Briggs & Stratton Bankruptcy

A friend emailed this link to me.

BB

Ky.Allis wrote: Kind of ironic that this info is on an AC forum. Is it possible that the same thing happened when AC went out? It would not surprise me. Most of us would have done the same thing.

I replied re. this in

The reason why AC went out, occurred for similar reasons... Business, ie. management, plans, and processes were inappropriate with respect to change.

Let's say you're a Brontosaurus.  It's 105F, and thick-sticky-humid.  You stand in a swamp, eating the tops of trees, lay basketball-sized eggs in a nest the size of a 24x24 garage, and nothing comes near it, on account of 8 feet of water and lots of your long-necked friends.  The eggs hatch 90 days later, and your offspring start eating plants.  Within 100 days, they're capable of surviving the winter, when temperatures drop down to about 60F for 4 months.

A volcano erupts 12,000 miles away, sending billions of tons of ash into the upper atmosphere, and the sky grows dark.  15 days later, it's 50F.  What's left of your nest will not hatch, as it's too cold.  In another 50 days, the swamp is starting to freeze, and the leaves have all wilted, so there is no more food.  You don't know which way, or how far it is, to another swamp, but if you DID start walking, and found one, you'd find that it too was wilted and gone, with other brontosaurus nests raided and gone.  You could also attempt to eat other species, perhaps even other brontosaurus, but you'd find that process to be incompatible with your physical structure- You're huge, heavy, and slow... so you have no ability to attack and kill, and also to bite, swallow, and digest.  You could eat rocks, which although full of minerals, do not posess the kind of energy necessary to fuel a 48,000lb body with an 80-foot tail... and with no substantial source of fuel, it becomes impossible to maintain enough body heat to defend against smaller creatures less affected by the falling environmental temperature (like... those that developed FUR... and have 4-chamber hearts, smaller bodies, etc).

The reality here is that business economics is no different than basic survival:

When the environment changes, you have ONLY THREE CHOICES:

Move, Adapt, or DIE.

Moving, and adapting take resources... and unfortunately, the time of indecision, is a timeframe in which resources are continuing to be used, and in most cases, those resources are being used FASTER than previously assumed, because the changing environment is applying more strain.  This means that... the DECISION TIMEFRAME between MOVE and ADAPT... can become PIVOTAL in the success of avoiding DIE.

Like driving a car... the choice of stop or dodge may both be valid, but the TIME required to choose wether to STOP or DODGE, may be so short that by the time the decision is made, NEITHER will work... and this is the reason why keeping alert (fast reaction time) and leaving lots of stopping distance (decision time) is so desirable on motorway safety.

Thus... HE who Hesitates... is LOST.

Allis-Chalmers, like many other companies, was consumed by it's own complex amalgation... in common English:  Too many irons in-the-fire, and a clear case where the upper end of management was too focused on one side of the economic model (money going in one direction) than the other (goods and services in the other).  It placed itself into a position of overdependency on the current environment, and had insufficient resources in reserve, to provide for reaction time, choosing time, and action time, to survive.

The giveaway, is 'Mergers and Acquisitions'.  When ANY company is involved in a merger or acquisition, it is because of ONE REASON ONLY:  Weakness.

A company that is strong, never merges, and is never acquired.

A business that is 'owned' by something other than itself, is inherently weakened, because it's focus is no longer in that of it's primary economic model (customer transactions => cash flow), and instead, on maintaining the desire of the 'ownership' (yielding dividends).

The reason for this, is that Yielding dividends is a short-term goal... it occurs on a regular (quarterly, biannually, annually, etc) basis.  As a result, it is frequent that middle and upper management of a company become short-sighted, and thus, are attracted to taking actions that look 'good' on the next Q report.  While it would be great to post a 10 million profit for 2Q, there's more than one way to accomplish that-  first, is to generate a 20 million in product sales (at 50% profit), the other is to sell off your foundry for 8 million, fire 12 million in experienced labor, and outsource all that production as Just-In-Time contracting for 3Q.

The third option, is to post no change in sales, and post no dividends, but remain on a steady keel for another several years.  What makes more sense?

A LONG TERM vision doesn't focus on short-term yield... it keeps the basic economic model in place (good/services one way, money in the other), and stays focused on it, while looking to utilize the company's resources (particularly, it's scrap, surplus, and waste) into marketable product and resource.

My brother owns a couple of go-kart rental tracks. The karts come with Honda motors. When they fail, which doesn't normally take long, he replaces them with the Predator motors from Harbor Freight. $400 for a new Honda, $99.00 for a new Predator. 

Same brother with the go-karts bought a new Ferris mower a few years back (NICE mower BTW), he chose the Briggs over the Kawi. The commercial duty Briggs is a nice piece. Hard to lump all Briggs branded stuff together. If a company spec's a cheap motor thats what they'll get.