remain until mid-January, 2011 to close down the building,” Wiseman wrote in an email to the Daily Sun.

Wiseman said the employment level at the plant has not fluctuated much since the announcement of the closing and more than 300 people are still employed.

Over the next few months, Husqvarna will begin to reduce its workforce, culminating in the Dec. 31 closing.

“To date, we have only laid off two employees,” Wiseman wrote. “Several employees resigned having found employment with other companies in the area.”

Further reductions in the workforce are scheduled for Oct. 29, Dec. 9 and Dec. 31.

Wiseman said some employees, including hourly, professional and management have accepted positions within Husqvarna in Charlotte, N.C. and Orangeburg, S.C., site of Husqvarna’s U.S. headquarters.

Beginning in mid-December, Husqvarna will remove its equipment and machinery from the plant.

“We plan to begin packing up equipment for shipment during the week of December 13, 2010,” Wiseman wrote.

Currently, once Husqvarna leaves Beatrice, there are no other companies lined up to move into the 274,000 sq. feet facility located just off U.S. Highway 77 in north Beatrice.

John DeHardt, managing principal of Kessinger Hunter, the owner of the Husqvarna building, said he has had one “lukewarm” lead on a company interested in leasing the building.

“We’re holding out hope on one unnamed company that would be a manufacturer,” DeHardt said in a phone interview Monday.

DeHardt said he is optimistic a company would seize opportunity to set up shop in Beatrice.

“Unfortunately, no one has immediately come forward, but we have every hope that we will secure a quality firm that wants to set up business in Beatrice,” he said.

In addition to Kessinger Hunter, a Husqvarna brokerage firm has also been marketing the building to sublease to companies needing factory space.

DeHardt said Husqvarna has 4.5 years remaining on its lease of the facility, and both Kessinger Hunter and the City of Beatrice hope to secure another company to fill the building.

“Both of us would like to see a major manufacturing presence in that building and I have a fair degree of optimism we will succeed in securing a company in the not too distant future,” DeHardt said. “It’s a great facility and more importantly a great local workforce.”

“A combination of those two should be a great way to attract new business,” he added.

CPSC, Briggs and Stratton Recalls Riding Mowers

Briggs and Stratton Recalls Riding Mowers Due to Injury Hazard from Projectiles; Sold Exclusively at Sears

October 15, 2010

The following product safety recall was voluntarily conducted by the firm in cooperation with the CPSC. Consumers should stop using the product immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Units: About 500

Manufacturer: Briggs and Stratton Power Products Group, LLC, of Milwaukee, Wis.

Hazard: These riding mowers came to consumers with the side discharge chute not fully secured to the mower. Bolts can be forcefully discharged from mower if not properly tightened, posing an injury hazard to consumers.

Incidents/Injuries: The firm received one report of a bolt that discharged forcefully, breaking a window.

Description: This recall involves Craftman riding mower with model number 107.28034 and serial numbers listed below. The rear engine mounted riding mower is black. The model and serial numbers can be found on the data tag on the back of the riding mower.

Serial numbers included in this recall

2014033403 through 2014034552

2014082112 through 2014082861

2014149995 through 2014151266

2014346290 through 2014346803

Sold exclusively at: Sears stores nationwide between February 2010 and May 2010 for about $1,400.

Manufactured in: USA

Remedy: Consumers should immediately stop using these recalled riding mowers and contact Sears for a free inspection and repair. Sears is sending consumers letters with information on scheduling an inspection and repair.

Consumer Contact: For additional information, contact Sears at (800) 859-7026 between 8 a.m. and 10 p.m. ET Monday through Friday, or visit the firm’s website at www.sears.com

OPEI Issues Consumer Alert on New Ethanol (E15) Fuel

ALEXANDRIA, VA -- Oct 13, 2010 -- The Outdoor Power Equipment Institute (OPEI) today advised outdoor power equipment users to be aware of new fuel coming on the market with higher levels of ethanol that could harm equipment sitting in their garages, tool sheds and maintenance buildings. Over two hundred million pieces of outdoor power equipment could be at risk of product failure or voided warranty, including chainsaws, lawnmowers, utility vehicles, generators, snow throwers, trimmers, edgers, pruners, chippers, shredders and blowers.

This advisory comes after the decision by the Environmental Protection Agency (EPA) to approve higher levels of ethanol (E15 or 15% ethanol) in gasoline for use in only 2007 and newer automobiles.

Consumers need to be aware that until today, the maximum allowable limit of ethanol in gasoline was E10 or 10%. That means, all engine products in use today, with the exception of "flex-fuel" automobiles, were designed, built and warranted to run on gasoline containing no more than 10% ethanol. Use of E15 or higher ethanol blended fuels in any engine product, with the exception of a "flex-fuel" automobile, could cause performance issues, damage engines, and void the manufacturer's warranty.

Consumer Advisory: OPEI advises consumers of the following measures to protect their products and prevent voiding warranties:

1. Consumers should read and follow the owner's manual. The owner's manual will clearly explain what fuels can be used to ensure a properly functioning product.

2. Do not put any fuel containing more than 10 percent (E10) in small engine products (EPA's decision only applies to 2007 and newer highway vehicles), unless otherwise stated.

3. Consumers must check the pump to be sure that it is dispensing E10. Some gas pumps at local gas stations may offer both E10 and E15, or have blender pumps that dispense mid-level ethanol fuels for "flex-fuel" automobiles. Higher ethanol fuel (E15) may be less expensive than regular (E10) fuel, but putting E15 into an E10 approved product could cause product failure and void its warranty.

4. Many consumers fill their vehicle gas tank and the gasoline can at the same time. Be sure that the gas can is filled only with E10 fuel.

"The Department of Energy's (DOE) own testing has shown that putting anything other than E10 in non-road, small engines can cause performance irregularities and equipment failure," said Kris Kiser Executive Vice President at the Outdoor Power Equipment Institute. "Consumers need to understand this or they could encounter performance irregularities, increased heat and exhaust temperatures, failure or unintentional clutch engagement when using outdoor lawn and garden equipment."

Added Kiser, "Consumers should understand that current outdoor power equipment may be permanently damaged and could pose a safety risk if E15 fuel is used. Almost without exception, current equipment is not designed, built or warranted for mid-level blends."

OPEI supports Congressional efforts towards energy independence and the use of biofuels, including ethanol, and manufacturers can design and build future equipment to run on specific blends. However, current equipment was not designed to run on any fuel exceeding 10% ethanol.

Background Growth Energy, an ethanol industry trade group, petitioned the EPA in March 2009 to raise the limit on ethanol in gasoline from 10 to 15 percent. OPEI urged EPA to be deliberative in its review process, assuring thorough and adequate testing to assure that E15 would not harm existing products or pose safety risks. By approving E15 use in a small subset of engines on the road, there is a high risk that consumers will unknowingly or mistakenly put E15 in products for which it has not been approved.

About OPEI OPEI is an international trade association representing the $15 billion landscape, forestry, utility and lawn equipment manufacturing industry. OPEI is committed to ongoing efforts to ensure consumer safety and access to outdoor power equipment in order to maintain and enhance outdoor landscapes. OPEI works with federal, state and local groups to ensure that equipment operates efficiently, safely and is fully emission compliant. OPEI is a recognized Standards Development Organization for the American National Standards Institute (ANSI) and active internationally through the International Standards Organization (ISO) in the development of safety standards. For more information on OPEI visit www.OPEI.org.

OSHA Proposes Penalties Against Briggs McDonough, GA Plant For Safety Violations

Oct 11, 2010 -- OSHA is proposing $78,000 in penalties against Briggs and Stratton Corp. in McDonough, Ga., for nine safety and health violations following a worker being injured.

In April, an employee sustained thermal and chemical burns when he stepped off a platform into a tank that contained hot caustic chemicals while repairing a wash line. The company is being cited with one serious safety violation for allowing the platform above the chemical tank to have open sides without a railing or guards.

"If the proper safety precautions had been taken by management, this injury could have been prevented," said Bill Fulcher, director of OSHA's Atlanta-East Area Office. "It is the employer's responsibility to ensure all aspects of OSHA standards are followed."

Briggs and Stratton is also being cited with one willful and six additional serious safety violations, along with one serious health violation. The willful citation with a $55,000 proposed penalty is due to the company exposing employees to danger by failing to develop lockout/tagout procedures to control hazardous energy.

Serious safety violations include exposing employees to amputation hazards by failing to install machine guards; electrical hazards including improper use of electrical equipment, improper electrical connections and making electrical equipment inaccessible for maintenance; unused openings in cabinets, boxes and fittings that were not effectively closed; and material data sheets on hazardous chemicals that were not readily available to employees. The serious health citation was issued because the employer did not provide training to employees on hazards associated with the specific chemicals being used in the plant.

Fines for the serious citations total $23,000.

According to the company’s website, Briggs and Stratton is the world’s largest producer of gasoline engines for outdoor power equipment.

The company has 15 business days from receipt of the citations and proposed penalties to comply, request an informal conference with OSHA's area director or contest the findings before the independent Occupational Safety and Health Review Commission.

Kohler Says Sheboygan Plant is 'Not Sustainable' Without Cost Cuts

Oct. 5, 2010 -- Kohler Co. said Tuesday that its Sheboygan County manufacturing operations "are not sustainable long term" under their current cost structure.

But a spokesman said later that the firm, which is seeking major concessions from its union workers, isn't threatening to relocate.

"We are trying to avoid getting to that point by seeking solutions during these negotiations," Kohler spokesman Todd Weber said by e-mail.

Earlier Tuesday, Kohler issued a four-page statement - unusual for the privately held firm in its length and detail - laying out its position in what have become high-stakes talks with the United Auto Workers on a new labor contract.

Calling the costs to run its Sheboygan County factories "significantly higher than any of our other plants," Kohler summarized its proposals for extensive use of casual employees, a two-tier wage scale that would pay new workers less and a five-year pay freeze for current union-represented employees.

"Kohler Co. will try to maintain a long-term presence in Sheboygan County," Weber said in the statement, "but we need to get our future wage and benefits more in line with competitors in the market to protect what we have in Sheboygan County and be viable long term."

At issue are the company's factories in the village of Kohler, where it makes plumbing products and engines, and just north of Sheboygan, where it makes generators. There are 1,937 UAW-represented employees now working at those plants, with another 550 on layoff, the company said.

Kohler said union-represented workers average $22.54 an hour, a rate the firm said is the highest among its 15 U.S. factories "by a substantial margin."

The company said the lower pay new employees would receive would be above the local average for manufacturing - currently $14.70, according to Kohler. The union has said the company wants the lower-tier employees to get about 35% below the current pay for regular workers, which would suggest a rate of about $14.65 an hour.

Kohler is seeking to use casual employees - or in the company's language, a flexible workforce - for up to 25% of the annual hours worked by bargaining-unit members. Casual workers would be paid the lower-tier rate, and get reduced benefits, until they worked 1,000 hours over 12 months. They also would be union-represented, Kohler said. The Journal Sentinel, quoting a union official, incorrectly reported previously that the workers would not be union-represented.

The company also wants to reduce benefit expenses that it says are "compounding the uncompetitive cost structure." The firm said it is looking to increase union-employee contributions for health care benefits to 20% of the cost.

Kohler's call for widespread use of casual employees and lower pay for new workers mirrors the strategy employed last year by Mercury Marine in Fond du Lac and just recently by Harley-Davidson Inc. in Milwaukee and Tomahawk. Both companies successfully wrested from their unions the concessions Kohler now seeks - and won public financial aid as well - all under threat of moving production out of Wisconsin.

Asked if Kohler is pursuing state aid, Weber said, "At this time, Kohler Co. is not talking to the State of Wisconsin regarding assistance."

Talking Shop with Stan Crader, President of OPEESA Member Companies CDC and BME

Monday, October 4, 2010

Stan Crader of Jackson started out screwing nuts onto bolts at his grandfather's International Harvester tractor dealership in Marble Hill, Mo. He soon graduated to refilling the GoJo dispenser and cleaning the toilets at Crader Equipment Co. The company's focus turned to growing its Stihl chain saw distribution, and after returning from college Crader started working with his father full time at what was then called Crader Distributing Co. He's been president the family business, now known as CDC-BME, since 1990. More recently he has written two books about growing up in a small town. 

Question: How has CDC-BME grown and changed over the years? 

Answer: Crader Equipment became a Stihl retailer in 1958. The foreign saw was clearly superior to anything on the market, but since World War II had only been about 15 years earlier, the German-made product was not readily accepted. Crader Distributing installed the first computer in 1978, and since I was the only person in the business with a college degree, I was put in charge. I had no idea what I was doing. Dad (Don Crader) and I made a trip to Germany and convinced them to let the distributors expand by acquiring their neighbors. The first acquisition was Central Equipment, expanding the CDC's Missouri/Illinois territory to include most of Kansas and Nebraska. A few years later came Blue Mountain Equipment (BME) adding Texas and Oklahoma to our territory and the frequent trips to Texas began. One of the first trips was a series of dealer meetings held throughout the state. My wife, Debbie, and I loaded our three boys -- Justin, Scott and Brad -- into our minivan and spent two weeks driving across Texas. The boys are in the business now, but I don't think any of them have cleaned the toilets or refilled the GoJo can. CDC is a true family business. My brother handles the banking side, and my sister handles the payroll. However, no major decision is made without their involvement, consent and influence. A family business is run a little different from a public company or a sole proprietor. In a family business, nobody is solely in charge and most decisions are done by committee. 

Q: How did you go from writing articles in company newsletters to writing your first novel?

 

A: Writing has always been a requirement with my job. Letters to customers, but more fun are general articles that are featured in our newsletter. I won a couple of Silver Quill writing awards given by an organization in St. Louis. And then there were the Christmas letters, an effort to do an annual letter that others enjoyed reading but offered family news. I've written articles about flying that have been published in flying magazines. And also a recent article in Rural Missouri about Ira Biffle, a Bollinger County native who was Charles Lindbergh's flight instructor. Most of my writing has been for our company newsletter. The articles have ranged from business specific to politically charged to human interest. Eventually people began to suggest a book. So I set to write a book. It was a much bigger project than I imagined. The first book took a couple of years, was published November 2007. Sales to date are over 3,500 but less than 4,000. That's about 3,000 more than I expected. During 2008, the book spent several days on Amazon's and Barnes and Noble's best-selling list for Christian fiction. I didn't set out to write a Christian fiction, just a story that was suitable for all ages, so the publisher categorized the book into Christian fiction. 

Q: Describe your books, "The Bridge," released in 2007, and "The Paperboy," due out next month.

 

A: "The Bridge" was named so because the goal was for the reader to identify with one of the characters and allow the story to be a bridge to their own memories. It's a story of a young boy who is at first self-centered, then grows to care about others. "Paperboy" continues with many of the same characters. But in "Paperboy," it's the town that changes for the better. And the main character, Tommy, as the paperboy, learns a great deal about his customers that most don't know. He observes the town dealing with a number of challenges, racial and otherwise. The goal of the story is for the reader to realize that everyone has a story worth getting to know. I'm making a draft for the third in the series of books, "The Longest Year." It's about a group of friends who are 15, and one by one they turn 16. The story will feature the anxiety of waiting to get their license. And the story will include a variety of subplots, including deportment.

Q: In addition to being a businessman and an author, you are also a pilot. 

A: I've been flying since I was 10, sort of. My dad flew and actually let me fly from the left seat beginning at age 14. Once I began taking lessons, it took me three years to finish. I only took lessons during the summer when I was working and could make enough money to pay for lessons. The business has grown to require travel. Private flying has been a huge time saver. For example, I can leave my house and be in McKinney, Texas, where we own Blue Mountain Equipment, in less than three hours. The same trip by car would require at least 10 hours, and a commercial flight would take six hours. 

I've made several fun trips through the Rockies. I once flew across the Atlantic to Greece, and I once flew the Lewis and Clark trail. I have always liked photography, but the film era was too expensive. The digital age makes photography affordable for anyone. My YouTube channel is a fun way to share the photos through video slide shows. Heck, why take all the great photos if you're not going to share them.

Stihl Marks 40 Million Unit Milestone in Virginia Beach, VA

VIRGINIA BEACH, Va – October  7 -- Stihl Inc. produced its 40 millionth tool in Virginia Beach at 1:15 p.m. Wednesday (October 6, 2010.)

It was an MS 290 Farm Boss, its best-selling chain saw in the United States.

To celebrate the milestone, the power-tool manufacturer splurged for beer, bratwursts and pretzels for its employees - after their shifts, of course.

Stihl has grown substantially since it moved into a 20,000-square-foot warehouse, with fewer than 50 workers, in Virginia Beach near Norfolk International Airport in 1974.

In 1978, Stihl switched to a site off Lynnhaven Parkway. Its U.S. headquarters now occupies more than 1 million square feet over 100 acres, with 1,850 employees.

The 40 millionth product hasn't been Stihl's only piece of good news lately:

- The company is on track for record sales this year, both nationally and worldwide, said Hans Peter Stihl, chairman of the advisory board of Stihl's German parent company. Stihl visits Virginia Beach every October, he said, "to exchange ideas about improving productivity and introducing new products."

Worldwide, sales will exceed 2.3 billion euros, or more than $3.2 billion, based on current exchange rates, Stihl said. U.S. sales are expected to top $1 billion, said Fred Whyte, president of Stihl in Virginia Beach.

- Independent research this year declared Stihl the No. 1 selling brand of hand-held power equipment in the United States, Whyte said.

- Popular Mechanics magazine last month named Stihl's 36-volt lithium-ion battery-powered hedge trimmer one of its 10 breakthrough products of the year. Stihl expects to market lithium-ion grass trimmers, blowers and chain saws in 2011, Whyte said.

- Virginia Beach plans to phase out its machinery and tools tax, a move Stihl has sought.

"Obviously, we were very pleased," Whyte said. "We compete against our sister companies around the world. Anything we can do to be more cost-competitive in Virginia Beach certainly enhances our opportunities to bring more new products into our facilities."

OPEESA Member and Stihl Distributor Blue Mountain Equipment Completes New Facility

MCKINNEY, TEXAS - Blue Mountain Equipment (BME), STIHL distributor for Texas and Oklahoma, celebrated the grand opening of its new distribution center on September 10, 2010, which included dealers from Texas, Oklahoma, employees, vendors, and STIHL Inc. personnel. Special guests included STIHL Inc. President Fred Whyte, Vice-President Peter Burton, and Jackson D’ Armond, Marketing Communications Manager. Company Founder, Don Crader, and family were also in attendance to celebrate the grand opening.

BME is the sister company to Crader Distributing Company in Marble Hill, MO. Crader Distributing Co. founded in 1944, began selling STIHL in the late 50s and became a distributor for STIHL in 1960. The Crader Family is currently celebrating four generations in the business, and 2010 commemorates their 50th year distributing STIHL products. Crader Distributing Company is the oldest independent STIHL Distributor in the US.

To commemorate the 50th anniversary of Crader Distributing Co. selling STIHL, Fred Whyte, on behalf of the Stihl Family from Germany; STIHL Inc. Virginia Beach VA, presented to the Crader family a fully operational 50 year old STIHL tractor. STIHL produced tractors, sold only in Europe, during the 1950s and early 60s.

The new BME facility, located adjacent to the Collin County Regional Airport in McKinney, TX, doubles the size of its previous facility at 108,000 sq. ft. The project started in October 2009 and was completed in July of 2010. The first floor of the office is 8,000 sq. ft., and is dedicated primarily to dealer technician training and a service shop. The second floor provides offices for order entry, customer service, inventory control, merchandising, and sales and marketing.

32,000 sq. ft. of the 92,000 sq. ft. warehouse is climate controlled. The warehouse also features four 24’ BA ceiling fans, insulated roof, indoor motion sensor lighting, low EE rated windows, 12 truck docks, 11 picking/packing stations, 35' tall ceilings, and will hold over 10,000 pallets of STIHL product.

Blue Mountain Equipment first opened in Dallas in 1988. When BME outgrew the original facility, it moved to McKinney, TX, in 1996. A warehouse expansion was completed in 2000, but only a few years later, thanks to efforts of its independent dealers, there was a need for a larger building. The new facility on Airport Drive is located on 10 acres, is 108,000 sq. ft., and has room to add an additional 70,000 sq. ft. in the future, says Robin Hastings Sales Manager for BME.

The facility shows the commitment the Crader Family; STIHL has made to its Texas and Oklahoma STIHL dealers. "We can only thank the Independent STIHL dealers for the tremendous growth over the past few years and for helping to make STIHL the #1 Selling Brand of handheld outdoor power equipment in America*," Hastings said.

*Number one selling brand is based on syndicated Irwin Broh Research (commercial landscapers) as well as independent consumer research of 2009 U.S. sales and market share data for the gasoline-powered handheld outdoor power equipment category combined sales to consumers and commercial landscapers.

Blackstreet Capital Recapps Swisher Mower

October 4, 2010 -- Blackstreet Capital has recapped Swisher Mower and Machine Co., a Warrensburg, Mo.-based maker and distributor of lawn & garden power equipment. Chevy Chase, Md.-based Blackstreet is a PE firm. News of the deal was announced by Livingstone, which acted as financial adviser to Swisher.

Livingston is pleased to announce the successful recapitalization of Swisher Mower and Machine Company, Inc. (“Swisher” or the “Company”) by Blackstreet Capital (“Blackstreet”). Livingstone acted as exclusive financial advisor to Swisher. Terms of the deal were not disclosed.

Swisher, based in Warrensburg, Missouri, is a leading manufacturer and distributor of branded lawn & garden power equipment and accessories. The Company’s product portfolio includes zero-turn riding mowers, trailmowers, high wheel string trimmers, log splitters, and ATV attachments. Known for its superior design, materials, components, and construction, Swisher has earned the reputation as a pioneer in the industry having created and developed multiple product categories throughout the Company’s 65 year history. Swisher sells its products through a diversified and expansive network of more than 2,000 retail outlets in the U.S. and Canada.

Livingstone worked with the Company to execute a comprehensive recapitalization process in an efficient time frame. The highly competitive process was a successful outcome for the Company’s employees, shareholders, lenders and other constituents. Livingstone completed the transaction within 90 days of its engagement by the Company.

“We are thrilled to have helped forge a partnership between Swisher and Blackstreet,” said Livingstone Director Joe Greenwood. “The Swisher family and management team are to be commended for successfully navigating challenging market conditions, while positioning the Company to capitalize on several exciting growth opportunities.”

OPEESA Member Power Equipment Systems Forges New West Coast Partnership with MTD

Salem, OR -- September 28 -- Power Equipment Systems (PES), a wholesale distributor of lawn and garden power equipment, today announced a partnership with outdoor power equipment manufacturer MTD that will make PES the primary West Coast source for MTD’s Cub Cadet and Troy-Bilt equipment brands.

Effective October 1st, the partnership will allow PES to sell Cub Cadet and Troy-Bilt equipment as a commissioned distributor to power equipment dealers in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming.

This new business model will enable MTD to consolidate how they go to market in the western regions and will provide dealers with the opportunity to take advantage of factory-direct pricing, national sales programs and marketing support combined with the exceptional service and support of an award-winning regional distributor with PES.

“PES has been a strong partner for us in the West for many years,” said Gary Lobaza, executive vice president, Specialty Retail Group at MTD Products. “They are consistent in providing a high level of service and support for our dealer community. At Cub Cadet we are excited to take this relationship to the next level and build a better solution with PES for our dealers.”

PES, which also offers parts and equipment from a number of other manufacturers, has built a solid reputation in the lawn and garden industry for more than 30 years. For the past three years, PES has been recognized as one of the 100 Best Companies to Work For by Oregon Business magazine. The new partnership with MTD will allow PES to expand both internal and external resources to meet increased demand as they continue to grow their dealer network across the West.