Robert Bosch Tool Corporation
Bosch’s North American leadership plans to invest $360 million across their 100 North American locations. More than $250 million will go toward mobility solutions. They do expect on-going challenges due to industry-wide headwinds, including the semiconductor shortage. Investment will also target technology integrated into the manufacturing operations that rely on AI and the Internet of Things (IoT). These investments in AI and IoT will also help Bosch move closer toward meeting their goal of carbon neutrality.
Bosch is opening a huge factory to produce semiconductors in Dresden, Germany, about six months ahead of schedule in order to help with the worldwide shortage of semiconductor chips. The plant will begin supplying chips for Bosch power tools in July, and for the automotive industry in September. For Bosch, the $1.2 billion factory is the largest single investment in the company’s history, but Bosch says it is badly needed because the lack of semiconductors is creating a production bottleneck that needs to be solved. The factory is driven by artificial intelligence (AI) and even has a “digital twin,” a computer animation in which employees can move around with virtual reality glasses without entering the real building. When production begins the factory will employ 250 people; once the factory is operating at full capacity it will need 700 employees. Most of the employees will be extremely well-trained semiconductor specialists.
Chairman and Chief Executive Volkmar Denner will step down at the end of the year after a decade at the helm in order to focus on research. He will be succeeded by Stefan Hartung, currently the head of the automotive parts business unit. Chairman Franz Fehrenbach, who has been with Bosch nearly 47 years, will also retire at the end of the year; his successor will be current finance chief Stefan Asenkerschbaumer. Bosch, which currently employs nearly 400,000 people globally, said the moves were just part of a generational change that was planned well in advance. Denner has been overseeing the transition to electric vehicles and the advent of IoT in manufacturing.
Stanley Black & Decker
UBS Global Industrials and Transportation Conference:
The Tools business is booming, up 45% organically in the first quarter. Organic growth looks to be close to that, or a little less, in the second quarter, where they will be measured against weaker comps from Q2 2020 when they were scrambling to deal with pandemic supply chain challenges and widespread retail closures.
It’s possible that the second half of the year will be very challenging as they will be facing very strong comps from Q3 and Q4 last year.
When they exercise their option to acquire MTD they will add another $2.6 billion+ in revenue.
They believe they are very well positioned to benefit from all the trends that accelerated during the pandemic including a reinvigorated focus on home and garden.
Black & Decker, a brand they have not really invested in over the past 20 years, remains a very relevant $1 billion worldwide business. The team has been working on revitalizing that brand for almost a year, driving it more towards youthful buyers, ecommerce and lifestyle. They believe they can double sales, turning it into a $2 billion brand.
DeWalt is a $5 billion+ professional brand and the largest professional power tool brand in the world. DeWalt is also an aspirational brand for DIYers and for tradesmen. Craftsman is a legendary brand in the US and covers four markets: construction, DIY, industrial and automotive repair. Craftsman is about a $1 billion brand now.
In the first half of 2020 they did lose some share and other brands gained share at their expense, largely due to their lack of inventory compared to competitors. When the market began rebounding strongly they had much less inventory in the pipeline than some competitors, so buyers went where they could get product. But during the past three quarters they have grown the tool business $1.8 billion and their estimates show the second quarter this year for the tool business should come in at upwards of $1 billion.
They currently have the capacity to have a $7 billion second half if the demand was there, including batteries, semiconductors, production capacity, etc.
Modest inflation makes it harder to raise prices; when inflation is surging, people are more understanding about increases in prices.
Power tools is an installed base game; people get married to their battery system and stick with their brand. That’s why it’s a good idea to have multiple brands that appeal to different users. Right now the big players have access to battery cells, but finding enough cells is challenging for smaller players. The auto industry is also impinging on supplies.
Some of their incredible growth in ecommerce is definitely cannibalizing sales in traditional channels but they have many initiatives in place that will drive ecommerce sales well beyond cannibalization.
They are using Germany as a test market for how they can go direct to the consumer in the tool business. They are also testing that premise in Japan. Both Germany and Japan are markets where they believe they are underpenetrated. They have no plans or intentions to do any direct-to-consumer sales in North America or other major markets where they have great channel partners and a great presence.
SB&D is seeking partnerships with battery and chip manufacturers to ease pressure on their supply chain, according to a report in the Wall Street Journal. Reportedly, they have a tentative partnership with a South Korean battery maker for a production line that will start manufacturing batteries in Malaysia in 2022 and are also in talks with other Asian and US businesses about potential partnerships. Of the $500 million SB&D plans to spend on capital expenditures (CAPEX) this year, they estimate 10% to 15% will go into supply chain partnerships and other related initiatives. Prior to the pandemic they would have accounted for less than 5% of CAPEX.
SB&D quickly made Juneteenth a paid company holiday after President Biden signed the bill making June 19 a federal holiday to honor Freedom Day. Juneteenth, also known as Emancipation Day, celebrates the emancipation of the last enslaved people after the Civil War and is a symbolic date for racial equity for Black Americans, according to CEO Jim Loree. SB&D also made June 18 a paid company holiday this year as a “Day of Hope and Healing” to honor George Floyd and all those who have lost their lives to or been victims of violence.
CEO Jim Loree joined the World Economic Forum as part of a virtual global panel on jobs recovery. Topics explored included how governments support workforce development, how investments can support new job creation and policies that can help accelerate growth in the jobs of the future. Loree shared his opinions on the need for a skilled workforce to increase economic growth and help close the divisions in society that were exacerbated by the pandemic. He also discussed his views on how businesses and governments need to create comprehensive approaches that make gaining the skills needed to succeed today affordable, accessible and inclusive. The Jobs Reset Summit was a two-day event designed to mobilize the most influential leaders and organizations and get them to work together.
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