Briggs & Stratton Corporation Business Information, Profile, and History
Wauwatosa, Wisconsin 53222
We will create superior value by developing mutually beneficial relationships with our customers, suppliers, employees and communities. We will enhance our brand equity and leadership position by developing, manufacturing at low cost, marketing and servicing high value power for a broad range of power products. In pursuing this mission, we will provide power for people worldwide to develop their economies and improve the quality of their lives and, in so doing, add value to our shareholders' investment.
History of Briggs & Stratton Corporation
Briggs & Stratton Corporation is the world's largest producer of air-cooled gasoline engines for outdoor power equipment. The company designs, manufactures, markets, and services its products for various manufacturers worldwide. In the 1990s, with increased competition from both domestic and Japanese engine makers, the company has sold off its non-core technology holdings and has shifted jobs from Wisconsin to southern factories in efforts to cut costs.
Early 20th-Century Beginnings
In 1909, Stephen Foster Briggs was a young college graduate and inventor when he and Harold M. Stratton, a successful grain merchant, founded Briggs & Stratton Corp. The partners incorporated their company in the state of Wisconsin and with $25,000 began to produce a six-cylinder, two-cycle engine that Briggs had made while a student at North Dakota State College. They experienced tough times at first as their six-cylinder engine proved too costly for mass production. A brief foray into the automobile assembly business also failed, nearly driving the partners into bankruptcy.
Nevertheless Briggs had a knack for inventions, and in 1910 he received a patent for a new gas engine igniter, which included a novel mechanism that could start an automobile engine with a single spark. Although it was not an overwhelming success, the company had found its niche as a producer of electrical specialties for the booming automobile industry. The business soon took off, becoming by 1920 the largest producer of specialty lights, ignitions, regulators, and starting switches in the United States. Sales also shot up, approaching $4 million. Briggs & Stratton customers included all the major automobile makers, including Chevrolet, Dodge, Ford, Hudson, Hupp, Kissell, Maxwell, Nash, Studebaker, and Willys-Overland. The market for electrical specialties proved so profitable that it accounted for two-thirds of Briggs & Stratton's total business through the mid-1930s. In 1920, the company expanded operations into the East Plant, a five story concrete and steel building at 13th and Center Streets in Milwaukee. The plant employed 1,400 workers with an annual payroll of $1.5 million.
In the early years, Briggs & Stratton ventured into various new markets, often with little success. The production of refrigerators, crystal radios, headsets, radio tuners, and a device called the battery eliminator all were short lived. The company also tried making oil filters, air cleaners, and a series of stamped metal items, including key storage cabinets, soap containers, calendar banks, candy display stands, and coin operated paper towel dispensing cabinets.
In 1924, Briggs & Stratton reincorporated in the state of Delaware. That year, with profits soaring, the company discovered another profitable market: the automotive lock business. A new die cast automobile lock cylinder outsold competing brass models, and within five years Briggs & Stratton had become the largest producer of automotive locks with more than 75 percent of the total market. Briggs & Stratton's new BASCO auto body hardware, including door handles, inside knobs and levers, compartment locks, door locks, hinges, and keys also became standard features on many of the leading models of motor cars. For the ever-expanding automobile market, the company introduced in 1938 the Cushion Action Starter Drive, a new automobile self-starting mechanism that became standard on the Ford V8, Mercury, and Lincoln Zephyr. Its automotive division also provided supplies to airline, marine, and cabinet manufacturers.
In 1919, the company acquired the A.O. Smith Motor Wheel and the Flyer, a two-passenger buckboard-like vehicle. The Motor Wheel was a gasoline-engine driven wheel, designed for attachment to the rear of a bicycle, thus converting it into a kind of motor cycle. The wheel sold for about $90 and could get approximately 100 miles per gallon. Briggs & Stratton had high hopes for sales worldwide and tried to market the Motor Wheel in Spanish-speaking countries and in Asia where it could also be used on rickshas. When sales proved disappointing, Briggs & Stratton re-engineered the Motor Wheel to produce the first American motor scooter. Despite being one of the least expensive automobiles on the road, the Flyer could not compete with the Ford Model T and other popular models. Only 2,000 Flyers sold between 1920 and 1923. In 1924, the Motor Wheel and related items were sold off.
The company soon became successful, however, in the engine manufacturing business by producing a stationary version of the Motor Wheel, which could power various kinds of equipment. In 1923, the Model PB engine was introduced, providing a popular and compact power source for washing machines, garden tractors, and lawn mowers. Production in 1925 of the overhead valve,
In 1928, Briggs & Stratton acquired the Evinrude Outboard Motor Company, which it sold less than a year later. Founders Stephen Briggs and Harold Stratton had differing views on the market potential for outboard motors. Stratton was against diversifying the company's products. Briggs, on the other hand, was enthusiastic, and he formed a new company, Outboard Motors Corp., with Ole Evinrude, a maker of outboard motors since 1909. The new partners merged Evinrude's company, Evinrude Light Twin Outboard, with Lockwood-Ash Motor Co. and purchased the Evinrude Outboard Motor Co. from Briggs & Stratton. Briggs served as chairman and Evinrude as president.
Success as a producer of electrical specialties and small engines proved a boon for the company's fortunes during World War II. Briggs & Stratton quickly became one of the nation's 200 largest military suppliers, producing everything from detonating fuses and artillery ammunition, to ignition switches for airplanes and airplane guns. The company also profited as a supplier of engines for electric and radio generators, pumps, compressors, ventilating fans, saw rigs, mobile kitchens, repair shops, emergency hospitals, and water purification equipment. The war effort proved so lucrative that between 1938 and 1944 net income increased six-fold, from $785,000 to more than $6,000,000.
Postwar Success with Lawn Mower Engines
Following the war years, Briggs & Stratton, already the biggest producer of small gasoline engines, pursued a greater share of the market for lawn and garden equipment caused by the postwar boom. With the rapid suburbanization of America, the Briggs & Stratton name became virtually synonymous with the lawn mower. The rapidly growing market for powered home use equipment also stemmed from the appearance of inexpensive rotary lawn mowers, powered by relatively lightweight two-cycle engines. Briggs & Stratton's original four-cycle engine, weighing about 40 pounds, was too cumbersome for lawn mowers and garden equipment. As a result, the company introduced in 1953 aluminum die cast engines with chrome plated pistons. These were not only lighter than competing models but also could withstand greater engine pressure and temperatures. In 1954, Briggs & Stratton patented its new die cast technique for the production of four-cycle engines, which rapidly became the industry standard. The company subsequently filed a patent infringement suit against the Clinton Machine Company, one of its major competitors. Briggs & Stratton eventually lost the case, allowing the industry to freely use the newly developed die cast process. In 1955, Briggs & Stratton opened a new plant in Wauwatosa, Wisconsin, to keep pace with rising demand for the aluminum engines. The plant was expanded in 1967 and again seven years later to increase production.
In 1948, Briggs resigned to join Outboard Motors Corp., the company he helped found. Briggs had been president of Briggs & Stratton from 1909 until 1935 when he became chairperson. While with the company, Briggs had received about 60 patents for various inventions, mostly for lighting switches and locks and their mechanisms produced for the automobile industry. Later, at Outboard Motors Corp. he would receive patents for engine components, including a starting circuit, valve lifters, and a valve actuating mechanism that could be mechanically self-adjusted.
Briggs was succeeded by Charles Lyons Coughlin, a fellow electrical engineering student who had known Briggs at North Dakota State College. Coughlin had joined the company in 1910, but left in 1918 for the Ladish Drop Forge Company. In 1923, he rejoined Briggs & Stratton as vice-president and general manager. He became company president in 1935 and later chief executive officer and chairperson in 1970.
Coughlin's leadership brought Briggs & Stratton rising profitability. Net sales more than doubled from $40 to $90 million between 1953 and 1959. By 1965, sales volume had risen to a record $105.1 million. Briggs & Stratton's profitability stemmed from a conservative approach in sticking with its two principal lines of manufacturing, the production of small air-cooled gasoline engines and the production of automobile parts. The company also benefitted enormously from a market that was not big enough to attract major competition. In 1966, Forbes magazine estimated that 90 percent of its sales were in "small engines, used mostly in power lawn mowers but also in air compressors, pumps, generators, etc." The remaining ten percent were in auto locks and switches.
In 1970, Vincent R. Shiely was named president of Briggs & Stratton. Shiely had joined the company in 1959 as administrative vice-president, later becoming executive vice-president in 1963. Shiely stayed with Briggs & Stratton's conservative approach, which continued to pay impressive dividends. In the 1970s, net sales shot up from about $212 million to almost $591 million from 1973 to 1979. The company's purchase of a manufacturing plant in Milwaukee from the Square D Co. expanded its production capacity for various components, and brought new facilities for research and development, engineering, and sales. The Burleigh plant, built in Wauwatosa in 1955, was also expanded to keep pace with demand for Briggs & Stratton engines. In 1976, Shiely became the company's chairperson and, by the time of his death in 1976, was also chief executive officer.
Following Shiely's death, Lawrence G. Regner was elected to the chair, and Frederick P. Stratton, Jr., became president and chief operating officer. By 1980, Briggs & Stratton remained unrivaled as the world's lowest-cost producer of small engines. The company enjoyed rising profits while selling motors to power-equipment makers at prices they could never match if they tried to produce their own. Among Fortune 500 companies, Briggs & Stratton ranked 405th in sales but 94th in profit margin (8.2 percent) and 44th in stockholders' return on equity (23.5 percent).
Competition from Japan in the 1980s
For all its success, however, the company was soon on the run from Japanese competitors. "In many ways," said a reporter in Forbes in 1986, "Briggs & Stratton was a sitting duck." Big Japanese producers, Honda in particular, began targeting the small engine market after sales for motorcycles peaked in the early 1980s. In 1984, Honda reportedly spent $12.5 million advertising its lawn and garden equipment, fully 20 percent of the industry's total advertising budget. Honda's move into the small engine market came at a bad time for Briggs & Stratton. In the 1970s, a weak dollar had boosted the company's market share worldwide. However, a recession and a strong dollar in the early 1980s allowed such competitors as Honda, Kawasaki, Suzuki, and Mitsubishi to make inroads by supplying U.S. equipment makers with engines at lower cost.
For the most part, due to its overwhelming market dominance and low production costs, Briggs & Stratton fended off the competition. Despite a strengthening dollar, the company retained its markets in Europe but lost considerable ground in Asia as its cost advantage disappeared. Its exports precipitously dropped from 25 percent of sales or $179 million in 1980, to 14 percent of sales or $99 million in 1985. In the United States, Briggs & Stratton relied on low manufacturing costs to beat out Japanese producers in the engine market itself. However, the Japanese were quick to provide more sophisticated engines aimed at the higher-priced segment of the market where Briggs & Stratton's cost advantage was less overwhelming. In response, the company produced a slew of new products, including an improved line of its basic 3.5 and four horsepower engines introduced in 1985, as well as a wholly redesigned line of other engines. The company also doubled spending on engineering and research and launched a $2 million consumer advertising campaign to bolster its brand name.
In addition to trying to maintain market share, Briggs & Stratton concentrated on cost reduction to ensure its position as the industry's low cost producer. Labor costs, which accounted for 50 percent of total expenses, also were 50 percent higher than those for the Japanese. Briggs & Stratton's ability to remain competitive with this considerable cost disadvantage reflected its remarkable efficiency. In 1983, the company experienced a three-month strike to win additional flexibility to remain competitive. Also during this time, Briggs & Stratton opened a highly automated nonunion engine plant in Murray, Kentucky, which required far fewer employees than at the main engine facility in Wauwatosa, Wisconsin. The new plant provided not only significant savings in labor costs, but greater flexibility with which to experiment with new manufacturing techniques.
None of these efforts, however, produced an immediate payoff. In 1985, earnings dropped 31 percent from their $49 million 1980 high, operating margins fell from 13.8 percent to 10.8 percent, and return on equity from 22.3 percent to 12.1 percent. The big difference occurred in sales volume, which declined a precipitous 30 percent since 1980.
In 1986, George A. Senn was elected as Briggs & Stratton's fifth president. Senn had joined the company the year before as an executive vice-president. When he resigned in 1988, Richard E. Marceau was elected president and chief executive officer. Marceau had risen through the company, first as human resource director and then as vice-president for administration. In 1991, Marceau retired, and Frederick Stratton Jr., grandson of co-founder Harold M. Stratton, assumed the office as president.
During this five-year transitional period, the company's fortunes continued to waver. In 1989, Briggs & Stratton suffered its first major loss in more than 50 years, incurring a $20 million net drop in income. The company continued aggressive efforts to improve its position in the industry. Capital expenditures in 1989 totaled a record $79.5 million, including spending on new equipment and tooling for its new nonunion assembly plant in Poplar Bluff, Missouri.
What looked like a decline in the 1980s was reversed in the early 1990s as Briggs & Stratton began recovering market share from such formidable competitors as Kawasaki and Suzuki. A boost in productivity stemmed partly from lower raw material costs and lower operating expenses. Moreover, Briggs & Stratton benefitted from a weakening dollar relative to the yen as well as from substantial increases in product development spending, which grew from 1.5 percent of sales in the early 1980s to 2.5 percent of sales in 1992. The company's two nonunion plants also were manufacturing engines more cheaply and efficiently.
Briggs & Stratton continued to strengthen its market position, an impressive feat given the stiff competition that now characterized the small engine industry. The company faced tough domestic competition from Tecumseh Products Company, Kohler Co., Kawasaki Heavy Industries, Ltd., and Onan Corporation. Two domestic lawnmower makers, Lawn Boy Inc. and Honda Motor Co., also produced their own engines. Eight Japanese small engine manufacturers were worldwide competitors, the largest being Honda and Kawasaki, while Italy's Tecnamotor S.p.A., owned by Tecumseh, was a major competitor in Europe.
In 1992, Briggs & Stratton reincorporated in the state of Wisconsin. At this time, engines, parts, and related products accounted for 93 percent of Briggs & Stratton's total sales, a percentage that had changed little since 1983. The company's chief market continued to be air-cooled four-cycle gasoline engines in the two- to 18-horsepower range. The lawn and garden equipment industry, holding remarkably steady since the early 1980s, accounted for 86 percent of its engine sales. Manufacturers installed Briggs & Stratton engines mostly on walk-behind mowers, riding mowers, garden tillers, and shredders. Briggs & Stratton engines also powered snow throwers, garden tractors, lawn edgers, vacuums, generating pumps, pressure washers, and various other equipment. The majority of its engines were still produced at the main engine facility in Wauwatosa, Wisconsin.
The engines were sold in the United States and Canada by Briggs & Stratton's own sales force. In overseas markets, the company relied primarily on independent representatives, assisted by a network of regional offices in Norway, Switzerland, the United Arab Emirates, Singapore, and Milwaukee. Exports accounted for 21 percent of all engines and parts sales in 1992, up from 14 percent of sales in 1984. One reason for Briggs & Stratton's success had been its emphasis on customer service, which included a worldwide service network of over 35,000 authorized service dealers through which it sold replacement engines and service parts.
1994: Jobs Shifted to Southern Plants
Despite its ability to maintain market share in the face of strong competition, the company remained focused on increasing profits and made plans for additional cost cutting measures. The corporation had adopted an Economic Value Added business philosophy in 1990, which emphasized earning a cash return that was higher than the cost of capital. In the early 1980s, Briggs & Stratton had maintained a ratio of operating capital to net income of three to one, but this ratio had slipped to nine to one by 1990. Efforts to reduce this ratio included cutting manufacturing costs, increasing productivity, boosting quality, and ensuring on-time delivery of products.
Having already built two plants in the South which had lower labor costs and a more productive work force, Briggs & Stratton made the decision in mid-1994 to move 2,000 jobs from Wisconsin to three new plants in the South within the next four years. These would be located in Statesboro, Georgia (a $75 million, 800 employee plant); Auburn, Alabama (a $30 million and 500 worker site); and Rolla, Missouri (a $38 million, 600 employee facility). The southern states offered incentives which included tax abatements and worker training programs, in addition to a wage scale, given a lower cost of living, of almost half that found in Wisconsin. The news hit the Milwaukee area hard, and the United Paperworkers International Union, which represented Briggs & Stratton's workers there, became increasingly antagonistic toward the company. Corporate officials expressed sympathy for the workers but maintained that there had been no choice but to take such a step. Fortunately, by 1996, as demand for the company's die-cast products suddenly surged, Briggs & Stratton was able to add 1,000 workers to its Wauwatosa plant, half of which had been idle since the lay-offs.
In early 1997 the company and the U.S. Environmental Protection Agency reached an agreement to comply with new, stricter emissions standards for the small engines the company manufactured, a challenge faced by all such manufacturers. These new engines were to be phased in between the years 2001 and 2005. Briggs & Stratton expected to spend a significant amount of money complying with the standards, though it already had some engines in production which were in compliance.
Divestitures in the mid- and late 1990s helped streamline Briggs & Stratton. In February 1995, the company spun off its Strattec Security Co. subsidiary, leaving the automotive lock and key business for good. In July 1997, it sold its gray iron foundry, and a year later its ductile iron foundry, both of which would continue to produce camshafts, crankshafts, and other products for the company under their new owner, JTC. In July 1998, the company also sold its Powercom-2000 subsidiary.
In late 1998 Briggs & Stratton and the United Paperworkers held talks aimed at reaching common ground, which purported to yield a new spirit of cooperation. As a result, the union gave up a piecework pay system in exchange for receiving increased retirement benefits. As the company's Wisconsin work force was aging, 500 workers had already taken an early retirement package in 1996. An immediate sign of the improved union-management relationship was the announcement that some 71 jobs would be shifted from the South back to Wauwatosa. Some analysts suggested at this time that the company's southern plants had not delivered the cost savings initially anticipated, though the company maintained that it was still in the process of getting the new plants up to capacity.
As Briggs & Stratton reached the end of the 1990s, it remained the world's largest manufacturer of small gasoline engines. Moreover, the streamlining and focusing of energies that had followed the adoption of the Economic Value Added model were showing some signs of strengthening the company's bottom line.
Principal Subsidiaries: Future Parkland Development Corporation.
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