End of a commodity, I mean era
Tecumseh Products Co. has announced its agreement to sell its engine and power train business to affiliates of Platinum Equity LLC for $51 million in cash. The company expects the deal to close during the fourth quarter of 2007. The Tecumseh, Michigan maker of compressors for HVACs will use the proceeds to payoff outstanding domestic debt and refocus on its core business in order to improve its financial performance.
Long known for their engines and less known for their Peerless transmissions, Tecumseh Products Company has been manufacturing hermetically sealed compressors, gas engines, and snowthrowers for more than 70 years. It’s own strategic planning may have been it’s downfall. As the self-proclaimed “leading private label manufacturer of small gas engines we specialize in customizing the style of our engines to provide a distinctive look to our customers’ products. The only way to be sure it is a Tecumseh is to look for our trademarks on the castings and stampings deep within the product,” Tecumseh may have commoditized itself into oblivion.
It’s important for you to be aware of this transaction because it has implications in every industry. Companies, products, and even people have a brand to nurture and develop. When you decide to hide behind other brands (or in the case of Tecumseh Products Co., inside other brands) you run the risk of becoming unrecognizeable; merely a component of some other brand.
I am not a marketing or branding guru. I also am not the one that knows what’s best for you or your company. I do know this, if your idea of a good time is working hard to build a company only to hide it in the corner until it can be valued for much less than industry averages, by all means, treat your products and customers like commodities.
