Briggs & Stratton Corporation

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Briggs & Stratton Corporation

12301 West Wirth Street
Wauwatosa, Wisconsin 53222
U.S.A.
(414) 259-5333
Fax: (414) 259-5313

Public Company
Incorporated: 1909 as Briggs & Stratton Corp.
Employees: 8,295
Sales: $1.04 billion
Stock Exchanges: New York
SICs: 3519 Industrial Combustion Engines; 7699 Repair Services; 3429 Hardware

Briggs & Stratton Corporation, headquartered in Milwaukee, Wisconsin, is the world’s largest producer of air-cooled gasoline engines for outdoor power equipment as well as locks for automobiles and trucks. The company designs, manufactures, markets, and services these products for various manufacturers worldwide.

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 shortlived. 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 autobody 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, however, soon became successful 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, ¾ horsepower, Model F series engine proved useful for a wide variety of industrial and agricultural equipment, including compressors, generators, and pumps. In 1931, Briggs & Stratton introduced a best-seller for washing machine producers, a small low-profile engine that could fit under washing machine tubs. This engine remained popular until 1936 when the Model WM (Washing Machine) engine rolled off the assembly line. The washing machine business was the company’s major market for engines until the Second World War.

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 chair 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.

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 South 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).

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. But 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. But 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 a 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 slip. In 1989, Briggs & Stratton suffered its first major loss in more than 50 years, incurring a $20 million net drop in income. The company, however, 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 company in decline in the 1980s made a strong comeback in the early 1990s as it 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 from substantial increases in product development spending from 1.5 percent of sales in the early 1980s to 2.5 percent of sales in 1992. Its two nonunion plants also were manufacturing engines more cheaply and efficiently.

Briggs & Stratton has continued to strengthen its market position, which is impressive given the stiff competition that now characterizes the small engine industry. The company faces 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 produce their own engines. Eight Japanese small engine manufacturers are worldwide competitors, the largest being Honda and Kawasaki. Italy’s Tecnamotor S.p.A., owned by Tecumseh, is a major competitor in Europe.

In 1992, Briggs & Stratton reincorporated in the state of Wisconsin. In the same year, engines, parts, and related products accounted for 93 percent of Briggs & Stratton’s total sales, a percentage that has changed little since 1983. The company’s chief market continues to be air-cooled four-cycle gasoline engines in the two to 18 horsepower range. The lawn and garden equipment industry accounts for 86 percent of its engine sales, a market which had held remarkably steady since the early 1980s. Manufacturers install Briggs & Stratton engines mostly on walk-behind mowers, riding mowers, garden tillers, and shredders. Briggs & Stratton engines also power snow throwers, garden tractors, lawn edgers, vacuums, generating pumps, pressure washers, and various other equipment. The majority of its engines are still produced at the main engine facility in Wauwatosa, Wisconsin.

The engines are sold in the United States and Canada by Briggs & Stratton’s own sales force. In overseas markets, the company relies 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 has been its emphasis on customer service, which includes a worldwide service network of over 35,000 authorized service dealers through which it sells replacement engines and service parts.

Approximately seven percent of Briggs & Stratton’s sales are currently in automotive locks. Unlike its early die cast models produced in the 1920s, the company now makes, sells, and services mechanical and electromagnetic locks for North American auto companies. Briggs & Stratton mostly produces locks for steering column ignitions, glove boxes, car doors, gas caps, and other items.

Briggs & Stratum appears well positioned to continue as a leading producer of small engines and automotive locks. The company, however, faces uncertainty over the development of national emission standards for lawn, garden, and other equipment powered by small air-cooled engines. The company is concerned that if the Environmental Protection Agency fails to develop emission standards by 1994, some states may adopt existing California provisions. Briggs & Stratton has noted that it could “tolerate a different standard for California, which accounts for about 5 percent of the U.S. market, but we would face difficulties if California and other states were on one standard and the rest of the country were on another.”