Industryweek 14330 Pillars Three

Briggs & Stratton's Three Pillars of Transformation

Oct. 2, 2014
How Briggs & Stratton leveraged a multi-faceted strategy to thrive amid a century of change. Second of a four-part series: Part One: The Transformation of a Century-Old US Manufacturing Company Part Two: Briggs & Stratton's Three Pillars of Transformation Part Three: How to Capitalize on Challenge and Change Part Four: Combining Continuous Improvement, Automation and Robotics Drives Quality

This is the second of a four-part series about Briggs & Stratton's transformation through the years. Read Part One: The Transformation of a Century-Old U.S. Manufacturing Company.

The Briggs & Stratton's transformation -- from being an engine business to becoming a power equipment business -- has been based on "three pillars," according to CEO Todd Teske. They are as follows:

  1. Focus on the Core:

    “First, make sure the engine business continues to do well," said Tesko. "The company was very cost-focused in the 80s and 90s -- and we don’t want to lose that attention to that; however, we want to build in more innovation."

  2. Grow Upstream:

    For the second -- and biggest -- pillar, the focus is on higher margin, higher value products. “We prefer,” Teske says, “to focus on the higher value products, like commercial equipment -- the very high-end equipment used in a business for eight to 10 hours day, for example. Here the products have to be extremely durable; although they are lower production.

    "We have a plant in rural, upstate Munnsville, N.Y., from our 2004 purchase of Simplicity that illustrates this. In the past, it’s [the] high end/higher value products where our engine business has not played as well -- but it is now. We can adapt engines to be used in [commercial] equipment -– it’s a little bit of integration strategy at very high end, and it’s working,” Teske affirms.

    As important, he adds, "Our due diligence highlighted the ingenuity of these people [at Simplicity] –- it’s a fantastic workforce. They do lower volumes, and they are very good at it. They produce top quality commercial grade equipment –- they make great margins."

  3. Global Diversification

    Despite a misstep with one of their first acquisitions back in 1979, a German power company since sold off, Briggs has doggedly pursued global growth via acquisition and new products.

    In 2001, they acquired producers of portable generators and pressure washers. In 2004 they acquired producers of high-end lawn and garden equipment, plus a company in Australia., and, later, a Brazilian distributor of outdoor power equipment.

    Changing the mix from a manufacturing giant of ninety years past that excelled at high-volume, low-cost engines, to a global operation whose arms reach into almost every continent has required Briggs’ executives as well as engineers and workforce leaders to diversify and “learn new trades.” For this heartland operation, that means a shift to 75% U.S. and 25% offshore business.   

    “For example,” says Teske, “in December 2012 we added Brazil to the international mix, although most of the 25% [of offshore business] is in Europe."

... we are trying to move the needle with smart deals and organic growth to 50% U.S., 50% global. -- Todd Teske, CEO, Briggs & Stratton

"One metric I pay attention to is non-US revenues because we are trying to move the needle with smart deals and organic growth to 50% U.S., 50% global.”  

The deal in Brazil represents no manufacturing, just distributors, with sourcing out of China and some from the U.S.  “But,” says Teske, “the Branco deal in Brazil made perfect sense because, although some lawnmowers are sold into this market, the big business is in generators -- and Branco has very good market presence. We think we can supplement this deal with equipment made in the U.S. and sold through Branco’s 1,200 dealers.”

Excellence in Acquisitions

The Simplicity acquisition proved that a growth-through-acquisition strategy could work. “I would tell you that we have figured out how to use acquisitions to support our strategy," Teske declares.  "We are learning every day, and as you know there are a lot of acquisitions that don’t work. We are very selective because we want to do the right deal.”

The current Briggs management team reflects how the company has “grown into” its acquisitions approach. Always focused on the numbers, Teske asserts: “We do a lot of homework and we are very methodical, we make sure there is a fit.” 

Here, the resources of ex-Andersen and other experts have enabled the transformation. “We had a lot of help -- we’ll use outside advisors,” said Teske, a veteran of nine years with Andersen where he conducted many purchase acquisitions alongside Briggs’ current CFO David Rodgers.

In addition, the company has just added a former GE executive to head up their Corporate Development group.

“We’re building an acquisitions team that will take us to the next level,” affirms Teske.

Adapting to Global Market Shifts

With so many possibilities, we asked what makes the difference in today’s global markets. “We go looking for good market knowledge and at the back-end great distribution and service -– there are so many manufacturers, we certainly know how to do manufacturing; we are still really good at it. [But] it really comes down to product, market and distribution.”

Other product market shifts are in the mix as well. Global product demand changes from one geographical area to another. Lawn tractors that cut suburban lawns, for instance, have low demand in Asia where the company believes that there is a general overall need for outdoor power equipment.

The new Briggs, Teske asserts, has the innovation and flexibility to build products that satisfy global demand: “What we are very good at is making high volume engines that work for a really really for a long time –- good quality, durable, but with applications now going into other things...  We’re probably the best in the world. Whereas at Honda, they produce a diversity of engines, all focused on engine technology. But Briggs’s engine production covers a lot of territory, from a walk-behind mower, up to commercial grade power equipment and everything in between."

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