OPE IN THE KNOW

Outdoor Power Equipment Goes Gas-Free: Makes Way to Wind Energy

2012-02-14T14:29:00.000-05:00

February 9 -- You know the drill. The familiar buzzing sound of a weed wacker combined with either the smell of gasoline or that super long power cable that's covered in grass shavings. Not any more.

A father and son team, Matt Jore and Lincoln Jore, Core Outdoor Power, created new gas-free motor technology, called Conductor Optimized Rotary (CORE™) combined with a hybrid power cell to go in their new line of gas-free emission-free outdoor power equipment – a hedge trimmer, lawn mower, blower and back pack blower. They call it intelligent technology to replace gas.

What does the new gas-free motor technology mean for portable outdoor power equipment?

Well a couple of things. One, the Outdoor Power Equipment (OPE) market for portable or handheld moving products is around $15B. Second, zero emissions, less noise with no loss of power to trim or blow – all of that inside of a market ready for a makeover.

Lincoln Jore, President and Founder, Core Outdoor Power, has been quoted in the past saying the OPE market has missed the mark on developing alternative energy products that meet performance expectations. He believes the company is onto something with their new gas-free product line and he might be right.

The hybrid power cell in the CORE motor technology makes it capable of storing and delivering large amounts of power in a very small package. Combining these technologies together creates an environmentally clean line of products capable of consuming a large portion of that $15B outdoor power equipment market, which has historically been dominated by two-cycle gas engines.

Yes, there are other OPE companies making green lines, but Jore says the advantage of CORE’s gas-free system comes from the marriage of those two technologies: the CORE motor technology and the lithium-based hybrid power cell.

“Our motors are capable of hitting very high power levels in a very compact package,” said Jore. “We use heavy duty circuit boards and permanent magnets rather than wire windings and iron laminations used in conventional motors. This gives our products considerably higher performance.”

The first application of their technology is in the OPE market, but the company sees other applications as well, such as in the wind energy sector with wind turbines. Jore believes they can leverage the CORE motor technology in a wind turbine power generation system at Boulder Wind Power in Colorado for residential and commercial deployments.

Boulder Wind recently received $34M in funding from Molycorp, Inc. (NYSE:MCP) and venture capital firm NEA. Molycorp is the Western hemisphere’s only producer of rare earth oxides (REO) and the largest REO producer outside of China. NEA is a key investment player in the clean energy, IT and health care spaces with more than $11 billion in committed capital.

“The technology allows utility-scale power levels in the multi-megawatt range, so both commercial and residential markets are served,” said Jore. “The ultimate goal of Boulder Wind is to offer a CORE generator that allows for the lowest cost energy to all end users, both residential and commercial.”

Jore admits there are always barriers to entry in every market, but states that any technology must be reliable, efficient, and cost-effective to penetrate the wind energy markets. “We believe our technology, which is a direct-drive gearless power generator, enjoys these characteristics and feel it’s a natural extension and application of the technology.”

www.forbes.com

Toro Acquires Astec's Line of Utility Trenchers, Vibratory Plows and Directional Drills

2012-02-14T14:22:00.000-05:00

Product lines provide entry into new markets for global growth

BLOOMINGTON, Minn.-- Feb. 10 -- The Toro Company announced today that it has acquired certain utility and underground product assets of Astec Underground, Inc., a wholly-owned subsidiary of Astec Industries, Inc. Terms of the transaction were not disclosed.

Through the acquisition, Toro has acquired Astec Underground’s equipment line of vibratory plows, trenchers and horizontal directional drills for the underground utilities market. Typically used in the installation, repair and replacement of utilities with minimal impact on surrounding landscapes or structures, these products are designed for power distribution, telecommunications, utility companies, and landscape and irrigation contractors.

“This acquisition helps further grow Toro’s product presence in the landscape and ground engaging markets, along with providing access to a new category close to our core businesses,” said Rick Rodier, general manager of Toro’s Sitework Systems Business. “The underground utilities space represents a market in which we don’t compete today, but one we believe provides great opportunity to drive global share growth in these new categories.”

Based in Chattanooga, Tennessee, Astec Industries, Inc. is a manufacturer of specialized equipment for asphalt road building, aggregate processing, pipeline and utility trenching, and wood processing. The products Toro is acquiring, which does not include Astec’s Trencor product line, are manufactured at the Astec Underground facility in Loudon, Tennessee.

About The Toro Company

The Toro Company is a leading worldwide provider of turf and landscape maintenance equipment, and precision irrigation systems. With sales of nearly $1.9 billion in fiscal 2011, Toro’s global presence extends to more than 90 countries through its reputation of world-class service, innovation and turf expertise. Since 1914, the company has built a tradition of excellence around a number of strong brands to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties, and agricultural fields. More information is available at www.toro.com.

About Astec Industries, Inc.

Astec Industries, Inc. is a manufacturer of specialized equipment for building and restoring the world's infrastructure. Astec's manufacturing operations are divided into four primary business segments: asphalt production equipment, mobile asphalt paving equipment, aggregate processing and mining equipment, and underground boring, directional drilling and trenching equipment. Additionally, the Other Group contains one subsidiary that manufactures equipment used for wood processing and recycling and one that is a company-owned dealership located in Australia.

Generac Expanding Operatons In Wisconsin, Adding R and D Facility

2012-02-09T08:23:00.000-05:00

February 8 -- Generac Power Systems Inc., a manufacturer of backup power generation equipment said it will commit $5-$6 million to expanding and remodeling its headquarters and an additional $3-$4 million in upgrades to create a technical center, both in Waukesha, WI.

The new technical center will be a research, development and testing facility and will include investments in equipment for data acquisition, analysis and testing of engines, generators and other power equipment. Specifically, new test chambers containing specialized equipment for the testing of emissions, sound, and environmentally controlled conditions will enable Generac’s engineering team to enhance its knowledge and competencies in these areas.

Generac currently employs more than 550 people at its headquarters and plans to add more than 200 new jobs over the next three years. The expansion and remodel should be completed by the end of 2013.

MTD's Industrial Plastics Co. Considering Moving 140 Jobs to Kentucky

2012-02-08T09:08:00.001-05:00

February 7 -- Industrial Plastics Co. in Valley City is considering closing its plastic injection molding facility and moving about 140 jobs to Kentucky, a company official said Tuesday.

The company and the Workers United union began to meet Monday to discuss the possibility of a move. Industrial Plastics Co. is part of MTD, which makes lawn mowers and other equipment, including the Yard-Man brand.

Mark Milko, the area director for Workers United, said he will not comment about the discussions until both sides meet again, which is scheduled for later this week.

A move would not affect the roughly 500 jobs at the MTD headquarters and customer call center, also in Valley City, in Medina County, said Kristee Mahler, director of organizational development.

If the facility moves, she said, it would take place before the end of the year. The plan would be to shift the work to a company plant in Leitchfield, Kentucky. The Valley City facility would be sold.

"The existing facility in Leitchfield has excess capacity, which is one of the prime drivers in the movement of work there," Mahler said. "They have the available square footage to pretty much pick up what we have in this facility, and put it in there. And they still have room to grow."

Mahler said the company could save money by moving operations to Kentucky, where the company makes other product.

"We're consistently looking for opportunities to improve efficiencies to save costs and eliminate excess capacity and produce significant cost savings," she said.

US Rep. Sensenbrenner Offers Bill That Would Slow Ethanol Increases

2012-02-08T09:05:00.000-05:00

MILWAUKEE – February 7 -- Efforts to increase the amount of ethanol in gasoline were dealt a blow Tuesday by legislation that would block a 15% biofuel blend until more studies are done on whether it harms engines.

A bill introduced by U.S. Rep. Jim Sensenbrenner (R-Wis.) would require a comprehensive review of fuels containing more than 10% ethanol before they're allowed in the marketplace.

By a vote of 19-7, the bill was approved by a House committee on science, space and technology. Sensenbrenner chairs the committee.

Makers of small engines, especially, have said scores of their products could be ruined if consumers use a fuel mix that contains more than 10% ethanol - a corn-based fuel additive used in most gasoline.

A 15% blend could cause premature engine failure, lower fuel efficiency and void warranties, according to some engine-makers.

"In small engines, E15 is downright dangerous," Sensenbrenner said in a news release.

"If ethanol is going to be the fuel of the future, then there should be no problem conducting independent, comprehensive scientific analysis of its effect on American drivers," Sensenbrenner said.

Ethanol advocates say those tests have already been done and Sensenbrenner's legislation is meant to stall the introduction of E15 so that oil companies benefit from lower ethanol blends.

The higher blend could be introduced this spring if it's approved by the Environmental Protection Agency, which oversees motor fuels and emission standards.

E15 gasoline would be clearly labeled so that consumers don't mistakenly use it in small, older engines where it could be harmful, according to ethanol advocates. Also, they say, it's already been proven safe to use in automobile engines.

"Give consumers a choice. That's all we have asked for," said Gary Kramer, president of Badger State Ethanol in Monroe.

"This bill is a perfect example of Congress trying to address a problem that doesn't exist," Kramer said.

Wisconsin ranks seventh among ethanol-producing states. The fuel additive is an important source of income for grain farmers, some of whom also own shares in ethanol plants.

The Wisconsin Farm Bureau Federation supports raising the allowable ethanol in gasoline to 15%.

It would help support strong commodity prices, said Paul Zimmerman, Farm Bureau's executive director of public affairs.

"We think the marketplace is there for E15, and that people are readily accepting renewable fuels," Zimmerman said.

Starting this year, tax credits for ethanol expired, putting more pressure on the fuel additive to stand on its own merits.

"We were hoping and expecting that E15 would be available by now," said Brian Jennings, executive vice president of the American Coalition for Ethanol.

"We will certainly be monitoring Sensenbrenner's bill and working to defeat it," Jennings said.

Wisconsin engine-makers Briggs & Stratton Corp. and Mercury Marine have said their products were not designed to run on ethanol blends greater than 10%.

In one test, paid for by the Department of Energy, a 200-horsepower Mercury Marine engine broke down after less than 300 hours of continuous operation, at full throttle, on a 15% biofuel blend. An identical engine powered by gasoline without ethanol was not damaged in the industry-standard test.

One problem with E15 is that people will mistakenly put the fuel in engines not designed to run on it, said Kris Kiser, executive vice president of the Outdoor Power Equipment Institute, which represents Briggs & Stratton and other engine-makers.

There are hundreds of thousands of engines in that category, Kiser said.

"The little label that the EPA came up with for E15 fuel pumps is nowhere near sufficient to effectively warn the consumer," he added.

The industry supports Sensenbrenner's bill, partly because engine-makers don't want to spend millions of dollars redesigning products every time there's a fuel change.

"We don't think there's been adequate testing of E15, and we don't think there's been adequate consumer information to warrant its introduction," Kiser said.

www.jsonline.com

Mowed Down: Lawn and Outdoor Equipment Stores

2012-02-07T14:58:00.003-05:00

February 4 -- According to IBISWorld’s updated industry research report the Lawn and Outdoor Equipment Stores industry has been wilting over the five years to 2011, with a multitude of factors adversely affecting its landscape. Poor economic conditions, such as falling consumer confidence and disposable income, have reduced discretionary spending, driving down demand for new lawn and garden equipment. IBISWorld projects that the Lawn and Outdoor Equipment Stores industry will remain relatively unchanged in the five years to 2016, with revenue virtually stagnant.

The Lawn and Outdoor Equipment Stores industry has fought through declining demand in the five years to 2011, with revenue falling at an average annual rate of 3.8%. According to IBISWorld industry analyst and report author Mary Nanfelt, “as consumers' confidence in the economy and disposable income dwindled following the housing market's collapse, households cut back on discretionary spending, including on lawn and garden tools. In particular, sales for big-ticket items have suffered since the recession because consumers have kept their wallet closed. However, sales of less-expensive products have offset some of the industry's demise. Many households that traditionally hired gardening services have increasingly invested in smaller equipment to take care of their lawns.” From 2010 to 2011, revenue is expected to increase by 0.6%, to total $5.2 billion.

In addition to falling demand, Nanfelt says “competition from home improvement stores like The Home Depot and Lowe's has held back the industry's growth. By leveraging their size, these national retailers can achieve significant cost savings on comparable products and pass them down to consumers in the form of lower prices. Therefore, these stores have increasingly attracted customers away from lawn equipment specialty stores and outdoor power equipment dealers. As companies reduced their price markups to remain competitive, the industry's average profitability declined.” IBISWorld estimates that profit margins have decreased to less than 2% of revenue. Such poor industry performance has caused many retailers to merge with other players or exit the industry. The number of enterprises declined at an average annual rate of 3.6% during the period, from 3,994 in 2006 to an estimated 3,328 in 2011.

The Lawn and Outdoor Equipment Stores industry is characterized by a low level of concentration and a high number of companies. This is because a large number of small and independent players dominate the industry; most businesses only cater to their local or regional demand. In fact, of 3,300 businesses that are expected to participate in this industry this year, the majority will be of small stores with fewer than 10 employees. As such, there are no major players that account for a considerable share of the industry.

No Snow? No Problem...For Most of Us

2012-02-07T14:54:00.000-05:00

SALEM, MA – February 4 -- Notice anything different about this winter? Anything at all?

Temperatures in the upper 50s and virtually no snowfall are, of course, hard to miss, especially now that it's already the first week of February.

Salem had just 13.8 inches of snow in January, compared to 65.7 inches last year at this time. And the average temperature last month was about 32 degrees — 7 degrees warmer than last year, according to Salem meteorologist Arthur Francis. Historically, January temperatures are in the mid-20s.

In a normal winter, we would have had about 24 inches of snow by now, according to the National Weather Service.

The unusual winter has to do with fluctuations in the jet stream.

"There haven't been too many deep troughs, so you don't get that cold air coming down," Francis said.

The warm weather has affected life here on the North Shore in a lot of different ways. Maple sugar makers have already begun tapping trees. Golfers — yes, golfers — have enjoyed an extra three months of tee times, thanks to several courses remaining open.

"On the warm days, with highs in the 50s, we probably get 50 to 60 people on the course," said Michael Flynn, owner of the Lakeview Golf Course in Wenham, which is open year-round, weather permitting. He said he doesn't remember a year like this one. There have been at least a half-dozen golfers on the course every day this winter.

"The bills keep coming in whether we're open or not," he said, "so we might as well stay open."

In general, there have been way more people out and about on any given day, in parks, on the beach, strolling through downtowns.

"We pull all of the trash barrels from the parks each winter, because they get covered with snow and they're almost impossible to get to," said Doug Bollen, Salem's parks and recreation director. "Everybody has been calling and asking us to put the barrels back because people are using the parks and walking their dogs."

All those people walking around has been good for business in downtown Salem, said Rinus Oosthoek, executive director of the Salem Chamber of Commerce.

"Any business that depends on walking traffic is enjoying this winter very much. On weekends in Salem, you see a lot of people walking around, which is good for retail and for restaurants," Oosthoek said. "It's a positive for the whole downtown."

One drawback has been the loss of the ice skating rink on Salem Common, which Bollen said isn't likely to happen this year because of the warm weather. The annual snowshoe race became more of a trail run, and the winter wonderland festivities at the golf course are in jeopardy, he said.

Winter-dependent businesses, like snow removal services, are taking a hit. Plowers had work for a couple of freak storms in October and one week in January, but other than that it's been nada.

"We're mostly sanding, but there hasn't been a whole lot of plowing," said William Megrath, the owner of Wam General Contractors in Beverly, which does a lot of excavation work in addition to snow removal. Last winter, with multiple back-to-back storms, business was booming, but this year Wam has had to lay off some employees for the season. Despite the setback, Megrath is taking it in stride.

"We prepare for the worst (no snow), and if it does snow, that's extra money for us, great," Megrath said. "When there's not snow, we do a lot of maintenance and get our fleet up to snuff. It's also good for us physically because we're not out all hours of the week. Personally, I'm sick and twisted — I like plowing."

Retailers who sell shovels and snow blowers aren't hurting too badly, according to Richard Maestranzi, the owner of Maestranzi Bros. outdoor power equipment.

"We were really busy right up until Christmas; we sold a lot of snow blowers, mostly on account of last year," he said. "Since then, we've only been selling them sporadically. ... Historically sales dry up this time of year anyway, unless the snow really starts picking up."

The company also did a lot of snow blower repairs early in the season, since so many were beaten up after the unrelenting snowfall last year, he said.

One beneficiary of the mild weather has been municipal budgets. Cities and towns have doled out much less overtime to city employees and private contractors to get rid of the snow and have also saved money on sand and salt.

Peabody spent more than $1.5 million last year on snow removal, sand and salt, which was about $840,000 over budget. The past four years, the city has spent an average of about $1.1 million each winter on snow and ice removal. This year, the city has spent just $226,000, according to the most recent figures provided by the city finance department.

"It's definitely a much lighter year than previous years, and we're thankful for that," said Robert Langley, director of Peabody's Department of Public Services. "I'm cautiously optimistic for the rest of the winter, but we're really always prepared for the worst. ... There are years when the snow has come in April."

While nobody can predict the future, it seems a safe bet that we'll be free from any significant snow threat in the near term.

"It's going to be cooler, but there are no storms on the outlook for at least the next week or so," Francis said.

Toro Testing Snow Blowers at Michigan Airport

2012-02-07T14:49:00.003-05:00

IRONWOOD, MI -- February 3 -- Less than typical snowfall in northern Minnesota has pushed lawn equipment manufacturer Toro into Michigan's Upper Peninsula to test some of its machines.

Toro has been testing snow blowers at Gogebic-Iron County Airport since Jan. 10, the Daily Globe in Ironwood reported Friday. Plans were to test the machines in Toro's home state, but not enough snow has fallen in Minnesota this winter. So the company looked east, and found the Michigan airport.

"When they called asking about doing the testing here, we had only about three inches of snow cover, but they said, `We'll take it,"' airport manager Duane DuRay told the newspaper.

The lack of snowfall has frustrated snowmobilers, cross-country skiers and others in Minnesota this winter. One dog sled race scheduled for early January was canceled in December because organizers weren't sure if enough snow would have fallen in time. A dog sled marathon scheduled for late January also was called off.

But snow was piled two to three feet and higher this week at Gogebic-Iron County Airport in Ironwood, about 250 miles northeast of Toro's main office is in Bloomington, Minn.

"They'll probably be here for two or three more weeks," DuRay said of Toro. "Their bosses love it. They said they'll put Ironwood on the map for future reference."

The company hired 10 local residents to test its snow blowers and may spend another three weeks at the airport, DuRay added.

Carlisle Reports 4h Quarter and Year-End Results - Excerpts from Conference Call

2012-02-07T14:48:00.000-05:00

Welcome to Carlisle’s 2011 fourth quarter and year-end conference call. On the call with me is our CFO, Steven Ford; our Chief Accounting Officer, Kevin Zdimal; and our Treasurer, Julie Chandler [ph]. On the website, you will find a slide deck that details our performance in the fourth quarter and for the full year. During this call, I’ll provide you additional color on the slides. But before I start reviewing the slides, let me just say that we consider 2011 as a very good year, both operationally and strategically.

In 2011, our sales were a record $3.225 billion. 2011 was also a record earnings year when the gain from the 2000 sale of Icapel [ph] is excluded from our 2007 earnings. 2011 earnings from continuing operations were also an all-time at $182 million.

Our sales and earnings came in a year where daily news reports constrain the economy brought uncertainty in all of our markets where raw material inflation was out of control during the first three quarters of the year where new non-residential construction continued to suffer its worse economic downturn since the Great Depression and where restaurants for the third year in a row saw store traffic lower than it was in 2007. Top that with the startup issues we had in our new tire factory in Jackson, Tennessee. I think most of you will agree our overall performance was very good in 2011. And 2011 performance is just setting the stage for a very good 2012.

Let’s turn to the slides that will provide with a background data for today’s conference call. As we get prepared to get started, please review slide two titled Forward-Looking Statements to help you understand the risks of investing in our company. After reviewing that, let’s turn to slide three.

The fourth quarter review begins on slide three. And our fourth quarter sales were up 26% to $790 million. 13% of our growth was organic, driven by strong demand for our braking, construction materials, and interconnect technologies products. 13% or $18 million of our growth came from the combined sales of the Hawk acquisition that was completed in December of 2010, the PDT acquisition completed in August of 2011, and the Tri-Star acquisition, which we completed in December of last year.

EBITDA was $53 million compared to $27 million in 2010, an increase of 97%. EBIT margin in the fourth quarter was 6.7%, positively impacted by selling price and raw material parity within construction materials and higher margin performance in CBS and CIT. Our gains in margin were offset by $4.2 million of one-time acquisition costs and lower volume in the food service business.

Slide four details the components of our revenue growth. Our growth by segment is detailed in this center of the graph. As can be seen, Interconnect Technologies enjoyed 20% growth, Construction Materials was up 18%, Brake & Friction 15%, and Transportation Products was up 5%. Sales growth in FoodService continued to be a challenge as its sales declined 5% in the quarter. We have not seen any economic recovery in the food service marketplace in 2011, but the most recent NRA Index has been above 100 for the past five months, and that should bode well for 2012.

As we turn to slide five, you will see our margin dollars growing 97% from $27 million to $53 million. Detailed in the bridge for the fourth quarter, you will see that net charges, which are the difference between the acquisition cost to purchase Hawk in 2010 and the cost to purchase PDT and Tri-Star in 2011 was a 1.3% gain to margin. EBIT generation from these acquisitions added 1.2%, volume represented 0.6%, and COS savings another 0.4%. Pricing net of raw materials was negative 1.2%, and the vast majority of that raw material variance came in Transportation products with smaller amounts in CIT and Food Service.

Please turn to slide six. We’ll begin reviewing each of the businesses individually. The first segment slide provides color on the performance of Construction Materials. The fourth quarter was a superb quarter in this segment. We reached price parity with raw material in the fourth quarter, allowing us to leverage our sales for the first time in 2011. With sales growing 23%, our EBIT grew 32%. Our leverage would have been even greater had it not been for the $2.1 million in step-up charge for the inventory from the purchase of PDT earlier in the year.

Warm weather across the country in the fourth quarter extended the roofing season, which was reflected in our sales. The vast majority of our sales growth was organic, with PDT contributing 5% overall in the growth – of the growth in the quarter. Another bright spot in Construction Materials was that PDT has grown 24% since we acquired the company in August. The EPDM market is growing in Northern Europe despite the soft economic conditions on the continent.

Turn to slide seven and we’ll take a look at Transportation Products, which grew 5%, but that growth was all price. Volume was actually down in the quarter as sales in outdoor power equipment and drive belts was lower than they had been during the fourth quarter of 2010. Outdoor power equipment continues to suffer from an anemic residential housing market.

Fourth quarter EBIT was a loss of $4 million, as we sold inventory containing higher priced natural and synthetic rubber, which was purchased earlier in the year, plus lower volumes in our factories as the outdoor power equipment does struggle to growth. The good news coming on our Transportation Products is related to our Jackson, Tennessee plant where productivity continues to climb and our scrap rates are dropping like a rock.

Our fourth quarter scrap rates were less than 2% and our January 2012 scrap rate was 0.7%, all while our operating efficiency reached 74% in the fourth quarter. For comparison purposes, in the second quarter of 2011, our scrap rate was in excess of 6% and operating efficiency approximately 50%. Our current levels of productivity are now on par with the outputs in our other tire manufacturing facilities. These improvements will pay dividends in way of higher earnings in 2012.

Generac Acquires Georgia Manufacturer

2012-02-02T17:23:00.000-05:00

Waukesha, WI -- February 1 -- The growth continues for Generac Holdings Inc. a Waukesha-based designer and manufacturer of generators and other engine powered products, which announced today that one of its subsidiaries has acquired substantially all of the assets and certain liabilities of Gen-Tran Corp., a leading transfer switch and portable generator accessory manufacturer located in Alpharetta, Ga.

Gen-Tran’s product offering fits strategically between Generac’s existing portable generator and home standby product offering, providing a broader set of solutions for consumers and allowing the combined companies to capture additional accessory sales.

Steve Goran, vice president of business development for Generac, said, “Adding Gen-Tran products to our offering will better position our portable products as safe, reliable backup solutions while complementing our fully automatic home standby solutions. By merchandising our products together across broadened distribution channels, we believe we can capture incremental sales opportunities through a more informed consumer, further building on our position as the leader in residential backup power”

Gen-Tran president Jack Mandula will continue to manage Gen-Tran’s operations in Alpharetta. Gen-Tran’s current management team and staff have joined Generac upon closing and will help lead the integration of the company’s products and operations.

Mandula said, “As we transition under Generac’s ownership, we will continue to provide high-quality products and support to our customers. We are excited to be a part of a well-resourced company whose broad product offering and distribution channels offer tremendous opportunities for our products and customers.”

www.biztimes.com

Cord Maker Finds Niche

2012-01-30T11:07:00.001-05:00

ROCKY MOUNT, NC – January 27 -- As thousands of textile businesses migrated overseas from the United States in recent years, Rocky Mount Cord Co. has stayed put.

The company produces round, braided cord and twisted ropes made of cotton, nylon, polypropylene, polyester and other synthetics at its plant at 381 N. Grace St. Its orders include made-to-order cords for companies such as Briggs and Stratton.

“What makes us unusual is we are still a textile manufacturing company in the South,” said Andy Barker, executive vice president of the company. “We aren’t big enough to go overseas. We have some niche markets. That is where we find our longevity. If we get too large with a product or a particular production item, then it will be picked up overseas. For years, we were one of the largest manufacturers of rope for hammocks.”

Barker said the primary way they land customers is by going to numerous trade shows throughout the country.

This company was started in 1934.

“Prior to that, there was a lot of the migration of Northeast textiles coming South,” Barker said.

The company was created after three principals of Rocky Mount Mills – the Bunn, Battle and Stephens families – bought the bankrupt Buckeye Cordage Co.

“That was located down where the old Pepsi plant is. That cord company started probably in the mid-1920s, and they went bankrupt,” Barker said. “North Carolina State Bank had it for sale a couple of times, and some former principals of Rocky Mount Mills bought it and started the Rocky Mount Cord Co. We’ve been around a while.”

The plant produces more than 6 million yards of cord a week. If this length of cord were stretched out, it would extend from 26 miles off the Pacific coast of the United States, cross the continent and end 26 miles off the Atlantic Coast, Barker said.

Q: What products or services do you provide?

A: We make braided cord and twisted rope. It can go into small engines like Weed Eaters, lawn mowers, blowers and trimmers. We manufacture commercial fishing cord line, but not normal fishing line. It goes in crab pots, lobster pots and fish netting, but not rod-and-reel fishing line. We produce tent line and parachute lines, anything where a small diameter line could be used.

Q: Who are your key leaders?

A: President Joe Bunn, whose father started the company and was the only other president, Executive Vice President Andy Barker, Vice President of Manufacturing Louis Hinson, and salesman Alden Love.

Q: How many people do you employ?

A: 75

Q: When were you established?

A: 1934

Q: What’s your business philosophy?

A: Quality, consistency and on-time delivery.

Q: What makes your business unique?

A: One, that we are manufacturing it here in the United States, and we have the versatility and equipment to be able to run a wide range of fibers and diameters of cord, braided or twisted types. We cut to length for Briggs and Stratton and put a lubricating finish on the cord.

A lot of our customers have gone to China, not to get cord made, but to have their finished products made. They used to produce here or in Mexico, but the Chinese have taken over production for finished products.

Q: What changes do you expect for your company in coming years?

A: The big thing is to be able to keep up with what the market demands and keep our response time to a minimum. That is where we have the advantage. All of our production is made to specification, whether it’s a government specification or a Cordage Institute specification or customer specifications.

Q: How has your company grown in the last several years?

A: We have actually been growing well, finding new markets over the last couple of years. We’ve expanded our presence in the poultry market. We’ve expanded our presence in the parachute market. Those have been good. We’ve got a lot of governmental defense contracts, either as a contractor or subcontractor. Most of our business is as subcontractor.

www.rockymounttelegram.com

Generac Sues Kohler Over Marketing Brochure

2012-01-27T11:16:00.000-05:00

Milwaukee – January 26 -- Waukesha's Generac Power Systems Inc. has sued Kohler Co., alleging that Kohler is misrepresenting one of Generac's products in a marketing brochure.

The allegations - denied by Kohler - are the latest twist in a running dispute between the two Wisconsin-based generator manufacturers.

At issue in the new lawsuit, filed this week in federal court in Milwaukee, are what Generac describes as false statements by Kohler about Generac's 20-kilowatt generator. The machine is among those aimed at homeowners, a key business segment for Generac.

In its complaint, Generac alleges that the Kohler brochure describes its 20-kilowatt generator as providing features not included on the Generac counterpart, including a commercial-grade engine and corrosion-proof enclosure.

Generac argues that it does in fact offer those features. But what the Waukesha company alleges is particularly bothersome is that Kohler's brochure portrays Generac's equipment as not offering something called "low-speed diagnostic exercise."

A standby generator typically is "exercised" periodically - fired up and run for a while to make sure it will operate properly when needed. That, however, can produce a lot of noise and annoy neighbors.

In June 2007, Generac was awarded a patent on a noise-reducing method for exercising a stand-by generator. That innovation and others, Generac has said, have led to its capture of "70% of the residential standby generator market."

But Kohler has infringed on the patent, Generac alleges. In separate litigation filed in October 2010, Generac charged that Kohler has been selling generators that unfairly use Generac's patented method for reducing engine speed - and thus noise - during weekly exercise.

Kohler has fought back. Denying any infringement, it has charged that Generac's noise-reduction method is not truly novel and shouldn't have been granted a patent. Kohler asked the U.S. Patent and Trademark Office to re-examine Generac's application for a patent on the method. The federal agency is doing that now, and in the meantime U.S. District Judge Rudolph Randa has put Generac's infringement lawsuit on hold.

Given the patent litigation, however, Kohler was well aware that Generac's 20-kilowatt generator could be exercised at low speed, the Waukesha company said in its latest lawsuit. So Kohler's failure to indicate in its brochure that the Generac generator has the feature "is willful and malicious and done with a clear intent to deceive the public and damage Generac," the firm alleges.

In an email, Kohler spokeswoman Jennifer Taylor said that while the company does not discuss specific lawsuits, it "takes the obligation of accurately portraying our products through our advertising efforts seriously. Kohler Co. denies that our advertising is misleading in any way and looks forward to the opportunity to defend ourselves."

Meanwhile, Generac last month filed another infringement lawsuit, this one alleging that Kohler has trampled on a 2003 Generac patent on a method for monitoring and controlling multiple generators.

Kohler denies any infringement. Among its arguments, again, is that at least some of what Generac claims to have invented is not novel and not worthy of a patent. That lawsuit is pending.

www.jsonline.com

Briggs Reports Results for 2nd Quarter and First 6 months of Fiscal 2012

2012-01-26T15:29:00.000-05:00

MILWAUKEE, January 26 -- Briggs and Stratton Corporation today announced financial results for its second fiscal quarter and first six months ended January 1, 2012.

Highlights:

• Second quarter fiscal 2012 consolidated net sales decreased $2.4 million or 0.5% from the second quarter of fiscal 2011.

• Second quarter net income of $2.7 million, or $0.05 per diluted share.

• Significant improvement in Products Segment manufacturing operations.

• Completed the acquisition of Premier Power Equipment and Products Private Ltd. of Tamil Nadu, India, providing a platform for future growth in India.

• Restructuring actions to consolidate manufacturing facilities and reduce capacity to save $18 million to $20 million annually.

Consolidated Results:

Consolidated net sales for the second quarter of fiscal 2012 were $447.9 million, a decrease of $2.4 million or 0.5% when compared to the same period a year ago. Fiscal 2012 second quarter consolidated net income was $2.7 million or $0.05 per diluted share. The second quarter of fiscal 2011 consolidated net loss was $1.3 million or $0.03 per diluted share.

Included in consolidated net income for the three and six months of fiscal 2011 was a $3.5 million pre-tax charge ($2.2 million after tax or $0.04 per diluted share) related to organization changes and $3.9 million of pre-tax costs ($2.4 million after tax or $0.05 per diluted share) associated with the redemption premium of the 8.875% Senior Notes and the write-off of the related deferred financing costs. After considering the impact of such items related to the organization changes and debt redemption, adjusted consolidated net income for the second quarter of fiscal 2011 was $3.3 million or $0.06 per diluted share. Consolidated net income for the second quarter of fiscal 2012 was lower by $0.6 million or $0.01 per diluted share compared to the second quarter of fiscal 2011 adjusted consolidated net income.

"The economic environment and the levels of consumer spending for outdoor power equipment continues to be challenging in the United States and in Europe," commented Todd J. Teske, Chairman, President and Chief Executive Officer of Briggs and Stratton Corporation. "We continue to execute our strategy of diversifying our product portfolio and seeking growth in other regions of the world." Teske continued, "We are encouraged with the operational improvements we are making in our Products business which are yielding improved financial results."

For the first six months of fiscal 2012, consolidated net sales were $845.2 million, an increase of $60.8 million or 7.8% when compared to the same period a year ago. The consolidated net loss for the first six months of fiscal 2012 was $2.5 million or $0.05 per diluted share. The consolidated net loss for the first six months of fiscal 2011 was $9.4 million or $0.19 per diluted share.

After considering the impact of items related to the aforementioned organization changes and debt redemption, the consolidated net loss for the first six months of fiscal 2012 was improved by $2.3 million or $0.05 per diluted share compared to the first six months of fiscal 2011 adjusted consolidated net loss of $4.8 million or $0.10 per diluted share.

Engines Segment:

Engines Segment fiscal 2012 second quarter net sales were $286.1 million, which was $11.7 million or 3.9% lower than the same period a year ago. This decrease in net sales was primarily driven by lower shipments to the European market, partially offset by a favorable mix of product shipped that reflected proportionally larger volumes of units used on snow throwers and portable and standby generators.

The Engines Segment gross profit was $49.4 million in the second quarter of fiscal 2012, a decrease of $19.2 million from the second quarter of fiscal 2011. Gross profit decreased primarily due to lower net sales, higher manufacturing spending and unfavorable absorption on lower production volumes. Higher manufacturing spending is attributed to start-up costs of $5.0 million associated with launching our Phase III emissions compliant engines. Increased pricing offset increased commodity costs.

The Engines Segment engineering, selling, general and administrative expenses were $47.1 million in the second quarter of fiscal 2012, a decrease of $1.3 million from the second quarter of fiscal 2011 due primarily to the absence of $0.6 million of organization change costs in the current fiscal year and reduced selling expenses.

Engines Segment net sales for the first six months of fiscal 2012 were $489.5 million, which was $14.0 million or 2.8% lower than the same period a year ago. This decrease in net sales was primarily driven by lower shipment volumes of engines due to reduced consumer demand for lawn and garden products in the North America and European markets, partially offset by a favorable mix of product shipped that reflected proportionally larger volumes of units used on riding lawn mowers, snow throwers and portable and standby generators.

The Engines Segment gross profit was $86.2 million for the first six months of fiscal 2012, a decrease of $25.0 million from the first six months of fiscal 2011. Gross profit decreased primarily due to lower net sales, unfavorable foreign exchange of $4.0 million primarily related to the Euro, and higher manufacturing spending associated with rising commodity costs and start-up costs of $6.0 million associated with launching our Phase III emissions compliant engines, partially offset by improved engine pricing.

The Engines Segment engineering, selling, general and administrative expenses were $89.4 million in the first six months of fiscal 2012, a decrease of $6.9 million from the first six months of fiscal 2011 primarily due to lower stock based compensation expense, reduced selling expenses and the absence of $0.6 million of organization change costs in the current fiscal year.

Products Segment:

Products Segment fiscal 2012 second quarter net sales were $215.4 million, an increase of $29.1 million or 15.6% from the same period a year ago. The increase in net sales was primarily due to increased sales of portable and standby generators as channel inventories continue to be replenished following the recent storm activity, as well as higher shipments of snow equipment after channel inventories were depleted from the prior selling season.

The Products Segment gross profit was $26.8 million for the second quarter of fiscal 2012, an increase of $14.7 million from the second quarter of fiscal 2011. The increase over the prior year was attributable to the increase in net sales, improved pricing, production operational improvements of $5.8 million, and favorable absorption of $4.1 million on improved plant utilization, partially offset by increased commodity costs.

The Products Segment fiscal 2012 second quarter engineering, selling, general and administrative expenses were $26.2 million, which was comparable to the fiscal 2011 second quarter. Increased sales and marketing expenses and salaries expense were offset by the absence of $3.0 million of organization change costs in the current fiscal year.

Products Segment net sales for the first six months of fiscal 2012 were $450.7 million, an increase of $96.7 million or 27.3% from the same period a year ago. The increase in net sales was primarily due to increased sales of portable and standby generators due to widespread power outages in the U.S. as a result of a landed hurricane and subsequent snow storm on the United States East Coast earlier in the fiscal year, as well as increased shipments of snow equipment after channel inventories were depleted from the prior selling season. There were no landed hurricanes in fiscal 2011.

The Products Segment gross profit was $54.4 million for the first six months of fiscal 2012, an increase of $25.0 million from the first six months of fiscal 2011. The increase over the prior year was primarily attributable to the increase in net sales, favorable foreign exchange of $1.7 million primarily related to the Australian dollar, improved pricing, production operational improvements of $11.9 million and favorable absorption of $4.8 million on improved plant utilization, partially offset by increased commodity costs.

The Products Segment engineering, selling, general and administrative expenses were $51.6 million in the first six months of fiscal 2012, an increase of $2.9 million from the first six months of fiscal 2011 primarily due to higher sales and marketing and salaries expense, partially offset by the absence of $3.0 million of organization change costs in the current fiscal year.

Corporate Items:

Interest expense was lower compared to the prior year periods by $4.2 million and $5.0 million for the second quarter and first six months of fiscal 2012, respectively. The decrease was due to $3.9 million of pre-tax charges associated with the refinancing of Senior Notes during the second quarter of fiscal 2011, which did not recur in the current fiscal year as well as lower average outstanding borrowings at lower interest rates in the current periods compared to the same periods a year ago.

The effective tax rate for the second quarter and first six months of fiscal 2012 was 195.6% and 63.9%, respectively, compared to 65.3% and 40.7% in the same respective periods last year. The variation reflected between years was primarily the result of a net benefit of $5.0 million due to the settlement of U.S. audits and the expiration of a non-US statute of limitation period in the second quarter of fiscal 2012.

Financial Position:

Net debt at January 1, 2012 was $229.1 million (total debt of $243.0 million less $13.9 million of cash), an improvement of $22.5 million from the $251.5 million (total debt of $283.0 million less $31.5 million of cash) at December 26, 2010. Cash flows used by operating activities for the fiscal 2012 first six months were $165.0 million compared to $128.7 million in the first six months of fiscal 2011. Cash used in operating activities for the first six months of fiscal 2012 was primarily related to seasonal build of inventory levels and an increase of accounts receivable during the period. Approximately $23 million of the increase in accounts receivable is due to delayed funding under the Company's new dealer inventory financing facility with GE Capital, Commercial Distribution Finance. The delayed funding to the Company reduces the overall cost of funds.

During the second quarter of fiscal 2012, as previously announced, the Company closed on a new 5-year $500 million Senior Unsecured Revolving Credit Facility. This credit facility replaced the Company's $500 million credit facility that was scheduled to expire in July 2012.

As previously announced during the first quarter of fiscal 2012, the Board of Directors of the Company authorized up to $50 million in funds for use in a common share repurchase program with an expiration of June 30, 2013. The common share repurchase program authorizes the purchase of shares of the Company's common stock on the open market or in private transactions from time to time, depending on market conditions and certain governing loan covenants. As of the end of the second quarter of fiscal 2012, the Company repurchased 801,843 shares on the open market at a total cost of $11.4 million. There were no shares repurchased in fiscal 2011.

Restructuring Actions:

In addition to its quarterly financial results, Briggs and Stratton announced today that it will move existing manufacturing from its Newbern, Tennessee facility to its McDonough, Georgia facility. The Company will also close its Ostrava, Czech Republic plant, shifting production to the Company's Murray, Kentucky facility. Also, the Company will continue reducing capacity by reconfiguring and idling certain assets at its Poplar Bluff, Missouri facility.

"We continually evaluate our manufacturing footprint as we consider productivity and efficiency gains along with changes in the markets we serve. Since 2004, the U.S. lawn and garden market has declined over 33%. This significant and prolonged market decline is unlike any other this industry has seen in decades. As a result of these market changes and evaluation of our manufacturing operations, we have taken difficult, but necessary actions over the past four years in order to reduce capacity. Between 2007 and 2010, we closed an engine plant in Rolla, Missouri, and products plants in Port Washington and Jefferson, Wisconsin. In addition, we have taken actions over the past year to reconfigure and reduce our capacity and costs at our Poplar Bluff, Missouri engine plant. The actions announced today to consolidate our manufacturing footprint further, will better align our production capacity to the markets we serve," continued Todd Teske. "It was a very difficult decision to close these production facilities; however, these changes are a necessary step in executing our strategy to grow the profitability of our business and invest our resources in high margin and margin expanding areas. We will make a dedicated effort to minimize the impact of these closings on our employees and the surrounding communities."

The Newbern, Tennessee facility currently manufactures walk behind lawn mowers and snow throwers for the U.S. domestic market. The Ostrava, Czech Republic facility currently manufactures small engines for the outdoor power equipment industry.

These changes will result in the closing of the Company's facility in Newbern, Tennessee, affecting approximately 240 regular employees and 450 temporary employees. Additionally, the closing of the Ostrava, Czech Republic facility will affect approximately 77 regular employees. The Company does not anticipate significant employment changes at its Poplar Bluff, Missouri facility. The Company will provide assistance programs, continued benefits and outplacement services for the affected employees.

Operations in Ostrava and Newbern are expected to wind down by March 15, 2012 and May 15, 2012, respectively. The pre-tax expense related to the restructuring activities is estimated to be $50 million to $55 million, of which, $45 million to $50 million is expected to be realized in fiscal 2012. The Company anticipates annualized pre-tax savings of $18 million to $20 million due to the restructuring actions.

Outlook:

For fiscal 2012, the Company has revised its guidance to include the restructuring actions announced today. Including $45 million to $50 million of pre-tax charges ($27 million to $30 million after taxes) related to the restructuring activities, consolidated net income is expected to be in the range of $28 million to $41 million or $0.55 to $0.81 per diluted share prior to the potential impact of any share repurchases under the Company's previously announced share repurchase program. Excluding the restructuring actions, consolidated net income is expected to be in the range of $58 million to $68 million, or $1.15 to $1.35 per diluted share.

Consolidated net sales for fiscal 2012 are projected to be higher than fiscal 2011 by approximately 4% to 6% depending on the level of recovery of consumer spending within the outdoor power equipment category. Engines Segment sales are forecasted to be comparable to fiscal 2011 on lower volume and improved pricing while the Products Segment sales are forecasted higher primarily due to higher volumes of lawn and garden equipment, pressure washers, and portable and standby generators.

Operating income margins, excluding the restructuring charges, are projected to be in the range of 4.5% to 5.0%, and interest expense and other income are forecasted to be $18 million and $5 million, respectively. The effective tax rate for the full year, excluding the restructuring charges, is projected to be in a range of 29% to 32%. Capital expenditures for the year are projected to be approximately $55 million to $60 million.

3 Reasons Toro is Going for the Green

2012-01-26T15:23:00.001-05:00

Margins

Fiscal 2011 was the first year in Toro's four-year plan to take the company into its second century as a more efficient, well-run business. Operating earnings is one of the areas where it feels progress is possible. Toro intends to deliver operating margins of 12% by the end of fiscal 2014. Dubbed "Destination 2014" by senior management, it lies 220 basis points from its audacious goal with three fiscal years left in which to accomplish the task. Is it doable? I don't see why not. In the past three fiscal years, its operating margin has risen from 7.6% in 2009 to 9.8% in 2011. That's a 220 basis point improvement in just two years, at a time when the economy was anything but solid.

Furthermore, Toro's best year in terms of operating margins is fiscal 2007, when its operating margin was 11.9%, exactly the same as its stated 2014 goal. In 2007, its professional segment, which provides products and services to turf professionals including golf course superintendents, produced operating margins of 20%. In 2011, those same margins were 350 basis points lower. When you consider that its professional segment accounts for 66% of revenue, coming anywhere close by 2014 would make a big difference to the bottom line. On the residential side, all it has to do is hold the line on revenues and margins and its stock will be more than ready to take off.

Revenues

Toro's second main goal under Destination 2014 is to increase organic sale by $100 million in four consecutive years, beginning with 2011 and ending in 2014. Excluding incremental acquisition revenue of $19 million in 2011, its organic revenue grew $175 million year-over-year, which is an increase of 10.3%. A 10% increase in each of the next three years (not including revenue from acquisitions), combined with a 12% operating margin, translates into a 2014 earnings estimate of $5.75 a share and a forward P/E of 11.2. If it were to hit $5.75 in earnings per share, its profits would be 69% higher than in 2007, its most profitable year on record.

Acquisitions

The funny thing about golf courses is that the putting greens need to be rolled on a frequent basis; perhaps not daily, but several times a week, especially in the summer. In December, Toro acquired a line of green rollers from Graden USA for an undisclosed amount. Darren Redetzke, Vice President of its commercial business, stated, "This acquisition fills an important product gap in our core golf business and helps further strengthen our offering in the greens care category." That's a big understatement. Go to their website and you'll see that it offers pretty much every type of mower a golf course superintendent needs to get the job done, except rollers for the putting surface.

Toro already has a strong brand in the golf business and this will complete the package. It's not easy operating golf courses these days and if you don't have a well maintained track, you can forget charging the big bucks, whether we're talking public or private golf clubs. This acquisition likely wasn't expensive, yet it should make the selling process a little easier.

www.stocks.investopedia.com

Man vs Machine, A Jobless Recovery

2012-01-26T15:18:00.002-05:00

U.S. Companies Are Spending to Upgrade Factories but Hiring Lags; Robots Pump Out Sunny Delight

January 17 -- In no other U.S. recovery since World War II have companies been simultaneously faster to boost spending on machines and software, while slower to add people to run them.

Part of this is the old story of substituting capital for labor. But a combination of temporary tax breaks that allowed companies in 2011 to write off 100% of investments in the first year and historically low short- and long-term interest rates have pushed that process into overdrive.

Hiring, meanwhile, is too slow to bring the unemployment rate down rapidly. Employers have added workers at a monthly rate of 142,000 for the past six months, half the pace needed to significantly reduce unemployment, which is now at 8.5%.

Billy Cyr, chief executive of Sunny Delight Beverage Co., a Cincinnati-based beverage company, says he is buying new machinery partly because it is a bargain. "When the cost of capital goes up, it is harder to justify an equipment purchase and may, instead, result in higher employment using existing equipment," he says, such as by adding shifts or overtime for existing workers. Today, the opposite is happening.

Instead of hiring, companies such as Sunny Delight and chain-saw maker Stihl Holding AG are investing in technology or other ways to make existing operations faster and more productive. History suggests that investment that increases productivity eventually will create jobs and raise living standards. The mechanization of the farm and the automation of the factory both raised fears of permanent unemployment that were unrealized, as efficiencies in production of basic commodities created jobs in all sorts of services.

Most economists say today's surge in productivity will have the same beneficial effect—in the long run. In the short-term, however, this burst of efficiency allows companies to delay hiring.

And that is happening more in this recovery than in the recent past. Spending on gear and hiring usually are more synchronized. Since the economy began growing again in 2009, spending on equipment and software has surged 31%, adjusted for inflation. In the postwar period, only in the wake of the 1982 and 1970 recessions has such spending grown faster. Private-sector jobs have grown just 1.4% over the same span. Only recoveries following the 1980 and 2001 recessions saw slower job growth.

Erik Brynjolfsson, a Massachusetts Institute of Technology economist, says companies began stepping up labor-saving investments in the first half of the last decade. The turning point, he says, came during the recession, when companies realized they could do far more than they expected with fewer people.

Even as demand has drifted back, companies are keeping that ball rolling by spending more money on machinery that automate functions. "It's as if the economy had a pent-up potential for labor savings that hadn't been harvested until the recession," says Mr. Brynjolfsson, author of a new book on automation.

Of course, the surge in capital spending isn't the only impediment to hiring. Some employers say they would hire more if there wasn't so much uncertainty, about everything from the durability of demand to tax and regulatory policy. Others complain they can't find qualified workers for the vacancies they have.

Sunny Delight is spending $70 million to upgrade its five U.S. juice factories, a record annual investment for the company, which was split off from Procter and Gamble Co. in 2004. A big chunk of that spending goes toward upgrading an aging complex that sits astride a railroad siding in Littleton, Mass., outside Boston. Improvements there include a new, brightly lit "filler room" where machines fill four flavors of juice simultaneously on one high-speed line. Previously, flavors were filled on separate lines, scattered in different corners of the plant. Each line required its own operator. Only two people tend the new combined line.

"Some people who drive forklifts now will shift to supervise the automated vehicles," says plant manager Dan Gray, leading the way through the cavernous facility, where the heated mix of liquid coursing through overhead pipes gives the air a sweet smell. "But others will have to move to other jobs in the plant."

The upshot will be fewer people. Littleton will shed 30% of its original 140 workers by the time the renovations are done.

The White House says the employment picture would have been worse if not for the jump in business investment. Jason Furman, deputy director of the White House's National Economic Council, says spending on equipment and software has created jobs at businesses that are expanding as well as at companies that make and install equipment. Hiring, however, is driven mainly by demand growth—and that side of the equation has been more muted.

"For the economy as a whole, we're getting about the level of job growth we'd expect, given the economic growth we've had," he says.

The tax break that Congress legislated for last year is having the desired effect, executives say.

"It just makes the decision easier," Brandyn Chapman, president of Phoenix Stamping Group LLC. The closely held company is getting tax breaks on $1.5 million in machines he bought for his two Atlanta-area factories.

Mr. Chapman is buying equipment because there's growing demand for his products, which include parts used in farm machines and heavy-duty trailers. "The cost of capital certainly helps that decision," he says. Phoenix is hiring because of the demand growth. He plans to add 12 production jobs to his current staff of 115.

The trend toward using labor-saving machines and software isn't limited to factories. W. Brian Arthur, an economist at Xerox Corp.'s Palo Alto Research Center, says businesses are increasingly using computers and software in the place of people in the nation's vast service sector. Many companies, for instance, use automation to process orders or send bills.

"It's not just machines replacing people, though there's some of that," Mr. Arthur says. "It's much more the digitization of the whole economy."

The U.S. today is second only to Japan in the use of industrial robots. Orders for new robots were up 41% through September from a year earlier, according to the Robotics Industries Association trade group. That has helped fuel a larger boom in productivity. Output per hour worked in nonfarm businesses has increased 6% during the recovery. Hours worked are up only 1.5%.

Mitch Free, chief executive of MFG.com, a website that manufacturers use to buy and sell parts and packaging, says the weak economy has produced a buyer's market for businesses shopping for equipment and software.

"We're still hearing that companies are having a tough time getting credit," he says, "but those that are able to buy are loving the deals they get on equipment right now." Machinery is a bit like housing, he says, "there's a glut."

Peter Mueller, executive vice president of the U.S. arm of Germany's Stihl, says he would buy robots and other machines even if they were far more costly. In Virginia Beach, Va., he recently opened the company's most advanced factory for making chain-saw guide bars, the metal frames that hold the chains in place.

The plant has 120 robots that run around the clock every day, with only seven workers on each shift. Next year, the company plans to spend $10 million for machines and software that will allow the plant to double its output. It will only need six more workers to do that.

Mr. Mueller says companies that want to produce in the U.S. and compete globally against low-cost producers in places like China need the latest technology or risk getting steamrolled by the competition. Mr. Mueller says the cost for a chain saw made in Virginia is just 1.8% higher than one his company makes in China. "It shows you the power of automation."

www.online.wsj.com

Dixie Sales Company Adds Servantage(TM) to Business Name

2012-01-16T15:29:00.001-05:00

Growth built on strong service that provides our customers an advantage inspired a new name.

Greensboro, N.C. — January 16, 2012 — Dixie Sales Company, an independent, full service, value-added distributor announced that effective immediately the company will do business as Servantage™ Dixie Sales.

Harold Reiter, CEO explained the name change does not indicate a change in ownership, but more accurately represents the comprehensive and innovative customer-support services the company provides its partners as well as its rapidly growing sales and expanding customer base and market areas it serves. Established in 1914, Dixie Sales Company originally focused its sales and marketing efforts on the southeastern U.S., but has since successfully expanded throughout the U.S. and Canada in support of its key business partners.

While it will continue to use the established name “Dixie Sales” with Servantage^TM, the addition of Servantage™ better reflects the company’s unique position as a trusted partner and reliable resource for manufacturers and national multiple-store retailers. Reiter went on to explain, “By delivering responsive and dependable service, our partners have a competitive advantage; in reality, a service advantage, thus Servantage^TM Dixie Sales.”

“Our employees are valued for their knowledge and ability to anticipate needs. Coupled with their capacity to connect with our partners on a personal level, they’ve enabled us to grow and expand internationally, despite the challenging economic climate of the past few years,” said Mike Rounsavall, president. “The high-quality service we’re able to provide gives our partners an advantage in the market, which makes everyone successful.”

About Servantage^TM Dixie Sales

Servantage^TMDixie Sales, established in 1914, is an independent, full service, value added distributor that enhances end-user experiences with consumer products. The company’s core-competencies are customer service, integrated distribution and logistics, and product-support service networks. As a trusted partner and reliable resource, manufacturers and multiple-store retailers depend on Servantage^TM Dixie Sales to create a seamless brand experience for their customers. Headquartered in Greensboro, NC, Servantage^TM Dixie Sales operates distribution centers in Greensboro, Memphis, TN, and Toronto, Canada, as well as two contact centers providing customer support in English, French and Spanish. For more about Servantage^TM Dixie Sales, visit the company online at www.dixiesales.com.

A New Era at Jacobsen

2012-01-05T14:07:00.000-05:00

December 19 -- David Withers, the newly minted president of Jacobsen, intends to focus on three things: customers, customers, customers.

We caught up with the man who now leads the Orange team in golf’s Big 3 as he was entering his fourth month in the job and beginning to implement some of the changes he believes will restore the manufacturer’s reputation and market share to its previous highs.

You came up from the technical side. Do you find yourself still poking around engines?
It’s too true! I have to stop myself from designing during product meetings. I love working with machines. That’s been a labor of love for me so I’ve had to spend far more time learning the business side.”

What’s priority one for you at the helm?
A lot of the issues that had hurt us were already fixed, particularly the parts and service problems. The challenge now is that we’re simply not externally focused enough. We need to be more involved and focused on the customers. You grow credibility by being out there and being involved. You have to be visible so we’re doing a lot more customer interaction. We’re going to put more feet on the street, so to speak. We’ve freed up money to hire more ‘forward-facing’ people and we’ve just named a new vice president of customer care, Tony Brown who’d been with Kioti tractors, who will be 100-percent focused on that.

What’s standing in the way of your business goals for Jacobsen?
Time, mainly. We can do it. It’s just a matter of how quickly. Unfortunately, we’re still suffering from the perception that our parts, service and backup isn’t as good as others. If anything, we’ve gone over the top on the inventory we carry and, as I said, fixed the reality. But to change the perceptions, we need to build relationships and confidence to the point where superintendents will say, ‘I’ll switch.’ We have to build relationships first at our level – the corporate level. We may have relied too heavily on dealers for that in the past. They look after existing customers well. We need to do a better job to help them bring new ones in.

What’s your take on the “new normal” in the U.S. golf market and how it impacts companies like Jacobsen?
There has been a structural shift in buying habits. We used to be able to count on equipment churning every five years. In today’s market, they just don’t churn as fast so it’s six or seven years. My guess is that (the market) will settle but with a longer replacement cycle. But, given our position, we can still grow. It’s actually advantageous to have lower market share in a shrinking market to achieve growth. The bottom line for us is to focus on the ‘three Bs”: Build good relations, Build a good machine and Back it up. It’s just a matter of execution from there.

How do you segment the market and where to focus your sales efforts?
My belief is that the market is splitting. You cannot serve it with one product per category. The high end is very interested in quality and new technologies. There, for example, we offer the Eclipse 322 with a higher sticker but noticeable, measurable and provable improvement in quality of cut. But, we also have value offerings for courses out there that are doing the very best they can with limited budgets. Those guys still need machinery that’s within their reach. Our portfolio moving forward will reflect the fact that we have to lead in both premium and value product lines.

What are you hearing from dealers?
I’ve met quite a few of them but not all of them quite yet. The ones I’ve met are very supportive of us being more active, more aggressive and more focused on building new customer relationships. I also know from them that I’m very lucky that I’ve come into this at a time when Dan (Wilkinson) had fixed a lot of the issues that troubled them.

So what can the golf market expect from David Withers at the helm of Jacobsen?
Well, as I mentioned earlier, I will stick to the Three Bs. I try to keep the business simple so everything flows from that. Golf is a relationship industry. We’ve done the hard work on the product, parts and service side…now it’s a matter for us to be visible, meet more of our customers and build relationships with them. They want Jacobsen to succeed because they like our products and they want a valid choice. We will be out there every day in front of customers to give them that choice.

www.golfcourseindustry.com

Stihl to Expand Virginia Beach Site, Hire 52 New Workers

2011-12-19T14:40:00.000-05:00

VIRGINIA BEACH – December 13 -- Power tool manufacturer Stihl Inc. plans to spend $10.3 million to build an expansion at its U.S. headquarters and hire 52 new workers, city officials are set to announce today.

The expansion would allow the German company to double its manufacturing capacity for "blow-molded" plastic products, such as tubes used for blowers and fuel tanks.

"Our Virginia Beach workforce has proven its ability to meet the demands of our customers, both here and overseas," said Peter Mueller, the company's executive vice president, in a news release. "Because of the manufacturing-friendly environment in Virginia Beach, we are able to compete domestically and globally, ultimately allowing us to continue to expand our operations here."

Mueller and Stihl's national president, Fred Whyte, were in Germany on Monday, attending meetings at Stihl's worldwide headquarters, spokesman Terry Kelley said.

Stihl last month began construction of the more than 53,000-square-foot addition to its accessories building off International Parkway, said Lorraine Wagner, director of manufacturing. The existing building produces accessories such as cutting heads for trimmers.

The addition is expected to be completed by the middle of next year, Wagner said.

Stihl will spend approximately $4.9 million to build the facility on land now used for parking, $4.6 million on machinery and $800,000 for other equipment, city officials said.

The company, which already employs nearly 1,900 workers at the site, will begin hiring new workers in the first half of next year, Wagner said. The new workers will earn an average salary of $45,000 a year, city officials said.

The Virginia Beach plant produces more tools than any other Stihl plant in the world.

The privately held company does not publicize how many tools it produces. But Whyte has said sales of U.S.-made equipment, which is marketed worldwide, top $1 billion annually.

www.hamptonroads.com

Generac CEO Sees Political Uncertainty Hurting Business

2011-12-13T07:51:00.000-05:00

December 12 -- Generac CEO Aaron Jagdfeld says the current political environment is dysfunctional and hurting business.

Generac, which manufactures back-up generators, has added 400 jobs thanks to strong demand that Jagdfeld attributed in part to things like the freak snowstorm along the East Coast this fall.

Still, he told the "UpFront with Mike Gousha" show that it’s hard to expand even further because of the uncertainty that exists politically. Jagdfeld said the economy and political environment are inseparable, adding how “simple things like tax planning” become difficult in times of uncertainty.

"How do you do tax planning when you don’t know what next year’s tax code will look like?” he asked.

“That uncertainty is creating, I think, a lot of pause for companies like Generac in terms of taking that next step, that next step off the cliff in terms of what we want to do in the future.”

Jagdfeld said the company is also running into trouble filling skilled positions, such as welders.

While entry level positions have been easy to fill, Jagdfeld said “regrettably once you get up the skill train ... it gets a lot tougher to hire.”

www.wisbusiness.com

Venture Products to Build New Plant

2011-12-09T16:25:00.000-05:00

ORRVILLE – December 7 -- Venture Products, Inc., makers of Ventrac tractors and attachments, has announced plans to build a new $7 million plant and become the first tenant in the city's new industrial park.

The company made the announcement to its employees on Friday, saying it plans to move forward with a multi-phased project immediately, contingent upon receiving an incentives package from both Ohio and Orrville. On Monday both those packages received approval.

The planned construction project over a period of four years would consolidate the activities of Venture Products' two manufacturing operations in Orrville. Now, a 33,000-square-foot plant on Church Road handles engineering, development, fabrication and cutting, while a second 37,000-square-foot plant on Water Street houses assembly, powder painting, administrative offices and parts warehousing and shipping.

Randy Kitzmiller, director of operations, said the goal is to unite the operations of the two facilities under one roof, thereby gaining efficiencies of operation and subsequent cost savings.

"It's exciting for a local company with local ownership to make a decision to grow its business in Orrville," said Mike Hedberg, director of Orrville development.

Hedberg said he gives "a lot of credit" to city officials for pursuing a vision of a second industrial park that would not only attract new manufacturing to Orrville but also allow existing businesses to grow here.

"It's proving to be a real asset," said Hedberg, noting that Venture Products has narrowed its choice of location for the new plant to two parcels, and anticipates purchasing between 15 and 20 acres of the 75-acre business technology park.

Kitzmiller said Venture Products, which began manufacturing the Ventrac line in 1998 after making agricultural equipment for the previous decade, is currently marketing its products in a dozen countries, and at present its future appears to be going straight up.

In 2009 Kitzmiller said, the company began implementing a new sales and marketing strategy which immediately resulted in a double-digit sales increase in 2010 and 2011. Kitzmiller said the company believes the strategy will allow the company to continue at that level of success for at least another five years, barring global economic turmoil.

So sharp has been the sales increase, that at first company officials didn't realize how successful the company was. But six months ago, Kitzmiller said, Ventrac realized it was "busting at the seams" because "sales keep coming in."

"It's an awesome problem to have," Kitzmiller conceded.

At that point the company began working on plans for a brand new manufacturing facility, initially testing the waters in other states for possible sites as they went through the "due diligence" process.

"But our number one goal was always to stay here, because this is where our employees are, and we care about our employees," said Kitzmiller.

Kitzmiller said that when the company began working with the city on a possible location for the new plant, it found exceptional cooperation.

"Orrville did an awesome job," said Kitzmiller. "Mike Hedberg is amazing. Staying in Orrville was a very easy decision for us."

Kitzmiller said Venture Products plans to begin the first phase of its project in the spring, starting work on a plant that is still in the design phase, but which is expected to be between 50,000 and 60,000 square feet. That plant, expected to take about two years to complete, will house what is now the Church Road operation.

Phase two is planned to commence in 2014 and would be a second building encompassing between 50,000 and 60,000 square feet. It would house production now being done in the Water Street plant and be completed in 2015.

Kitzmiller said the exact amount of land needed remains up in the air, but said the land would be purchased from the city in advance of the construction projects.

Kitzmiller said an advantage of doing the project in a multi-phased manner is that if the global economy sours, Venture Products could put off building the later phase of the plant until economic conditions improve.

In asking city council Monday night to approve a resolution authorizing the safety-service director to provide for job creation income tax credit for the company, Kitmiller said Venture Products envisions adding another 33 employees to its present 85 over the next three years.

Safety Service Director Steve Wheeler said those jobs would translate into $1,026,600 in new payroll taxes for the city, and $10,266 in new income tax. Wheeler said the job creation tax credit would translate into $6,159 over the six-year life of the agreement.

"This is exciting," said Hedberg. "An announcement like this is a great Christmas gift to this community. It continues the positive momentum we have from local companies continuing to grow, like Will-Burt, Bekaert and the J.M. Smucker Co. We are very fortunate here."

Kitzmiller said that employees at Venture Products were shocked and "very excited" by last week's announcement.

"They knew the company was doing well, but I don't think they knew just how well," said Kitzmiller. "They knew that one day we wanted to bring all the operation under one roof, but they didn't know that day was coming so soon. Now it's here."

http://www.the-daily-record.com/

The Toro Company Reports Record Results for Fiscal 2011

2011-12-09T16:22:00.000-05:00

Sales increase 11.5 percent for the year to a record $1.9 billion
Net earnings per share for the year up 32.6 percent to $3.70
Professional segment net sales up 14.2 percent on improved global demand in golf, grounds and agriculture markets.
Increased quarterly cash dividend to $0.22 per share, as announced last week

BLOOMINGTON, Minn.-- Dec. 6, 2011-- The Toro Company today reported net earnings of $117.7 million, or $3.70 per share, on net sales of $1,884 million for its fiscal year ended October 31, 2011. In fiscal 2010, the company delivered net earnings of $93.2 million, or $2.79 per share, on net sales of $1,690.4 million.

For the fourth quarter, Toro reported net earnings of $5 million, or $0.16 per share, on net sales of $368.1 million. In the comparable fiscal 2010 period, the company posted net earnings of $3.2 million, or $0.10 per share, on net sales of $337.3 million.

With a focus on returning value to shareholders, the company reported last week that the board of directors raised its regular quarterly cash dividend to $0.22 per share from its previous quarterly dividend rate of $0.20 per share. Additionally, for fiscal 2011, the company repurchased $130 million of company stock.

“Fiscal 2011 was a very good year for The Toro Company, delivering record revenues and earnings per share,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “Increased global demand across golf, grounds and agriculture markets drove further improvement in our professional businesses. Our innovation levels have never been higher, and we were successful in gaining share in many of our markets and key product categories. I am extremely proud of our team and their execution throughout the year. We finished the year strong and have good momentum going into fiscal 2012.”

SEGMENT RESULTS

Professional

Professional segment net sales for the fiscal 2011 totaled $1,239.1 million, up 14.2 percent over last year. Global demand across all professional businesses remained strong, increasing the Professional segment to nearly two-thirds of total sales. Worldwide sales of golf maintenance equipment and irrigation systems benefited from the successful introduction of new products, along with increased customer investments in course upgrades and equipment purchases.

Shipments of landscape contractor and grounds products saw gains, including strong acceptance for Toro’s innovative Groundsmaster® 360 rotary mower. Orders for micro irrigation technologies experienced significant growth on a worldwide basis driven by added production capacity and agricultural growers transitioning to more efficient methods of irrigating crops. For the fourth quarter, professional segment net sales were $216.5 million, up 5.5 percent from the comparable fiscal 2010 period.

Professional segment earnings for fiscal 2011 totaled $205 million, up from $173.8 million last year. For the fourth quarter, professional segment earnings were $17.1 million, down slightly from the comparable fiscal 2010 period.

Residential

Residential segment net sales for fiscal 2011 totaled $623.9 million, up 5.8 percent over last year. For the year, sales of riding products increased on demand for Toro’s new line of zero-turn mowers.

Shipments of snow products were up significantly in North America and Europe coming off last year’s strong snow season that boosted preseason orders, along with benefit from additional product placement.

Somewhat offsetting these gains were lower orders of walk power mowers and electric blowers due to unfavorable weather conditions. For the fourth quarter, residential segment net sales were $143.5 million, up 12.9 percent from the comparable fiscal 2010 period.

Residential segment earnings for fiscal 2011 totaled $54.4 million, down from $58 million last year. For the fourth quarter, residential segment earnings were $11.9 million, up from $8.8 million in the comparable fiscal 2010 period.

OPERATING RESULTS

Gross margin for fiscal 2011 declined 30 basis points from last year to 33.8 percent, and for the fourth quarter was down 60 basis points from the comparable fiscal 2010 period to 32.3 percent. The margin decline for both periods was mostly due to increased commodity costs and higher freight expense, somewhat offset by higher production volumes.

Selling, general and administrative (SGandA) expense as a percent of sales for fiscal 2011 was down 110 basis points to 24 percent, and for the fourth quarter decreased 150 basis points to 29.8 percent. The decline in SGandA as a percent of sales for both periods reflects further leveraging of costs over improved sales volumes and lower product liability expense, while increasing investments in marketing.

Operating earnings as a percent of sales increased 80 basis points to 9.8 percent for the year, and increased 90 basis points to 2.5 percent for the fourth quarter.

Interest expense for fiscal 2011 was $17 million, down slightly from last year. For the fourth quarter, interest expense totaled $4.4 million, and was up slightly from the same period last year.

The effective tax rate for fiscal 2011 was 32.7 percent compared with 34 percent last year, primarily the result of the retroactive extension of the Federal Research and Engineering Tax Credit. For the fourth quarter, the tax rate increased to 33.6 percent from 20.8 percent in same period last year.

Accounts receivable at the end of fiscal 2011 totaled $148.1 million, up 3.7 percent from last year, on a sales increase of 11.5 percent. Net inventories for the year were $223 million, up 14.7 percent over last year. Trade payables decreased 5.7 percent for the year to $118 million.

OUTLOOK

“Looking ahead, we find ourselves at the threshold of reaching $2 billion in revenues for the first time in our history,” said Hoffman. “We remain committed to delivering against our Destination 2014 goals, and have made some important changes internally with an increased focus on quality, cost and productivity improvement. We are well-positioned to grow share in our markets with a strong lineup of innovative new products, along with the benefit of additional capacity from the investment in our new Romania operation. And, our employees are aggressively pursuing profitable revenue growth as we serve our growing global markets.”

The company expects net earnings for fiscal 2012 to be about $4.15 per share on a revenue increase of about 5 percent. For the first quarter, the company expects to report net earnings of about $0.58 per share.

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.