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OPEESA'S

Outdoor Power Equipment and Engine Service Association

OPE-IN-THE-KNOW

Volume CXIII, October 11, 2007

"The Business of Outdoor Power Equipment"

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John Deere's Big-Wheel Rally Firefly Energy Wins 2007 Technology Innovation Award EPA Standards Fuel Rethinking Like Seeing Ghosts A Look at the Obsession With Creating Lush Grass Dollar Lifts Exporters, Blunting Housing Bust Generac Power Systems Hires New Senior Marketing Executive Thoughts for the Day Industry Events Calendar Warm US Winter Expected to Worsen Drought Conditions OPEESA Officers, Board, Executive Director Contact Information

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1)

JOHN DEERE'S BIG-WHEEL RALLY Doug Tsuruoka Business Investors Daily September 21

Robert Lane's managing philosophy boils down to a simple point: He believes great companies can always do better. "You set the bar really high," Lane said. "We want to perform on average better than our very best year." This isn't idle talk. Lane is chairman and CEO of Deere & Co., an iconic $22.1 billion manufacturer of tractors and field machines that's given farmers a leg up for 170 years. Since taking over Deere seven years ago, Lane and his managers have taken the Moline, Ill.-based maker that made its mark in 1837 by inventing a new horse-drawn plow on a moonshot. Deere now sells high-tech harvesters with Global Positioning Systems that let farmers cut crops with data from space. It also makes tractors in China and India for sale in other developing nations. U.S. farmers upping corn production to meet demand for ethanol biofuels are expected to buy Deere's vehicles for years to come. They'll also have more cash to buy tractors because of record corn prices fanned by government subsidies. "Farmers are trading up to new and better equipment, and that's good for Deere," said Morningstar analyst John Kearney. Deere predicts equipment sales will increase about 16% in the fourth quarter, and the company raised its full-year forecast to 7%, up from 6% in May. Nice Tail Wind "Deere's fundamentals are pretty good," Morningstar's Kearney said. "They have a strong wind at their back. There's nothing that shows it will turn down in the near term." Deere owes more to deft management than luck. Lane and his team unscrewed past notions about how firms should be run to set Deere on a new course. They also realigned key units so they're more in line with fast-changing business trends. One of Lane's managing tips: Companies should be less like families and more like high-performance teams. "In families, everybody pulls for everybody else," he said. "Your uncle gets invited to dinner even if he doesn't bring anything to the table. But performance teams are like rowing teams -- everybody must do what's expected." Lane believes that winning firms also need to develop new ways of gauging performance. "If markets are strong, your performance has to be that much stronger," he said. When Lane took charge, Deere was hitched to some old economy realities. It was fighting the riptide of a cyclical downturn in farming with too many on its payroll. Its tractors cost too much to roll off the factory floor. R&D for new tech was lagging, just as new markets like China and India were taking off. "The business was good but not great," Lane said. "The question was, how could we build a business that was as great as our products?" The 57-year-old Washington, D.C., native stresses that Deere's reputation for providing durable farm equipment and great customer service was never at risk during the slump. But the maker of shiny green tractors needed some work under the hood. Fast-forward to 2007. Lane and his team have retooled the way the 50,000-employee firm does business. They've cut costs, inventories and non-core assets. Competing units were consolidated, and Deere's distribution system was streamlined. Lane's team got unions to support the changes. The other interesting point 19 that Lane shook up the company as an insider. He was able to change Deere from the inside because he spent years learning how the company worked. Lane joined Deere in 1982 after a stint in global banking and rose through the ranks. He began as an exec in Deere's construction-equipment unit. Lane has also been chief financial officer, head of the worldwide farming equipment unit, and president and chief operating officer. He's gone to China more than 25 times and taken long trips to India, Africa and South America.

One of Lane's key moves when he took over Deere in 2000 was to forge a new metric for measuring corporate performance. It's called shareholder value added, or SVA. It provides a clearer picture of Deere's future for investors, customers and employees. Lane felt that pressure to perform needed to be turned up, from the corner suite to the factory. Laying down this yardstick was Lane's way of doing it. In the process, Lane and his team shattered the "good enough" mentality that vexes many companies. SVA measures pretax profit left over after subtracting the cost of enterprise capital. Deere fuels SVA growth by paring costs, dumping bad assets and investing wisely. As a benchmark, Deere's equipment units usually target a return on operating assets of 20%. The final SVA figure is an annual lump sum for the entire firm that shows how much was added to shareholder value. The more SVA, the better it is for the company. In 2006, Deere's SVA totaled $948 million. In each of its three fiscal years from 2004-06, it kept doubling its SVA totals from the year before. "It was a transformational moment for the company," said Michael Mack, Deere's CFO. Under SVA, all of Deere's 24,000 salaried employees also get written online performance targets that are reviewed twice yearly. "All their goals are aligned" so that everyone pulls together, Lane said. Intelligent Tractors Deere is also forging ahead in digital technology. It's R&D labs in Moline have virtual reality rooms that project computergenerated, 3-D images on walls so engineers can check new product designs for durability. Walking around "inside" these virtual images, engineers quickly decide how to reduce defects and slash the costs of design and manufacturing. "Our machines are becoming intelligent," Lane said. Lane is a nautical buff who compares keeping Deere on an upward tack to trimming sails. "You can have a great sail, but if it's all trim and no wind, you're not going to get very far," he said. "The same's true if you have all wind and no trim." The trick, he says, is to trim your sails to catch the wind as never before.

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2)

FIREFLY ENERGY WINS 2007 WALL STREET JOURNAL TECHNOLOGY INNOVATION AWARD

PEORIA, Ill., Sep 24 -- Firefly Energy Inc., the Peoria Illinois-based company developing an innovative carbon-graphite foam lead acid battery for commercial and military applications, said today it was named a co-winner in the energy category in 2007's The Wall Street Journal Technology Innovation Awards. Los Alamos National Laboratory was the category's other co-winner. The seventh annual awards competition recognizes technological breakthroughs by individuals, companies and organizations around the world in a wide range of disciplines including medicine, energy, software, hardware, the Internet, broadcasting, the environment and other categories. In his overview, Michael Totty, a news editor for The Journal Report in San Francisco, said Firefly Energy won for developing a "power supply that replaces the heavy lead plates in vehicle batteries with a carbon-graphite foam. The result is smaller and lighter, yet can deliver as much power as more advanced and more costly technologies."

Ed Williams, CEO of Firefly Energy, said "It is truly a unique honor to be selected out of 800 companies as one of the cowinners of this award, and from such a prestigious sponsor as Dow Jones and Company's The Wall Street Journal. Winning the Journal's 2007 award is a clear reflection on the talents and ingenuity of our team and their impassioned focus on introducing greater energy storage performance, at lower costs, with greener battery technology." Kurt Kelley, the inventor of Firefly's graphite foam battery technology, added that removing corrosive heavy lead grids and replacing them with graphite foam helps unleash the innate power of lead acid chemistry. "Our battery technology can rival other advanced chemistries in performance, take advantage of an existing manufacturing base, and addresses environmental concerns through the significant reduction of lead content resulting from the use of carbon-graphite foam," he said. Firefly Energy is currently applying the first version of its battery technology in several commercial and military markets. The company's battery technology may also serve emerging applications such as hybrid electric vehicles, which historically haven't been served effectively by traditional lead acid batteries due to heavy weight and poor cycle life. Firefly Energy's "3D" carbon-graphite foam lead acid battery, the first of several innovations from the company's technology portfolio for lead acid batteries, uses a three dimensional high surface area foam material that unleashes the high power potential of lead acid chemistry which was impossible to achieve in the past. The technology not only reduces the lead content-- making the batteries smaller and lighter--but also enables faster, deeper and more reliable discharges and recharges, significantly extends the battery life, is more environmentally friendly and, is less expensive than lithium and nickel battery chemistries. The carbon-graphite foam also enables a much cooler overall battery performance - a key feature considering that the corrosion rate of lead doubles for every 15 degrees the temperature rises above 70-degrees Fahrenheit. Examples of end-use applications of the Firefly Energy technology include lawn and garden care equipment, commercial and military vehicles, and uninterruptible power supplies. "Though it's batteries aren't yet on the market, Firefly has signed a deal with Sweden's Husqvarna Group to provide batteries for the outdoor-equipment maker's planned line of electric lawn mowers and lawn tractors."

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EPA STANDARDS FUEL RETHINKING - SMALL-ENGINE MAKERS WEIGH RISKS, REWARDS Rick Barrett www.jsonline.com Sept. 26, 2007

Tougher environmental regulations are continuing to drive changes in the small-engine industry, similar to what's happened with car and truck manufacturers. For the small-engine makers, represented in Wisconsin by Briggs & Stratton Corp., Kohler Co., Generac Power Systems, Mercury Marine Inc. and BRP International, the total estimated costs will rise to $620 million by 2037, according to the Environmental Protection Agency. What's more, the makers of outdoor lawn-and-garden equipment, such as Ariens Co. and John Deere, are affected by what happens with the engine manufacturers. "Things are in a huge state of flux," said Gregory Weekes, a John Deere product marketing manager. John Deere makes garden tractors and utility vehicles in Horicon. Ariens, based in Brillion, makes snow-throwers and garden tractors. Ariens is about one-third of the way through its annual snow-thrower production. Those machines are made in limited quantities, usually in the fall, based on what manufacturers and dealers expect to sell. In the winter, the companies gear up to produce garden tractors and other outdoor power equipment for the spring and summer.

Engines on the current snow-throwers aren't required to meet the 2008 environmental regulations. But as the rules change, products like snow-throwers and garden tractors might have to be redesigned to accommodate a catalytic converter - a bolt-on engine device that reduces pollution but creates high-temperature safety issues. "You really have to worry about the hazards," said Dan Ariens, company president and chief executive officer. Kohler Co. is spending $11 million on research to develop cleaner engines. The company wants to meet EPA requirements without the use of catalytic converters or other bolt-on devices, said Richard Koehl, director of marketing and quality. Increased use of ethanol-based fuels also worries the small-engine industry. Some states, such as Minnesota, have said they want to use 20% blends of ethanol with gasoline because it's an environmentally friendly fuel additive made from corn and other renewable energy sources. But ethanol has caused problems for some boat engines, partly because it absorbs moisture from the air. Ethanol also is corrosive to aluminum and other metals. There would have to be some major small-engine design changes to accommodate 20% ethanol, said Marvin Klowak, Briggs' vice president of research and development. In some cases, rubber hoses and gaskets could be broken down by the fuel additive. Pieces could flake off and cause fuel-system problems. An increasing number of cars and trucks run on an 85% blend of ethanol with gasoline. But tests at Briggs & Stratton have shown that fuel economy drops 40% to 60% when E85 is used in a small engine. "Performance is an issue too," Klowak said. "Carburetors are designed to run on a certain air-fuel mixture. When you introduce a lot of alcohol into the gasoline, it's going to run much leaner . . . with engine surging and poor performance." Within the next five years, under environmental regulations being phased in, gasoline engines used in outdoor power equipment will run 35% cleaner. And although a lawn mower produces as much pollution in one hour as a car does in 20 miles, it's much better than years ago when a lawn mower polluted as much in an hour as a car did in 350 miles. Advanced technologies Small-engine makers have turned to advanced technologies, some of them from automakers, to clean up their act. "Everything that influences the automotive industry eventually finds its way into small engines," said Steve Hespe, a Generac vice president. Generac was probably the first U.S. engine manufacturer to develop a propane-powered engine for the lawn and garden industry. That mower, the Dixie Chopper, produces about 50% fewer ozone-forming emissions, according to Generac. The new U.S. environmental standards could reduce air pollution by millions of tons a year. In some cases it's difficult to go much further because the cost of adding technology such as fuel injection to a lawn mower could be four times higher than the cost of the entire engine. And because so many small engines are used in products sold through major retailers such as Sears, Wal-Mart and Home Depot - retailers who insist on keeping prices low - companies like Briggs must weigh the costs of improvements against the risks to their businesses. Initial adoption of technology is expensive. But eventually the costs come down on sheer volume, according to Hespe.

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4)

LIKE SEEING GHOSTS - Huge Presses And Tool Room's Heavy Equipment Are Auctioned Off Kitchener ­ September 28

Rose Simone www.news.therecord.com

Seeing the huge presses and tool room equipment standing still and silent during an auction yesterday at MTD Products Inc. was like "seeing ghosts" for former workers like Kathy Gartshore. "You can almost see the presses running and all the people going about," said Gartshore, who is now helping at the MTD Job Action Centre, an office that the company and the Ministry of Training, Colleges and Universities have set up inside the Kitchener plant to help the 170 workers who were laid off this summer. A deal between the company and Canadian Auto Workers Local 1524 did save about 195 of the lawn mower and snowblower assembly jobs. But the parts-manufacturing portion of the production ceased as the press shop and the tool room were closed in the restructuring on June 1. The action centre held an open house yesterday. Coincidentally, the equipment auction was also taking place, on the shop floor next to the action centre. "It is a weird feeling, to walk through there," said 50-year-old Mike Synyard of Kitchener, who worked at MTD for 22 years and saw the auction when he visited the action centre to look at the job board. Synyard said finding a similar position and pay won't be easy. "There are jobs for tow motor drivers, but they only pay $10 or $11 an hour," Synyard said. Workers at the plant made an average of $19 to $20 an hour. Synyard recently had an interview for a job he could easily have done, but didn't get it because he doesn't have a high school diploma. "I left Newfoundland when I was 16 years old to come here to work," he said. Many former MTD workers have found jobs. Mike Lemieux, 43, of Kitchener, was hired at a manufacturing plant in Cambridge within seven weeks of being laid off. He is among the 45 per cent of former MTD workers who have found work or are in training programs. "The majority of those have found full time employment," said Paxton Holmes, the co-ordinator at the MTD Job Action Centre. Holmes said 45 per cent is an extremely encouraging adjustment rate, especially since many former workers are just starting to kick their job search into high gear. "We are very happy with employers in the area who have been supportive," Holmes said. "Our people have quite a variety of training and we have had one of the most productive plants . . . so they bring a lot to the table," Holmes said. The action centre will have a fund to help workers who need to get their high school equivalency papers or want to retrain, he added. Arnie Francisco, an independent chair working with the MTD adjustment committee, said the new Toyota plant in the Woodstock area is creating jobs with some manufacturers.

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5)

A LOOK AT THE OBSESSION WITH CREATING LUSH GRASS - GOLF'S 'TURF WACKOS' John Paul Newport Wall Street Journal September 29

For Craig Schreiner, a golf-course designer from Myrtle Beach, S.C., the highlight of any project is the final step: "draping" the course in a variety of attractive grasses. "If the golf-course site is the canvas and the routing plans and the bunkers are the pencil outlines, the grass is the paint," he says. He uses the contrasting tints and textures of different grass strains to define the fairways, greens and roughs and often frames his compositions with colorful areas of high fescue. The grass, he said, is like "a silk dress on a woman with a good figure. It may not cling exactly, but it reveals the shape beneath." Mr. Schreiner is a "turf wacko" -- the fond term that Greg Lyman, director of environmental programs for the Golf Course Superintendents Association of America, uses to describe many golf architects and almost all of the country's grassbesotted course superintendents (in simpler times known as greenkeepers or greenskeepers). And they are joined in their condition by a large number of home lawn owners -- albeit in many cases frustrated ones. "A lot of people who care for their own yard see the golf course as the pinnacle of what they could achieve," Mr. Lyman says. "But unfortunately they tend to gloss over the science and the technical sophistication necessary to grow performance-level grass." Many course superintendents, including Mr. Lyman, have luscious home lawns, but they are often able to maintain them with half the effort that their neighbors expend and, even more importantly, a fraction of the environmental degradation, simply because they know how. The aesthetic passion for grass is one that eludes many, including (in my world) my wife, my daughter and all of my close personal friends. The only lawn-related compliment I can recall ever receiving, specifically about a new patch of grass I painstakingly brought to life on a difficult slope, came from an avid gardener friend. "And grass is SO hard to grow," she ooohed. Midway through my modest words of acceptance, I realized her voice had been dripping with sarcasm. My wife explains my ardor for our lawn as an outgrowth of my love for golf, and I'm sure that's part of it. As it turns out, the history of the suburban lawn in deeply intertwined with that of golf. One of the most popular volumes on the topic, "The Lawn: A History of an American Obsession" by Virginia Scott Jenkins, features a photo from a 1951 magazine ad of the legendary golf pro Sam Snead pushing a mower. The initial models for lawns in this country were the landscapes of the great English country houses. In the Victorian era, well-kept lawns emerged as an important expression of bourgeoisie order. But by the early years of the last century, as Ms. Jenkins writes, country clubs became the aspirational anchors of the new suburbs and velvety golf courses increasingly became the inspiration for home lawns. The state of turfgrass science in that era was still pretty primitive, but in the mid-1910s the U.S. Golf Association and the U.S. Department of Agriculture began to fund a joint research project -- the turfgrass equivalent of the 1960s man-on-themoon program -- to develop new strains of grass and better methods for growing it. According to Ms. Jenkins, the USDA had initially been reluctant but surrendered to the persuasions of several highranking employees who were also influential members of the USGA. "If these men had not worked for the USDA or if they had not been golfers, the domestic landscape of the United States might look very different today," she wrote. Most golf-playing lawn owners I know have at least briefly toyed with the notion of building a backyard putting green. When Mr. Lyman of the GCSAA taught at Michigan State University he fielded many inquiries on the matter. "My advice was always to lie down until the thought went away," he says. Apart from typical installation costs of at least $10,000, putting surfaces to roll smoothly need to be mowed daily with a specialized mower that costs $6,000 to $8,000. What about establishing backyard turf short enough for practice chipping? Also tough. The performance-level turf on golfcourse fairways is typically maintained at between one-quarter and three-quarters of an inch, and mowed (with mowers that "float" along bumps and hillsides) three or more times a week. Rough grass, designed to be difficult to hit balls from, is typically cut at 1½ inches or higher, whereas the grass on typical home lawns is 2 to 3½ inches long. Plus, the blue grass and rye strains commonly used on home lawns would never survive a summer cut below 1 inch. (Conversely, the bent grass and Bermuda strains used in golf fairways would be prostrate at typical lawn lengths and look terrible -- like a bad comb-over.) But that's not to say homeowners don't have a lot to learn from golf-course practices. For the past three years, David Phipps, a course superintendent in Portland, Ore., has been teaching a three-hour class called "Golf Course Quality Lawns." He is currently in talks about syndicating the curriculum nationwide.

"People think they can go out and buy a bunch of fertilizers and get a beautiful green lawn, but that's a good way to waste a lot of money. You have to think in terms of treating the whole plant, starting with the soil and good drainage," he says. "In fact, honestly, one of the main points of my class is to make people aware of the adverse impact on the environment when they take care of their lawns incorrectly." Yearly practices such as aeration (extracting ¼-inch plugs from the soil to allow more oxygen into the roots), dethatching and top dressing with lime or gypsum to adjust the soil's pH level can drastically reduce the costly and potentially toxic chemicals needed to create a thick green lawn. So can frequent mowing with a sharp blade (never cut away more than the top third of the grass blade) and smart watering (how much and how often depends on the drainage properties of the soil). The problem, of course, is that all this is hard to figure out for time-pressed homeowners. Few of us have college degrees in botany or turf science, as most top course superintendents do these days. It's just one more way we stand in awe of the golf pros.

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6)

DOLLAR LIFTS EXPORTERS, BLUNTING HOUSING BUST Wall Street Journal

By Timothy Aeppel

PITCAIRN, Pa.--October 1 -- Gary Bence sees the impact of a weaker U.S. dollar every time he wheels his truck into the sprawling rail terminal in this gritty Pittsburgh suburb. As a driver for AGX Intermodal, which hauls containers for local companies here, the 57-year-old has seen a surge in recent months of boxes filled with locally made products headed to customers overseas. Of about 15 loads he handles each week, 10 are for export, he estimates, including a shipment of mineral oil bound for Bolivia that he dispatched earlier in the day. "I was in the scrap business for 30 years, and we exported nothing, and now we [in the region] export a lot," he says, just before he climbs into the cab of a Mack truck pulling a gray 40-foot container and kicks up a cloud of dust on his way out. Mr. Bence is one of the people benefiting from one of the few bright spots in a slowing U.S. economy. While a weaker dollar hurts consumers by raising the price of imported goods, it also is helping the economy stave off a deeper slowdown, by making U.S. exports more competitive and influencing more foreigners to visit Disney World or the Statue of Liberty. Yet currency rates are so intertwined with other crosscurrents in the economy that the impact varies from one individual or company to another, even within the same business. Someone who works for a company that relies heavily on foreign trade or a hotel catering to European visitors might get a plump raise or avoid a layoff because of the weaker greenback. An employee of a hotel getting less foreign business -- or one whose company has lots of foreign hotels catering to American tourists -- may fare worse. If the dollar falls too far and too fast, it could spur a run-up in interest rates and shake the stock market -- which would be bad for the economy. A rapidly falling dollar would raise the price of imports, stoking inflation, and in an extreme case could prompt foreign investors to dump U.S. bonds, pushing their yields higher. But as long as the dollar's decline is gradual, most economists see it as a modest plus overall. Joshua Feinman, chief economist at Deutsche Asset Management, wrote in a recent note to investors that the export upswing is one of the factors "poised to help cushion the impact of the housing correction." Real exports have grown faster than real imports for nearly two years, notes Mr. Feinman, and he expects this trend to continue. U.S. exports rose 2.7% to a record $137.68 billion in July, according to the Commerce Department. Mr. Feinman estimates stronger exports have contributed a half percentage point of added growth to gross domestic product since 2005.

How this all plays out at U.S. companies depends greatly on where they have their operations -- at a time when many have been moving them out of the U.S. to lower costs. Though the general shift of production to low-cost countries is unlikely to halt, some companies are giving more consideration to the U.S. For instance, at Joplin, Mo.-based EaglePicher Technologies LLC, the dollar's slide has raised questions about the future of the company's big Canadian plant, where it produces batteries for military radios. When EaglePicher bought the facility in 2000, the Canadian dollar was worth 68 U.S. cents. "I was part of the transition team that bought that plant," says the company's president, Steven Westfall. "I never thought [the U.S. and Canadian dollars] would come close to par, especially not in just seven years." The company will decide in the next several weeks whether to move the production to the U.S., he says. In the meantime, EaglePicher's business in Europe is booming, with requests for bids up nearly 10% since the beginning of this summer. Stihl Inc., the U.S. subsidiary of German chain-saw maker Andreas Stihl AG & Co. KG, recently opened a small addition to its huge factory complex in Virginia Beach, Va., partly for currency reasons. "It's a classic good-news, bad-news scenario," says President Fred Whyte. The price Stihl pays to import materials and components has gone up. But exports of its U.S.-made finished goods have surged, and Stihl now exports half its U.S. production to 79 other countries, up from 30% five years ago. "So what you lose on the apples you kind of make up on the oranges," says Mr. Whyte. Many companies that produce for U.S. domestic consumption, rather than export, note that the weaker dollar has given them an edge against foreign competitors, too -- particularly those based in Europe. One such company is RomWeber Co., a maker of high-end wooden furniture in Batesville, Ind. Not long ago, the U.S. furniture manufacturing sector was in a free fall as domestic manufacturers shuttered factories and shifted work outside the U.S., especially to China. Business also migrated to Canada, which has abundant wood supplies and a thriving furniture sector. But over the past two months, RomWeber has seen a surge of business from distributors looking for alternatives to factories in Canada and other countries that have seen their currencies appreciate against the dollar. "Right now we're seeing retailers trying to source product that has been coming out of Italy and Europe and Canada, because of the cost of it," says Bruce Rippe, president of the company. He won't disclose sales at his family-owned business, but he notes that sales have virtually recovered all of the falloff the business had seen since 2004, when there was a clear acceleration in business moving out of the U.S. The furniture business is a good example of why it's difficult to separate the influence of a weaker dollar from other forces at work in global industries. Many U.S. retailers, wary of the slowdown in domestic consumer spending, have cut inventories. That already has prompted many of them to reconsider the long supply lines involved in ordering from overseas, which require them to hold larger stocks -- thus increasing their appetite for domestic supply even if the dollar wasn't cheap. At the same time, the remaining domestic furniture producers have revamped their operations to make themselves better able to respond more quickly to orders, making them more attractive to retailers than in the past. Visits by foreign tourists to U.S. theme parks and other attractions are up, which means more bookings for hotels, restaurants and rental cars. The convention bureau in Orlando, Fla., forecasts a 3.9% increase in foreign visitors this year compared with 2006. Tiffany & Co. recently cited free-spending foreign tourists as a factor in the 31% jump in sales at its flagship New York store in the second quarter. The head of the world's largest public auction for thoroughbred horses, Keeneland Association Inc. in Lexington, Ky., says European participation surged this year for the same reason. "There were more Europeans here, and they spent more," says Nick Nicholson, Keeneland's president. "I kept hearing from them: 'I feel like I'm getting a discount,' because they're constantly translating everything they spend back into euros." The same dynamic is encouraging foreigners to snap up U.S. real estate and other assets. One example: The recent bid by the stock exchange in Dubai for a sizable stake in the Nasdaq Stock Market in New York. Nariman Behravesh, chief economist at Global Insight, an economic forecasting and consulting firm in Lexington, Mass., says, "We're going to see a continuing wave of foreign money flowing in to buy U.S. factories and companies, because U.S. assets are viewed as a bargain." To be sure, there are big downsides to a weaker dollar. It makes foreign travel pricier for Americans and drives up the cost of German beer and Canadian lumber. It also pushes up the price of commodities, many of which are denominated in dollars, as the producers of those materials raise prices to offset their loss of buying power. That, in turn, could trigger more inflation.

Many multinationals have built factories all over the world at least in part to help insulate themselves from the ebb and flow of currencies. Their goal is to make most things in the region where they will be sold, allowing them to calculate production costs and their sales prices in the local currency. But that doesn't work for every company. Instead, many try to cut costs by concentrating production of certain items in one or two locations, then ship to the rest of the world from those places. That's what Terex Corp. does. As one of the world's largest producers of construction equipment, it has a big factory in Europe that specializes in mini-excavators, which has been badly hurt by the slide of the dollar. Meanwhile, the company's factory in the U.S. making aerial work platforms has had to double its employment to 3,000 people, in part to meet surging overseas demand for its products, particularly from Europe. "That's why, for us, the dollar is not a particularly good thing," says Ronald DeFeo, chief executive of the Westport, Conn.based company. "If you're a global manufacturer, what you hate is [currency] volatility," because it makes long-term planning harder and can suddenly turn a profitable factory into an albatross. David Dalquist represents the other extreme. As chief executive of family-run Northland Aluminum Products Inc., which produces all its Nordic Ware line of bakeware at one factory in Minneapolis, he loves what's happening. He expects his company's exports will be up 50% this year and the surge of new, foreign business is helping smooth some of the peaks and valleys in his production. In the U.S., baking is a seasonal activity, he notes, with most occurring between Halloween and Christmas. "Exports are making it possible for me to keep more people working year-round," he says, because foreign demand is more consistent and takes up slack during the periods when U.S. demand drops off. The low point of his headcount this year, he notes, was about 200 workers -- about 10% higher than in the past. At its peak, the company employs 400. The weaker dollar may also be helping to make him more competitive against the Chinese, he says, although that element is difficult to measure. A weaker dollar tends to drive up the global cost of raw materials, such as copper and steel, which hurts manufacturers on both sides of the Pacific. But compared with a Chinese producer, a far smaller portion of Northland's total costs are the raw materials -- because labor costs are higher in the U.S. So the same increase in raw materials has a relatively bigger impact on the Chinese, he says, "though they're still ferociously competitive." One question now is whether the dollar's slide will remain gradual. A J.P. Morgan index comparing the dollar with a basket of 16 currencies, weighted by their importance to U.S. trade, is near a 12-year low. Canada's dollar recently hit parity with its U.S. counterpart for the first time since 1976, which is why Disney recently ran ads north of the border urging Canadians to "enjoy the magic" of a strong currency by traveling to Florida. How this plays out also depends on what happens in the rest of the world. At the moment, strong foreign economies are soaking up U.S.-made goods. But if key economies such as Europe or China stumble, the weaker dollar won't make much difference. Meanwhile, foreign producers may hold down their U.S. prices despite the weaker dollar, giving up some profits to keep up their market share, especially in consumer goods. That may lessen the pain for consumers but also reduce the advantage for U.S. manufacturers. Germany's BMW AG, for instance, has reported declining profit margins in large part because of the weaker dollar. The car maker hasn't hiked prices, but recently announced a series of moves to blunt the impact -- including an increase in its output of vehicles in the U.S. Dan Ariens, president of Ariens Co., a Brillion, Wis.-based maker of lawn mowers and snow blowers, says he isn't benefiting much from the dollar's weakness versus the euro. Instead, his European distributors are. Ariens sells to them at prices fixed in dollars, so they are the ones who see their margins growing. Mr. Ariens says he doesn't mind, since many distributors use that fatter profit to do promotions that expand sales. The situation is different in Canada, he notes, where Ariens's wholesale prices are fixed to the Canadian dollar. People like James Mallon are seeing yet another dimension to the falling dollar. The 34-year-old native of Ottawa, who now lives in Ann Arbor, Mich., says he's gotten a flurry of phone calls in the past few weeks from friends in Canada who want to stay with him for weekend shopping excursions. Several asked him to accept mail-order shipments -- including a surfboard, cookware and bicycle parts -- that they'll pick up in the future. "I feel richer for my friends," he says, "but poorer." Mr. Mallon, an engineering consultant who specializes in ergonomics, has his student loans in Canadian dollars that now cost more to pay back. And a loan of C$25,000 that he took from his parents to buy his house in 2003 has suddenly grown far more onerous. "When I took out that loan, it was the equivalent of $14,000 U.S., but now I owe them $25,000."

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7)

GENERAC POWER SYSTEMS HIRES NEW SENIOR MARKETING EXECUTIVE

Town Of Genesee ­ October 3 -- In an effort to bolster its marketing efforts, Generac Power Systems said Tuesday it has created a new senior executive position to oversee the company's marketing team. The new chief marketing officer is Clement Feng, who has handled marketing for a number of consumer-oriented products and services, including Master Lock and United Airlines. The Brookfield resident most recently served as vice president of marketing at Broan-NuTone LLC, North America's largest manufacturer of residential ventilation products. At Generac he will be responsible for developing markets for the company's entire line of generators, which are used in recreational vehicle, residential, commercial and industrial applications. "Clement's wealth of experience and broad marketing knowledge make him a valuable addition to our executive team," said Generac president Aaron Jagdfeld in a statement. Company spokesman Mike Carr said the marketing push is largely influenced by Generac's new ownership. The firm was sold by founder Robert Kern to New York private-equity firm CCMP Capital Advisors LLC last year. "It's one of the areas they thought they could be of help to us," Carr said of Generac's marketing. "They have a lot of resources and contacts in the business world."

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8)

THOUGHTS FOR THE DAY

ADVERSITY If we had no winter, the spring would not be so pleasant: if we did not sometimes taste of adversity, prosperity would not be so welcome. - Anne Bradstreet QUESTIONS A wise man's question contains half the answer. - Solomon Ibn Gabirol

DISCOVERY Discovery consists of seeing what everybody has seen and thinking what nobody has thought. - Albert Szent-Gyorgyi

ACTION You're alive. Do something. The directive in life, the moral imperative was so uncomplicated. It could be expressed in single words, not complete sentences. It sounded like this: Look. Listen. Choose. Act. - Barbara Hall

TALENT Hide not your talents, they for use were made. What's a sun-dial in the shade? - Benjamin Franklin

PLANNING Bite off more than you can chew, then chew it. Plan more than you can do, then do it. - Anonymous

AIM Fanaticism consists of redoubling your efforts when you have forgotten your aim. - George Santayana

HOPE Never deprive someone of hope; it might be all they have. - H. Jackson Brown Jr.

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9)

INDUSTRY EVENTS CALENDAR

2007 - 2008 OPE INDUSTRY MEETING AND EVENTS CALENDAR

Click On Link For More Information

January 22-25, 2008 January 22-24, 2008 Jan 31 - Feb 2, 2008 February 11 ­ 14, 2008

World of Concrete, Las Vegas Convention Center BTME-BIGGA, British Turf Management and the British International Golf & Greenkeepers Association Show, Harrogate International Center, England GIS, Golf Industry Show, Orange County Convention Center, Orlando, FL The Rental Show, American Rental Association Conference and Trade Show, Mandaley Bay Convention Center, Las Vegas OPEAA, Outdoor Power Equipment Aftermarket Association Annual Meeting, Santa Fe, NM OPEESA, Outdoor Power Equipment and Engine Service Association, Westin Mission Hills, Rancho Mirage, California Daylight Savings Time Begins EETC, Equipment and Engine Training Council 12 Annual Meeting, Sponsored by National Hardware Show, Las Vegas Convention Center and Sands Convention Center Skills USA, National Leadership and Skills Conference, Kansas City, Missouri OPEI, Outdoor Power Equipment Institute Annual Meeting GAFA (with SPOGA), International Garden Trade Fair with the International Trade Fair for Sport, Camping and Garden Lifestyle, Cologne, Germany GLEE, International Garden and Leisure Show, NEC Birmingham, England GIEE, Green Industry and Equipment Expo, Louisville, KY (combining EXPO and the GIE Show) FFA, Future Farmers of America Annual Convention, Indianapolis, IN Daylight Savings Time Ends Southwest OPE Show, TSDA, Fort Worth Convention Center, Fort Worth, TX

Please contact [email protected] with any corrections or if any links in this calendar do not work.

th

February 2008

March 2-5, 2008 March 9, 2008 April , 2008

May 6-8, 2008 June 22-28, 2008 2008 2008 2008 October 25-27, 2007 October 24-27, 2007 November 4, 2007 Nov 29 - Dec 1, 2007

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10)

WARM US WINTER EXPECTED TO WORSEN DROUGHT CONDITIONS By Doyle Rice, USA Today

October 9 -- Unusual warmth is forecast across most of the nation this winter, continuing a decade-long trend of mild winters, according to the federal Climate Prediction Center. The above-average temperatures predicted for December through February could also worsen drought conditions across the country. Parts of all 50 states are either abnormally dry or in some level of drought, the U.S. Drought Monitor reported Thursday. A mild winter could mean lower heating costs and perhaps less snow along the East Coast and in the southern Appalachians, says Michael Halpert, head of forecast operations at the climate center. "U.S. winters have been milder-than-average for the past 10 years," Halpert says. "And we're again looking at a milderthan-average winter, nearly coast-to-coast." The climate center's three-month winter forecast will be officially announced on Tuesday. The USA has been unusually warm all year. Through August, the nation was 1.39 degrees above the long-term average -- the 13th-warmest year since record-keeping began in 1895. Halpert says the only uncertain areas for temperatures this winter are in the northern Plains and the Pacific Northwest, where there are equal chances for a cooler- or warmer-than-average winter. Halpert says the climate center's "heating-degree-day projections are 3% less than the long-term average." Heating degree days measure the amount of energy needed to heat homes and businesses. The Pacific Northwest and Ohio Valley are the only areas forecast to be wetter than average. "This is just conjecture, but the area that might do the best for snow is the northern Rockies," Halpert says. Winter should be drier than average across the southern part of the nation -- good news for sodden Texas but disappointing for the drought-stricken Southeast. Jay Lawrimore, chief of the climate monitoring branch at the of the National Climatic Data Center, says 78% of the Southeast is in some stage of drought, while 24% of the region is in "exceptional drought" -- the highest level. "Since the beginning of 2007, precipitation is about half or less of what is typical in much of the Southeast," he says. Exceptional drought conditions expanded this week to parts of North Carolina, South Carolina and Virginia.

Drought conditions are also plaguing the West, where 62% of the region is in some stage of drought. Lawrimore says the drought in the West can be traced to 1999, "although the expanse and severity of the drought has changed over time." While the dry, warm forecast may not help ski areas in the Southwest, Dave Smith, director of sales and marketing at the Arizona Snowbowl in Flagstaff, isn't worried. He says the Snowbowl has had two below-par years due to mild winters -- open just 15 days in 2005-06 and 45 days in 2006-07. He's now counting on the fact that the Snowbowl hasn't had three bad years in a row. "We're in regular preparation mode and looking forward to a great season," he says.

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11)

OPEESA OFFICERS, BOARD, CONTACT INFORMATION

THIS NEWSLETTER IS PROVIDED BY OPEESA

OUTDOOR POWER EQUIPMENT AND ENGINE SERVICE ASSOCIATION. And read by over 600 OPE industry leaders in 12 countries around the world. For New Subscriptions Or To Unsubscribe, Please Contact: [email protected] Note: you are automatically removed from the list if your e-mail is returned undeliverable.

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OFFICERS

President, Glenn Beyerl, KPM Exceptional Distributors, Kenvil, NJ, Vice President, Rob Smith, RBI Corp., Charlotte, NC, Sec./Treasurer. Mike Joynt, Mississippi Valley Stihl, Peoria, IL, Immediate Past President, Tom Jones, President, Bryan Equipment Sales, Loveland, OH

DIRECTORS

Tim Gupton, Carswell Distributing, Winston-Salem, NC, Don Young, Gardner, Jacksonville, FL, Rob Zucker, Outdoor Equipment Distributors, Raleigh, NC, Keith DeShetler, Florida Outdoor Equipment, Orlando, FL, Alan Rondina, WJ Connell, Foxboro, MA, Todd Winstead, Tidewater Power Equipment, Virginia Beach, VA, Gary Bussell, Golden Eagle Distributors, Rocklin, CA, Robert Graham, Engine Warehouse, Houston, TX, Mark Vining, Roberts Supply, Winter Park, FL, Mfg. Representative, Jim Forrester, Encore Mfg Co., Beatrice, NE, Affiliate Representative, Kyle Larsen, GE Commercial, Sioux Falls, SD ----------------------------------------------------------------------For more information about OPEESA, please contact: Nancy Cueroni Executive Director 37 Pratt Street Essex, CT 06426-1159 Tel: 860-767-1770 Fax: 860-767-7932 Email: [email protected] Web Site: www.opeesa.com

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