Husqvarna Looks to Improve Production Time in Orangeburg Plant

ORANGEBURG – May 25 -- Orangeburg's Husqvarna plant, a leader in the manufacture of mowing and trimming equipment, is seeking to trim production time at its plant to meet customer demand.

The plant has hired North Carolina-based Rucker & Associates consultants to help implement efficiency methodologies such as Lean Manufacturing and Six Sigma strategies to boost production, according to an article published in the Reliable Plant Magazine and Lean Manufacturing Journal last month.

R&A specializes in finding industrial and operational efficiencies.

Lean Manufacturing strategies aim to preserve the value of a product with less work and Six Sigma is a data-driven process aimed at eliminating defects in a process.

Attempts to reach R&A and Husqvarna officials for comment related to this matter were unsuccessful.

The Swedish company employs an average of 1,500 in Orangeburg making riding lawn tractors, tillers and snow throwers.

In the article, David Rucker, company founder and president, said R&A served as a consultant for Husqvarna at its Beatrice, Neb., plant in an effort to increase productivity.

But Rucker said the Orangeburg plant provides a greater challenge simply because of its size, at 1 million square feet.

"We have been thrilled to improve Husqvarna processes in Beatrice," Rucker told the journal. "We believe we can achieve similar results at the cornerstone of their U.S. presence in Orangeburg."

Last month, Husqvarna said the production disturbances due to the transition have resulted in an "increase in material complexity" and a higher number of new products being launched.

This has caused fewer shipments and increasing costs, the company said.

Rucker said the Beatrice production line featured multiple equipment models, each requiring unique assembly methods and different amounts of dedicated assembly time from the operators.

The strategies implemented created a more visual and flexible assembly line, delivering the next two hours' worth of raw materials.

"By changing the way operators worked on the line, we were able to make it easier for Husqvarna to accomplish more, increasing the overall efficiency," Rucker said. "These types of changes make a huge difference in all aspects of the business, from reduced labor costs to on-time delivery."

Last year, Husqvarna announced it would shut down its Beatrice, Neb., plant and move its production lines to Orangeburg.

And then in November, it said it would invest $105 million at its Old Elloree Road plant over the next decade and a half. In the first phase, it plans to invest $30 million in Orangeburg County by Dec. 31, 2013. The second phase will involve a $75 million investment to be completed by Dec. 31, 2024.

www.thetandd.com

Stihl Recalls 2.3 Million Yard Power Products

WASHINGTON, D.C. – May 25 -- The U.S. Consumer Product Safety Commission, in cooperation with the firm named below, today announced a voluntary recall of the following consumer product. Consumers should stop using recalled products immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Name of Product: Gas powered STIHL trimmers, brushcutters, KombiMotors, hedge trimmers, edgers, clearing saws, pole pruners, and backpack blowers that utilize a toolless fuel cap

Units: About 2.3 million

Manufacturer: STIHL Inc., of Virginia Beach, Va.

Hazard: The level of ethanol and other fuel additives can distort the toolless fuel cap, allowing fuel to spill, posing a fire and burn hazard.

Incidents/Injuries: STIHL has received 81 reports of difficulty installing and/or removing the fuel caps and fuel spillage. No injuries have been reported.

Description: The following yard power tools and model numbers are included in this recall:

Blower, backpack                          

                             BR 500                     Up to 284053456

                             BR 550                     Up to 284053456

                             BR 600                     Up to 284053456

                             BR 600 Magnum       Up to 284053456

Hedge Trimmer, extended reach      

                            HL 90K                    Up to 284101483

                            HL 100                     Up to 284101483

                            HL 100 K                 Up to 284101483

Pole Pruner           

                           HT 56 C-E                Up to 284398635

                           HT 100                      Up to 284097165

                           HT 101                      Up to 284097165

                           HT 130                      Up to 284097165

                           HT 131                      Up to 284097165

Edger       

                           FC 56 C-E                Up to 284180999

                           FC 70 C-E                Up to 284180999

                           FC 90                        Up to 284012099

                           FC 95                        Up to 284012099

                           FC 100                      Up to 284012099

                           FC 110                      Up to 284012099

Trimmer/Brushcutter          

                           FS 40 C-E                 Up to 284180999

                           FS 56 C-E                 Up to 284180999

                           FS 56 RC-E               Up to 284180999

                           FS 70 RC-E               Up to 284180999

                           FS 90                         Up to 284012099

                           FS 90 R                      Up to 284012099

                           FS 100 RX                 Up to 284012099

                           FS 110                        Up to 284012099

                           FS 110 R                    Up to 284012099

                           FS 110 RX                  Up to 284012099

                           FS 130                        Up to 284012099

                           FS 130 R                     Up to 284012099

Clearing Saw     
                           FS 310                       Up to 284012099

KombiEngine         

                          KM 56 RC-E               Up to 284180999

                          KM 90 R                      Up to 284012099

                          KM 110 R                    Up to 284012099

                          KM 130 R                    Up to 284012099

Visit STIHL’s website, www.stihlusa.com for additional photos of the power tools involved and photos of the toolless fuel cap.

Sold at: Authorized STIHL dealers nationwide from July 2002 through May 2011 for between $190 and $650.

Manufactured in: United States

Remedy: Consumers should immediately stop using these products and return them to an authorized STIHL dealer for a free repair. Consumers can contact STIHL for instructions on identifying these toolless fuel caps.

Consumer Contact: For additional information, contact STIHL toll-free at (800) 233-4729 between 8 a.m. and 8 p.m. ET Monday through Friday, or visit the firm's website at www.stihlusa.com or e-mail to stihlrecall@stihl.us

China to Lose Edge over U.S. by 2016 Says Manufacturing Group Economist

May 18 -- Based on recent analyses and reports, a leading manufacturing sector economist asserts the Chinese will stand to lose significant market share in the years to come, and will have not a cost advantage over U.S. manufacturing by the year 2016.

"Such a statement would have evoked peals of laughter and derisive remarks only a few years ago, but times change and situations alter," says Dr. Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association, Intl. (FMA). "There are no guarantees, of course, and these reports make it clear that idiotic policies can still ruin the trend.

"But analysts are starting to string together some of these trends, and they inevitably point to better news for the U.S. than for China. Some feel that it has been a nice run for the Chinese, but all things must come to an end," Kuehl states in the current economic update newsletter Fabrinomics published by FMA.

Kuehl points out that in 1990 the Chinese share of world manufacturing output was a paltry 3 percent. Today its share is 19.8 percent and the U.S. is slightly behind at 19.4 percent.

"The Chinese built quickly on a base of low wage workers and significant government assistance as well as a very low valued currency that has allowed the growth of the export economy," he says. "The future is not looking so positive for the Chinese, however. Wages are growing at 17 percent annually, while in the U.S. they are growing at 3 percent.

"That is just for the average worker's wage," he stresses. "If one looks at the managerial levels and among skilled workers, the rate of Chinese wage growth is about 135 percent per year; in the U.S. that same group is seeing wage growth of 3.7 percent. The Chinese pay scale is still far less than in the U.S., but that gap is closing very fast."

Kuehl admits China has made great strides in terms of productivity – an improvement of 10 times in the last 20 years. Yet, he claims, this still leaves China at a third of the productivity the U.S. boasts, and the U.S. is seeing productivity gains of almost 8 percent per year these days.

"The amazing observation from all this is that China is not going to have a cost advantage over the U.S. after 2015," he says. "If, as expected, the Chinese are forced by inflation threats to start pushing the value of their currency higher, the balance could shift pretty quickly. Then there is the potential for much higher transportation costs as the price of oil rises. None of this will cause the U.S. manufacturer to shed a tear."

In the newsletter article, Kuehl notes the U.S. currently competes with the Germans in terms of the value of their manufacturing, as these nations combined cover almost 80 percent of global value. "These are the countries that supply the high value manufactured goods while the Chinese are still focused on the cheaper consumer goods," he explains. "The U.S. will see that lead expand, but there will be competition from China in these areas as they will see these more expensive goods as the only way to retain some competitive edge."

Kuehl believes that for both nations future emphasis will be on the domestic market and that could well be significant for the U.S. manufacturer in a variety of ways.

"If China shifts its attention to its own domestic market and away from exports, it will allow U.S. producers to recapture domestic market share," he says. "As the U.S. manufacturing company looks to its own market, it will be generally better positioned than the Chinese competitor as the distribution infrastructure in the U.S. is better suited than China's."

According to Kuehl, most everything in China's transportation network is currently pointed out of the country to service export, and its internal transportation system is often inferior. China will need some infrastructure work to be able to service its domestic markets as effectively as U.S. suppliers are able to service American customers.

"This is not to say that China will cease to exist as a global competitor, but it does suggest that the same patterns that affected other fast growing nations have started to impact them," he says. "Japan looked unstoppable in the 1970s, and they faded over time. It now appears to be the beginning of China's return to earth."

www.thefabricator.com 

The Toro Company Reports 2011 Second Quarter Results

• Quarterly sales increase 12 percent driven by professional businesses
• Improved golf market fuels worldwide demand for turf equipment and irrigation systems
• Net earnings per share for the quarter up over 40 percent to $1.88
• Company takes first step towards Destination 2014 goals

BLOOMINGTON, Minn. -- May 19 -- The Toro Company today reported net earnings of $60.3 million, or $1.88 per share, on net sales of $631.6 million for its fiscal second quarter ended April 29, 2011. In the comparable fiscal 2010 period, the company reported net earnings of $45.7 million, or $1.34 per share, on net sales of $ 562.8 million.

For the first six months, Toro reported net earnings of $77.5 million, or $2.41 per share, on net sales of $1.01 billion. In the comparable fiscal 2010 period, the company posted net earnings of $56.6 million, or $1.65 per share, on net sales of $894.2 million.

"We are very pleased with our second quarter performance as our execution serving the professional markets led to significant revenue and earnings growth, putting Toro on an early trajectory towards our Destination 2014 organic growth and profitability goals," said Michael J. Hoffman, Toro's chairman and chief executive officer.

"We are especially excited about the golf business. Customers are choosing Toro's innovative products to replace aging equipment and irrigation systems, and to support new golf development projects around the world. As for our residential business, the late start to spring delayed retail sales resulting in us carrying more inventory; however, we expect demand to return with the recent, warmer weather."

SEGMENT RESULTS

Professional

• Professional segment net sales for the second quarter totaled $418.3 million, up 19.7 percent from the prior year period. Worldwide orders for golf equipment and irrigation systems were up on improved market conditions, successful product introductions, and new course development around the world - particularly in Asia. Shipments of landscape maintenance equipment were higher on strength of new products, even with a slow start to spring that delayed some purchases. Other contributors to growth in the quarter included strong global sales for micro irrigation products on increased demand and added capacity, along with a rebound in the rental business. For the first six months, professional segment net sales were $676.6 million, up 20.3 percent from the comparable fiscal 2010 period.

• Professional segment earnings for the second quarter totaled $85.6 million, up 26.6 percent from the prior year period. For the first six months, professional segment earnings were $123.5 million, up 32.2 percent from the comparable fiscal 2010 period.

Residential

• Residential segment net sales for the second quarter totaled $209.6 million, down slightly from the prior year period. Cool, wet weather dampened sales for walk power mowers. These declines were somewhat offset by strong acceptance for Toro's new line of innovative zero turn mowers, with shipments up significantly for the quarter. For the first six months, residential segment net sales were $332.9 million, up 1.9 percent from the comparable fiscal 2010 period.

• Residential segment earnings for the second quarter totaled $26.5 million, up 5.7 percent from the prior year period. For the first six months, residential segment earnings were $37.9 million, down 1.6 percent from the comparable fiscal 2010 period.

OPERATING RESULTS

Gross margin for the second quarter and first six months was up 50 basis points, respectively, to 33.8 percent and 34.5 percent. The margin improvement was primarily driven by favorable mix and higher production volumes, which were somewhat offset by rising freight and commodity costs. 

Selling, general and administrative (SG&A) expense as a percent of sales improved 150 basis points for the second quarter to 19 percent. The decline in SG&A as a percent of sales reflects further leveraging of costs over increased sales volumes. For the first six months, SG&A expense improved 110 basis points as a percent of sales to 22.6 percent. 

Operating earnings as a percent of sales increased 200 basis points to 14.8 percent for the second quarter, and was up 160 basis points to 11.9 percent for the year to date. 

Interest expense for the second quarter was $4.2 million, down 2 percent from prior year period. For the first six months, interest expense totaled $8.3 million, down 2.5 percent from the same period last year. 

The effective tax rate for the second quarter was 33.4 percent compared with 33.6 percent in the same period last year. For the year to date, the tax rate declined to 32.6 percent from 33.6 percent last year, primarily the result of the retroactive extension of the Federal Research and Engineering Tax Credit. 

Accounts receivable at the end of the second quarter totaled $278.5 million, up 6.8 percent from the prior year period, on a sales increase of 12.2 percent. Net inventories were $259.8 million, up 49 percent from last year's second quarter. Inventories increased in response to last year's availability issues, coupled with the impact of delayed residential product shipments due to unfavorable spring weather. Trade payables were $202.6 million, up 18.3 percent compared with last year. 

OUTLOOK

"Economic trends in our markets remain positive; however, weather and commodities are proving to be more challenging this year," said Hoffman. "While uncertain how the delayed start to spring will play out across our markets, we are encouraged by the success of our innovative new products and execution in the marketplace. Given our strong performance to date, we are increasing our full-year revenue and earnings outlook." 

The company now expects net earnings for fiscal 2011 to be about $3.60 per share on a revenue increase of about 10 to 12 percent. 

ABOUT THE TORO COMPANY

The Toro Company is a leading worldwide provider of turf and landscape maintenance equipment, and precision irrigation systems, to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties, and agricultural fields.