The History of The Toro Company
|By ELIZABETH LEXAU|
Onlookers were witnessing the first piece of mechanical golf course maintenance equipment. It was built by a young enterprise known then as the Toro Manufacturing Company.
This creation is just one example of the spirit of innovation demonstrated by Toro over its 94 years. Innovation has shaped the company throughout its history—from its roots as a tractor engine supplier, to its role today as a leading worldwide provider of turf maintenance equipment and precision irrigation systems. Innovation doesn’t Ingenuity doesn’t come out of the blue, however. Early on, company leaders understood that innovation is about people. It happens naturally when strong relationships are built, both with customers and employees. Loyal customers help the company identify new problems to solve and valued employees respond with creative solutions.
“If you genuinely value others and have an engaged workforce, they will be productive and they’ll go the extra mile,” says Michael J. Hoffman, chairman and CEO of The Toro Company in Bloomington, Minnesota. “They’ll develop strong relationships with customers and seek ways to solve their problems.”
He should know. As an employee who worked his way up from service, to sales, to CEO and chairman of the board over his 30 years with Toro, Hoffman understands firsthand what good mentorship can do for employees and what good employees can give back.
The core values of strong, lasting relationships, respect for employees and the environment to create the best products have guided The Toro Company through decades of change. They continue to do so today.
“The same values go throughout our company—whether you are in our irrigation business in Riverside, California, in our Adelaide, Australia facility, or our Rome, Italy facility,” says Phil Burkart, vice president and general manager of Toro’s irrigation division. “It’s in our DNA. It’s how we strategize and execute. It’s nice to be able to sing off the same sheet of music.”
Founded on July 10, 1914, The Toro Motor Company made engines and other parts for the Bull Tractor Company in Minneapolis. Mechanized farming was catching on and Bull Tractor needed a steady supply of motors for the tractors they sold to farmers. Toro maintained this exclusive relationship with Bull until 1917, when the U.S. entered World War I. During the war, Toro applied most of its resources to the war effort, manufacturing steering mechanisms for merchant supply ships.
This diversification helped the company weather a major change. In 1918, the Bull Tractor Company folded, leaving Toro on its own. Fortunately, Toro’s first president, J.S. Clapper, had a background in sales, a knack for identifying new markets, and a belief in building relationships -- all of which helped Toro survive this upheaval.
When the war was over, Toro turned its efforts back to mechanized farming. In 1920, the company was renamed the Toro Manufacturing Company and introduced an exciting new product for farmers, the To-Ro Cultivator (two row), which combined a cultivator and tractor in one. While advertisements stated that this new equipment could “replace two to four horses,” farmers weren’t always easily convinced. Tough economic conditions for American farmers meant variable success for Toro.
The year 1921 opened up a valuable opportunity that would chart a new course for Toro. The chairman of the greens committee for the prestigious Minikahda Country Club approached Toro, seeking equipment that would bring the technological advances of mechanized farming to the golf course.
The company was quick to fulfill this commission by producing the first piece of mechanized golf course maintenance equipment. This product helped launch a new industry in golf course and grounds maintenance and a new direction for Toro.
Clapper’s emphasis on building relationships helped Toro take full advantage of this new market. The company developed strong associations with a network of park and golf course managers. These relationships guided the company as Toro sought better ways to meet the diverse needs of these new customers.
The new direction was a huge success. Toro continued to introduce turf maintenance products and improve on their designs. By 1928, the company began shipping their products worldwide. During these prosperous years, Toro was still developing its identity, but clear patterns were emerging. Relationships were at the core. Clapper himself walked the factory floors, seeking advice from his employees on how products and systems could be improved upon.
The foundation was set. The company’s core values had become strong guiding forces. These values would help Toro weather many challenges ahead. One of these was the Great Depression. In 1929, the company went public, offering its first common stock at $1.40 per share. Only nine months later, the stock market crashed.
But while other companies floundered, the crash was only a temporary setback for Toro. Early investments in relationships had paid back with a loyal customer base, a solid reputation, and a talented and dedicated workforce. This helped Toro thrive during one of our nation’s most trying times.
During these years, the company unveiled the Toro Professional, the first 76" professional unit. It also introduced its first power mower for home users. This launched another new direction for the company into the consumer market.
World War II brought a temporary interruption as production turned away from mowing equipment to tank and cannon parts for the war effort. But the end of the war brought still another turning point for Toro. In 1945, three young veterans and college buddies, David Lilly, Robert Gibson, and Whit Miller, put their minds and dollars together and bought the company.
Energy, enthusiasm, and expansion characterized Toro’s post WWII years. The company acquired Whirlwind, one of the pioneers of the push rotary mower, in 1948. In 1951, Toro introduced the first snow thrower, the Snowhound. By now, sales, had exceeded $7 million.
During the ’50s and ’60s, under the leadership of President David Lilly, the company continued to roll out one new product after another, perfecting its rotary mowers, snow throwers, and other products for professionals and home users. Lilly continued to recognize the value of employees in generating new ideas. As Clapper had before him, he often walked factory floors, seeking input from those on the front lines.
The ’60s brought another turning point, when the company entered the underground irrigation market with the acquisition of California-based Moist-O-Matic. Innovation led to success in this field as well. The company received a number of new patents, eventually making Toro the leader in golf irrigation.
Lilly retired from his role as president in 1970 and David McLaughlin took the post. By now, sales had exceeded $50 million. The company changed its name to The Toro Company in 1971, and a new era of expansion and acquisition was underway. By 1979, sales reached over $350 million.
Near disaster . . . and an amazing comeback
The next few years offer an important lesson on how quickly a thriving company can be undermined by both internal and external forces. For Toro, several strategic errors, including over-expansion in the undependable snow thrower market and greater reliance on mass merchandising, were among the internal forces that set the stage for serious trouble. Weather and the economy were the external players.
Two years of almost no snow, along with a severe recession, brought the company to a crisis state in the early ’80s. Sales dropped by half and Toro suffered devastating losses.
In 1981, Ken Melrose was named president and went to work with company executives to determine how to restore Toro to its former glory. He studied Toro’s strengths and liabilities. He also identified the values that had made it so successful. Then he acted quickly.
“We had gotten off track in the ’70s,” says Hoffman. “It almost bankrupted us. But Ken reconnected us to our core values.”
Cuts were made. Better inventory systems were put in place to prevent overproduction. The company reduced emphasis on snow throwers and shifted attention back toward the commercial turf market. This helped balance a portfolio that had relied too heavily on the unpredictable consumer market.
By the end of 1983, sales were rebounding. Acquisitions continued but were now more aligned with the company’s core business. Among the purchases were Wheel Horse in 1986, Lawn Boy in 1989, James Hardie in 1996 (which launched the Irritrol brand), and Exmark in 1997. It was a long ride with many ups and downs, but by 1997, sales reached one billion dollars.
During the ’80s and ’90s, while the company was struggling to reshape itself from its headquarters in Bloomington, Minnesota, another struggle was going on across the country. In California, the irrigation division of Toro was experiencing its own growing pains.
Toro had enjoyed the number one spot in irrigation. They continued to bring to market innovations with leadership from top designers and specialists such as Ed Hunter, who came to Toro with the acquisition of Moist-O-Matic, and Dr. James Watson, a leader in the turf agronomic field. Both the residential/ commercial and the golf product lines grew. The irrigation division enjoyed an enviable leadership position in the industry. But in the ’80s and ’90s, the company experienced a series of quality issues and a lack of motivation that eroded their position.
Now, under the leadership of Phil Burkart since 2003, Toro’s irrigation division is enjoying renewed success. A number of key acquisitions and patents in the areas of centralized control, adjustable rotor technology, rain sensor technology, and drip irrigation, have helped Toro maintain its leading position in golf irrigation and led to resurgence in the areas of commercial and residential irrigation.
With more than five thousand employees and approximately $1.9 billion in sales worldwide, The Toro Company is proof that clear leadership, focus, and attention to core values can bring a company back from the brink of disaster and even send it leaping ahead.
A culture of creativity is clearly responsible for Toro’s original success and its comeback. It’s also the company’s greatest strength for meeting challenges ahead.
Innovation seems to be part of everyone’s job description at Toro. Toro’s Center for Advanced Turf Technology (CATT), a think tank whose members are responsible for studying current challenges, proposed solutions, and new technologies, is one example of the company’s investments in ideas.
“We don’t commercialize all ideas,” says Hoffman, “but the job of the CATT team is to keep these things percolating.” Ingenuity also drives Toro’s acquisitions. “Innovation isn’t exclusively developed within a company,” says Hoffman. “It’s also about finding the right partnerships on the outside and bringing them in. Rain Master is an example of an innovative company that we purchased in August. Turf Guard wireless monitoring technology is another example.”
Investing in people
Burkart uses his own career as an example of the investment Toro makes in people. “I came to Toro through an acquisition in 1986. While there were many challenges, there was always room for growth and support to do so. I've been lucky enough to be in the right places at the right times, but more importantly, I have had some great senior leaders mentor me along the way . . . and they continue to do so today.”
He says this experience is typical of the culture at Toro. “Our senior management believes in servant leadership,” says Burkart. “The company works to bring people along into supervision and management, providing training and support. While we are a Fortune 1000 company, we truly are a family company with Midwestern values.”
An investment in people pays off in ideas. “Not too far into our building you’ll see a wall filled with plaques,” says Hoffman. “These are the hundreds of patents our employees have applied for and received.”
And of course, these ideas pay off for shareholders. “It doesn’t begin with shareholders. It starts with employees and customers,” says Hoffman. “If you start with employees and customers and value them, you will serve your shareholders well.”