Milwaukee Business Journal Executive of the Year: Generac's Aaron Jagdfeld

Executive of the Year: Public Company

Aaron Jagdfeld

President and chief executive officer, Generac Holdings Inc.

Age: 41
Family:  Wife, Christy, an accountant; daughters, Abby, 16, Meghan, 11; son, Adam, 14 
Education: Bachelor of business administration degree in accounting, University of Wisconsin-Whitewater
Grew up: Milwaukee and Hartland
What book is on your nightstand? “Actually on my tablet, as I am trying to go paperless, is ‘The Complete Short Stories of Ernest Hemingway.’” 
What other profession would you like to try and why? “For the longest time, I really wanted to be a high school teacher so that I could teach U.S. history and coach high school track. I’ve always been a big history buff and the desire to coach is something that comes from my high school and college track career.” 
What was your first job? Newspaper delivery
Favorite film? “Planes, Trains and Automobiles”
What’s something about you that would surprise people? “I really hate to golf. Most people assume that a CEO spends all of his or her spare time on a golf course, but the truth is that I would rather be running or biking.” 
Favorite vacation spot?  “We are fortunate to have a place in the north woods of Wisconsin that has been in my wife’s family since the 1940s and even if it’s only for a weekend, the opportunity to unwind and relax on Pelican Lake has always been my favorite retreat.” 
Biggest perk of your job? “That one is easy: I get to spend every day doing something I really enjoy.” 
What is playing on your iPod? “Every Beatles song imaginable” 
iPhone or Blackberry? BlackBerry. “I’m still tied to the physical keyboard on the BlackBerry. I just haven’t found myself to be quite as productive with emails on an iPhone.”

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ARTICLE

A year or two ago, Generac wasn’t exactly a household name around the country.

But times have changed.

After going public in February 2010 and a seemingly endless string of major storms and massive power outages, particularly on the East Coast, the Genesee-based company and its line of generators have been thrust firmly into the spotlight.

“We’ve been kind of this quiet little company out here in western Waukesha County for a long time. And I think that changed overnight,” said Aaron Jagdfeld, president and chief executive officer of Generac Holdings Inc., parent company of Generac Power Systems Inc. “Now with all the outages and the categories of product being top of mind for people and our brand being so strong in the marketplace, we’re really, I think, capitalizing on that today in a way that we just couldn’t before. It’s going to launch us in a place we’ve never been before as a company.”

Founded in 1959 by Robert Kern, Generac grew sales more than 33 percent in 2011 to almost $800 million. The company said in October it expects to grow more than 30 percent in 2012, surpassing $1 billion.

“Coming into this year I don’t know that I really thought that we would be able to achieve the kind of success that we had last year. But we have completely outdone ourselves,” Jagdfeld said. “We’ve hit a number of milestones this year that I think are really important for us.”

Those milestones include topping $1 billion in sales, initiating a $10 million headquarters renovation and expansion, buying back a former Generac manufacturing facility in Jefferson that recently went operational, acquiring a company that gives Generac its first international operations and adding more than 800 jobs through organic growth and acquisition.

The company’s 2012 success under Jagdfeld’s leadership led The Business Journal to name him Executive of the Year in the public company category.

“Aaron Jagdfeld has been instrumental in Generac’s success story,” said Michael Halloran, a Milwaukee-based financial analyst with Robert W. Baird & Co. Inc. who follows Generac.

Halloran said Generac’s 38 percent compound annual growth rate since 2010 is “impressive amid the slow growth environment in the U.S.” and is driven in part by “strong management execution to capitalize on recent major power outage events” and Jagdfeld-led efforts to improve the company’s marketing and distributor penetration.

Jagdfeld, 41, started working at Generac 18 years ago in the finance department. He was named CEO in 2008.

He is perhaps perfectly suited for the top role at a generator manufacturer. His accounting background gives him the chops to run the business, and the self-proclaimed “gear head” understands how the products work.

Jagdfeld, who comes from humble roots on Milwaukee’s northwest side, has built a reputation as one of the hardest workers at Generac. He made a point throughout his career of never going home before his boss left.

“That created for me a way to, I think, get the most out of the people that started working for me,” Jagdfeld said. “People really appreciate when you lead by example. People respect that if you’re the guy who’s in the office last, you’re turning the lights out last and you’re the first guy in the morning to get there and turn the lights on, people will work incredibly hard for you.”

That work ethic hasn’t changed now that he doesn’t have a boss. It helps that he loves his job.

“I feel like my role, and I’ve told my board this, if you didn’t pay me anything I’d still be here because I like what I do,” Jagdfeld said. “I ended up in a role where I’m happy to be building something.”

Tim Sullivan, former president and CEO of mining equipment giant Bucyrus International Inc.and new member of Generac’s board, said Jagdfeld has “unlimited potential.”

“I think the responsibilities he’s been given at his age, learning what he has in his career so far, positions him better than most young CEOs that I’ve met,” said Sullivan, who spent 35 years with Bucyrus in South Milwaukee. “I think he’s got all the attributes to be one of the best ever. I think he has that desire and that drive to be one of the best.”

Generac chief financial officer York Ragen said he knows few people with the same level of drive and energy that Jagdfeld possesses. Jagdfeld has made an impression at investor conferences in Generac’s early stages as a public company.

“(Investors and analysts) talk to a lot of CEOs obviously, and there’s a lot of people that don’t come to the table with the same level of passion,” Ragen said. “If you want to talk about intangibles, those are probably things you spend 30 minutes talking with him, (and) the energy radiates as you talk to him.”

Jagdfeld, an avid sports fan, talks about his strategy for Generac in terms of building a strong program that attracts top talent and has a certain aura of success surrounding it.

Key to that strategy are acquisitions. Ragen said Jagdfeld has led that charge over the past two years, which have seen Generac’s first acquisition in its history and its first international presence.

“It’s a huge world out there, and it’s something that I think if we continue to be shrewd about it, I think we can really add scale to this company over the next few years,” Jagdfeld said. “This is one of those situations where success breeds success.”

Generac Holdings Inc.

Company: Manufacturer of generators and other engine-powered products

Headquarters: Town of Genesee

Employees: 3,000

Top executive: Aaron Jagdfeld, president and chief executive officer

2012 projected sales: Nearly $1.2 billion

Generac’s 2012 in review

Generac had arguably its most successful year to date. Here are some of the highlights:

• Feb. 1: Generac announces one of its subsidiaries acquired Gen-Tran Corp., a transfer switch and portable generator accessory manufacturer in Alpharetta, Ga.

• Feb. 7: Generac says it will invest as much as $10 million to remodel and expand its corporate headquarters in the town of Genesee, create a technical center at the location and add more than 200 jobs.

• Feb. 22: Forbes names Generac’s Aaron Jagdfeld one of the 20 most powerful CEOs who are 40 years of age or younger.

• July 30: Generac says it will sell its automatic home backup power systems and other products in Australia and New Zealand through a distribution contract signed with Allpower Industries of Victoria, Australia.

• Oct. 1: Generac raises its 2012 guidance to about 30 percent sales growth over 2011, which would push it past $1 billion in annual sales.

• Oct. 31: Generac says it will hire more than 100 production workers and start manufacturing operations in a Jefferson facility that it initially intended to use for warehousing and distribution, driven by superstorm Sandy’s impact on the short-term demand for Generac’s portable generators and the expected long-term demand for its home standby generators.

• Nov. 20: Generac announces $46.5 million purchase of Ottomotores UK Ltd., which includes Mexican and Brazilian affiliates. The acquisition, completed Dec. 8, adds 500 employees and gives Generac its first international manufacturing operations.

Ariens Has Model To Bridge Wisconsin's Skills Gap

December 12 -- Over the years, I’ve spent considerable time writing and reporting on the manufacturing skills gap. It remains a topic of concern for the industrial sector in Wisconsin as business, education and political leaders continue to work to develop solutions to a problem that stems from manufacturers struggling to fill open jobs while thousands of unemployed workers search for employment but don’t have the necessary skills to make them immediately viable candidates.

During the course of my coverage of the topic, Dan Ariens, president and chief executive officer of privately held Ariens Co., a Brillion-based outdoor power equipment manufacturer, has been held up as an example of a top-level leader who is taking noteworthy steps in dealing with the issue.

Ariens is more than willing to share the story of how his company, over the course of many years, has dealt with the situation. He will deliver the keynote address and also will take part in a break-out session at the Wisconsin Manufacturing Extension Partnership’s Manufacturing Matters! Conference on Feb. 28 in Milwaukee.

Getting students to develop problem solving skills has been essential in the success Ariens has exhibited in attracting key talent.

“We need to educate kids on how to solve problems versus teaching them a skill. That can be done in our plant,” Ariens said.

Educational systems, from high schools to technical schools and universities, aren’t broken but are in need of greater focus, he added.

“What keeps getting missed is that local business that are connected with their high schools, technical schools or university systems need to get much more engaged in those schools and in curriculum support so that it’s hands on, minds on,” Ariens said.

Way too often, students are are delivered the message that they need to go to college so that they can avoid working in a factory, he said.

“There’s a large population that isn’t built for advanced education and who’d much rather work with their hands and solve problems in an environment like manufacturing,” said Ariens. “Teachers keep telling kids that you don’t want to get stuck in factory. We’ve got to get over that. We want them to think that this could be a great opportunity.”

Manufacturers need to go beyond addressing their immediate skills needs on the factory floor and focus more on the long term, Ariens said. Again, he stressed the need to get younger people to develop problem solving skills, which will make them more viable employees.

A key aspect in Ariens’ efforts has come through a major investment to build a technology and education center at Brillion High School. The partnership between Ariens and the school began six years ago.

“It’s not just about the infrastructure that we built, it’s about the attitude and the mindset,” Ariens said. “We really integrate with the school’s manufacturing and technology educator, who creates projects through the full term that will engage the kids.”

As part of the initiative, Ariens places its manufacturing and engineering staff into the classroom several times a year. The company also brings Brillion school students to its manufacturing plant.

“We’ll actually get them engaged in a real live product development process,” said Ariens, who has been with the company since 1983 and has served as president and CEO since 1998. “We have snow blowers on the market today that have parts designed by these high school kids. It’s sort of a live curriculum.”

Since the program began, students and parents alike have developed a more energized attitude toward manufacturing, Ariens said.

“Kids want to come work for Ariens,” he said.

Having prospective employees see the plant in operation is a huge benefit for the company, which has about 1,800 employees globally, including 850 in Brillion, Ariens added.

“If we can get them here, they know they are in a different place,” he said. “It’s very high-paced and its hard work. I don’t want to shy around that. But for people who want to come to work every day at a good company, those are the people we are able to recruit.”

Ariens wants to share his success story with other employers for the benefit of the entire industry.

“We get a lot of educators and chambers of commerce that call us, but individual businesses don’t call,” he said. “Frankly, I wish they would. I wish they would say what are you doing that we could do in Middleton or in Rhinelander. But they don’t. I think businesses assume that what we’ve done is all about the building and the money we spent to build it. It’s really not. It’s much more about the mindset and creating an environment where educators and parents understand that Ariens is a great place to work.”

www.biztimes.com

Energy Efficiency Tech Demos Can Help Adoption of New Technologies

December 2012 -- Since the 1970s many technologies have been developed with strong energy-savings potential for the industrial sector.  In fact, the U.S. DOE’s Advanced Manufacturing Office has supported more than 600 RD&D projects that yielded more than 250 technologies that are now in commercial use. However, even when lifecycle cost-effective technologies are available, their adoption can be uneven. As an example, the market penetration of variable speed control technologies in the United States lags behind market penetration rates in Japan and Western Europe. One mechanism to catalyze adoption of such technologies is demonstrations in manufacturing plants under real-world conditions.

Setting the Stage for Adoption

Without credible information on successful implementation, whether from peers or reputable third parties, energy-efficient technologies can seem risky. For energy-efficient industrial technologies in particular, a lack of credible information about a given technology’s success can prevent widespread adoption, particularly if the technology is integrated with a critical process that could jeopardize production if it does not operate as intended.

One important pathway to facilitate technology adoption is through demonstration projects that allow industrial end-users to assess a technology under real-world operation conditions. In “Crossing the valley of death: Policy adoptions to advance the uptake of energy-efficient emerging technologies in U.S. industry” (Bostrom, et al., 2011) the authors propose a set of policy options,  including establishing regional demonstration hubs as a mechanism to drive the diffusion of industrial energy-efficient technologies.  Demonstrations could also be implemented at company sites where some project funding is provided in exchange for detailed information on the project’s impact.

Showcase Projects Highlight Emerging Technology

The Better Buildings, Better Plants Challenge industrial partners have as part of their challenge-level commitment included showcase projects demonstrating their efforts to improve energy efficiency.  Briggs & Stratton, a manufacturer of lawn mowers, generators, and other small engines, included a demonstration of isothermal melting at its Statesboro, Ga., plant.  Not only has Briggs & Stratton had exchanges with General Electric and Alcoa to share technical expertise on the technology, but guests from domestic and international representatives from other firms have visited the site.

Isothermal melting uses high-intensity electrical resistance heaters to melt aluminum via conduction and convection, producing zero in-plant emissions. This melting technology imposes relatively low capital and operating costs, requires less floor space, and can increase energy efficiency by up to 70% compared to conventional natural gas-fired furnaces. The process received support from DOE as part of a technology demonstration by Apogee Technology. This demonstration provided the technical information that gave confidence to Briggs & Stratton to commit capital to upgrade their aluminum melting process. Richard Feustel, Corporate Energy Manager at Briggs & Stratton noted the demonstration’s importance, “When we begin to get into the process improvements, the technical expertise is key—the technical expertise we received from Apogee Technologies and the financial backing they had to obtain to get this project off the ground was a big part of it.” In addition to receiving expertise from Apogee, the Statesboro plant received a $45,000 grant from Southern Company which provided additional thrust in moving forward with the installation.

Moving forward with new policy and approaches

The gap between research and development and large-scale adoption of proven technologies remains. Investments in research and development have yielded significant technological developments that extend the potential to improve industrial energy efficiency. However, enabling mechanisms are needed to catalyze these technologies’ adoption in order to achieve their anticipated impacts.

Similar to ARPA-E’s assessment of technologies that offer transformational promise in energy generation, a parallel assessment of technologies with transformational promise in industrial energy efficiency with low market adoption rates could inform demonstration project technology candidates and scope.  Ensuring that technologies are consistently accompanied by demonstrations at relevant firms can provide the necessary information to increase adoption in industry where systems impact and operational risk of major alterations remains high.

www.earthtechling.com

The Toro Company Reports Record Results for Fiscal 2012

• Full-year sales increase to record $1.96 billion in fiscal 2012
• Professional businesses grow over 7 percent on strength of golf, landscape and micro-irrigation
• Operating earnings expand to 10.5 percent towards Destination 2014 target
• Net earnings per share for the year up 16 percent to record $2.14

BLOOMINGTON, MN.-- Dec. 5, 2012-- The Toro Company today reported net earnings of $129.5 million, or $2.14 per share, on a net sales increase of 4 percent to $1,958.7 million for its fiscal year ended October 31, 2012. In fiscal 2011, the company delivered net earnings of $117.7 million, or $1.85 per share, on net sales of $1,884 million.

For the fourth quarter, Toro reported net earnings of $0.3 million, on a net sales decrease of 7.8 percent to $339.3 million. In the comparable fiscal 2011 period, the company posted net earnings of $5 million, or $0.08 per share, on net sales of $368.1 million.

Earnings per share figures for all periods reported have been adjusted to reflect the company’s 2-for-1 stock split effective June 29, 2012.

“The Toro Company completed another record year with new highs for revenues and earnings per share,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “While pleased with our performance, it could have been even better if not for limited snowfall around the world that reduced snow thrower sales by almost 50 percent. Despite the weather challenge and a continued sluggish worldwide economy, Toro made tremendous progress in 2012.

New products and good execution helped grow our positions in golf equipment, landscape contractor and grounds, micro irrigation and residential mowing. Our investments in acquisitions to enter new markets and expand capacity for micro irrigation, are contributing and will fuel growth into the future. And our efforts on productivity are starting to gain traction, as we delivered another significant step towards our Destination 2014 operating earnings goal of 12 percent by the end of fiscal 2014.”

“For the quarter, retail sales activity for many of our products were strong this fall, which helped get field inventories in good shape heading into the upcoming season. The majority of the decline in sales for the quarter resulted from the lack of snow thrower shipments due to soft preseason demand. Other major product categories showed sales growth in the quarter, with positive momentum heading into the new fiscal year.”

“We are early in our fiscal 2013, and mindful of the challenging world-wide economic environment and, as always, acutely aware of the volatility of Mother Nature. Nonetheless, the outlook for our end markets appears promising. Golf rounds and revenues were up last year, housing and construction are showing signs of improvement, and the agriculture market continues to adopt more efficient methods of irrigation.

While we hope for better weather for our business, that is out of our control. We will concentrate on those actions that have made us successful: developing innovative products, serving our customers, executing in the marketplace, and engaging our employees to improve profitability as we pursue our Destination 2014 goals of additional revenue growth and further operating earnings expansion.”

The company expects revenue growth for fiscal 2013 to be about 4 to 5 percent, and net earnings to be about $2.35 to $2.40 per share. For the first quarter, the company expects net earnings to be about $0.40 to $0.45 per share, positively impacted by anticipated accelerated purchases of diesel products in advance of the Tier 4 price change.

SEGMENT RESULTS

PROFESSIONAL

Professional segment net sales for fiscal 2012 totaled $1,329.5 million, up 7.3 percent over last year. Sales of golf equipment and irrigation were up domestically on continued demand as golf courses replaced equipment and renovated aging irrigation systems. Landscape maintenance equipment increased on the success of new products and retail demand in markets not impacted by the drought.

Micro irrigation sales in the Americas increased significantly on improved capacity and dealer expansion that enabled Toro to better meet growing demand for agricultural irrigation. Recent acquisitions also contributed incremental sales for the year. International economic issues, particularly Europe, negatively impacted the sales of most professional businesses for the year. For the fourth quarter, professional segment net sales were $228.6 million, up 5.6 percent from the comparable fiscal 2011 period.

Professional segment earnings for fiscal 2012 totaled $232.1 million, up 13.2 percent from the prior year. For the fourth quarter, professional segment earnings were $20.8 million, up 21.2 percent from the comparable fiscal 2011 period.

RESIDENTIAL

Residential segment net sales for fiscal 2012 were $607.4 million, down from $623.9 million in fiscal 2011. Snow thrower sales were down about 50 percent for the year due to the lack of snowfall last winter and the resulting soft preseason demand in the fourth quarter. Shipments of walk power mowers and riding products were up for the year due in part to the successful launch of the TimeMaster™ 30 inch walk power mower. For the fourth quarter, residential segment net sales were $102 million, down 28.9 percent from the comparable fiscal 2011 period due to reduced demand for snow throwers.

Residential segment earnings for fiscal 2012 totaled $57.9 million, up $3.5 million or 6.4 percent from fiscal 2011, when a pre-tax charge of $4.7 million to account for one-time costs associated with a rework issue affecting walk power mowers resulted in a decline in earnings. For the fourth quarter, residential segment earnings were $6.7 million, down from $11.9 million in the comparable fiscal 2011 period.

OPERATING RESULTS

Gross margin for fiscal 2012 improved 60 basis points from last year to 34.4 percent. The majority of the margin expansion was due to realized price, coupled with productivity improvement, somewhat offset by higher materials costs. For the fourth quarter, gross margin was up 100 basis points to 33.3 percent.

Selling, general and administrative (SG and A) expense as a percent of sales decreased 10 basis points to 23.9 percent for fiscal 2012. For the fourth quarter, SG and A expenses were down $0.8 million, but increased 230 basis points compared to last year’s fourth quarter to 32.1 percent, on lower sales volumes.

Operating earnings as a percent of sales improved 70 basis points to 10.5 percent for fiscal 2012. For the fourth quarter, operating earnings were 1.2 percent of sales compared to 2.5 percent last year.

Interest expense for fiscal 2012 was $16.9 million, down 0.4 percent compared to the fiscal 2011. For the fourth quarter, interest expense totaled $4.1 million, down 5.9 percent from the same period last year.

The effective tax rate for the fiscal year was 34 percent compared with 32.7 percent last year, primarily due to the expiration of the Federal Research and Engineering Tax Credit.

Accounts receivable at the end of the fiscal year totaled $147.4 million, down 0.5 percent from the prior year period. Net inventories were $251.1 million, up 12.6 percent from the end of fiscal 2011 due to planned inventory build of diesel products to meet anticipated customer demand as part of the Tier 4 transition. Trade payables were $124.8 million, up 5.7 percent compared with last year.

About The Toro Company

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

Brigg's Murray, KY Facility Produces 70 millionth Small Engine

Over 85% of Briggs and Stratton® engines manufactured in U.S. plants

MILWAUKEE, WI - NOVEMBER 30 - Briggs and Stratton Corporation today announced that it has produced its 70 Millionth small engine at its Murray, Kentucky facility. A committed team of approximately one thousand American workers have achieved this milestone of consistently producing millions of engines each year since the plants opening in 1985 for the outdoor power equipment industry.  This great accomplishment is further evidence that Briggs and Stratton, like many companies, is solidly committed to U.S. - based manufacturing.

The approximately 300,000 square feet at its Murray facility, located at 110 Main Street, is responsible for die casting, machining and the assembly of engines and related components.  "It's hard to believe that just this facility alone has produced 70 million small engines," said Rodney Bohannon, Plant Manager.  "This is a true testament to the dedication and hard work of our employees and suppliers."  Briggs and Stratton's Murray Kentucky facility is one of four small engine plants located in the U.S.

"Briggs and Stratton has a longstanding relationship with the Commonwealth of Kentucky and is a top employer in the community.  Manufacturing 70 million engines is a significant accomplishment," stated Murray Mayor Bill Wells.  "They continue to invest in our community and are a significant part of Murray's economic success and for that we are extremely thankful."

Briggs and Stratton previously announced that its newest generation of engines would be produced at the Murray, Kentucky facility.  This new engine platform called the E Series™ began production last year.

"This milestone couldn't have been achieved without the extreme dedication of our Murray team and the support of the entire community, stated Joseph Wright, Senior Vice President and President of Briggs and Stratton's Engine Products Group.