Power Tool Industry December 2020
Robert Bosch Power Tools
RBPT introduced RefinemySite, a digital construction site platform that allows teams to plan, communicate and document jobsite changes in real time. The easy to use cloud-based software utilizes the Lean Construction Institute’s (LCI) Last Planner System. Lean management principles improve productivity by empowering team members to optimize processes and eliminate inefficiencies and makes the type of information that has traditionally ended up on sticky notes and whiteboards easily accessible via the cloud on computers and smart devices that can be accessed by all team members in real time from any location.
Stanley Black & Decker
Robert Baird Global Industrial Conference:
They have been experiencing consistent trends that confirm their estimates of 11% organic growth for Tools & Storage during the fourth quarter. US markets continue to be strong.
They are not seeing the same type of restocking impact that they saw during the third quarter. The industrial side of Tools & Storage is lagging behind.
They feel the cost reductions they implemented have given them about a $125 million “positive tailwind” for 2021. Currency has been stable and there is only minor inflation in commodities.
They don’t expect a change in the China tariffs with the new Biden administration, but if there is a change, they expect it to be a positive one.
They think they will be in an environment of renewed consumer activity based around the home at least through next summer. Based on comps to the first and second quarters of this year, they expect robust growth rates for Tools & Storage for the first half of 2021. Back-half comps will be more difficult to exceed, because of the 10% to 11% growth they expect this year. Overall, they believe their businesses are positioned to grow mid-single digits in 2021.
They now believe the Craftsman brand has the potential to be a $2 billion to $3 billion brand on an annual basis, much more than the $1 billion in annual revenue that was their original goal. It will take time to reach that goal, but they have many products that will start to roll out in 2021 and 2022.
Right now, they are going to focus on the potential to grow Craftsman in the US with partners Lowe’s and Amazon but going forward they will be investigating whether the brand could resonate in other markets such as the U.K. or Australia.
They believe Black & Decker has the potential to be an amazing global ecommerce brand that could go well beyond tools and do well in many countries over time. They think B&D will be primarily a DIY and possibly a tradesman brand in certain countries, including the U.K. With Jeff Ansell now leading their efforts for B&D, they have tremendous confidence in the brand over the long term.
All of their domestic manufacturing facilities are now producing above pre-pandemic levels, as are all their global facilities. In almost every category they are currently running at max capacity, and they expect that to continue for the next six months to a year.
They will execute their option to purchase the remainder of MTD next summer, and perhaps close on the transaction in October.
Morgan Stanley’s “Life After Covid” Conference:
This conference was for Morgan Stanley clients and employees and was referred to as the work-from-home track; it was not open to the press. SB&D was represented by Frank Mannarino, the president of the Power Tools Group, and Allison Nicolaidis, the president of the Hand Tools & Storage group.
Mannarino said that they are seeing more and more end users doing projects either at home or on job sites and are seeing sustained, really strong demand.
Some of the key categories where they’re seeing strong demand for power tools include all the woodworking categories, including sanders, jigsaws, circular saws, miter saws and table saws, which are purchased both by pros and some homeowners. They are seeing strong demand across both the DeWalt and Craftsman brands.
In Craftsman, they are seeing more end users going into the Craftsman V20 cordless system, and now have about 4 million battery packs in the field.
In their Black & Decker home products business, which is cleaning tools, they are seeing very strong demand for dust busters, steam mops and stick vacs, all in line with America’s new obsession with cleaning.
Nicolaidis covered outdoor, hand tools and storage and some power tool accessories, which she called an exciting category during the pandemic. Users range from typical do-it-yourselfers to a category she described as “ambitious enthusiasts” who spend a lot of money on outdoor power equipment, even though they are not professionals to Pros.
Some very traditional hand tool categories really took off for them in April and demand has stayed very high. Products include clamps, sawhorses and traditional handsaws. They also saw items like picture hanging tools and stud sensors, which are clearly DIY products, accelerate.
Power tool accessories performed at the “top of the heap” of all categories, including drill bits, saw blades, grinding wheels, etc. People bought new tools with accessories and bought new accessories for the tools they already owned.
They believe they have accelerated between three and five years of share shift from traditional brick and mortar to ecommerce simply because people are shopping from home.
They are very focused on ensuring they are servicing demand, making sure they have a phenomenal holiday season, with brick and mortar and online retailers building inventory to make it through the high sell-through anticipated in the fourth quarter.
In normal years they typically see volume slow down as they exit one year and move into the next, and they take plants down and liquidate a lot of inventory off their balance sheet. This year they are going to continue to run plants in order to gear up for the big spring selling season and Father’s Day.
Typically much of the process they go through related to promotion with their partners and distribution happens 9 to 12 months before anything hits the stores. The pandemic was an element of surprise in the middle of a promotional period. In the beginning everyone was very unsure whether there would even be a promotional period, or what the holidays would look like.
Their 12-volt XTREME platform and 20-volt ATOMIC platform have been very strong growth drivers and they will continue to build them out as they move into 2021. Dustbusters and other cleaning items not normally seen as big gift items are flying off the shelves.
They just launched the DeWalt ToughSystem 2.0 professional storage system, which consists of boxes that bolt together and also bolt to a cart that can be rolled on and off the jobsite. They are seeing great adaption from Pros.
They are also very focused on using technology to create longer product life and faster speeds for users.
Within their power tool business, the breakout of Pro to DIY is about 70-30. They have seen strong demand in DIY and a bounce back in the Pro business. They never saw a significant drop off in the residential professional market.
Drills and impact drivers are typically the entry ways into their platforms, because they are the key tools used for drilling holes and driving screws. Therefore, they know they have to have really good drills and impact drivers.
The plant they are currently building in Dallas to support the Craftsman business and a few other professional brands and mechanical tools is the biggest project they have going on now. Putting in the best and newest equipment and processes is much more efficient than retrofitting existing plants.
CFO Don Allan told the Hartford Courant that they see some relief but no big changes in tariffs in a Biden presidency. He said that if tariffs eased it could benefit the company to the tune of hundreds of millions of dollars and be a very significant positive. Right now the total cost of tariffs to the company is about $300 million on an annual basis. Price increases, moving production and other actions have helped offset the impact, but mitigation will take about three years. President-elect Biden has not yet detailed his plans, but said during his campaign that he would work with European and other allies to pressure China to change its behavior. President Trump’s tariffs were part of his “America First” economic policy to pursue bilateral trade agreements rather than free trade agreements negotiated by groups of nations, which he felt put America at a disadvantage.
SB&D has been pilot testing a new vocational leadership program (VLP). It’s a twelve-month training program to support workforce-enabled jobs, such as milling and tool shop operators, maintenance techs, and materials and manufacturing-focused positions. There are reportedly 20 million jobs currently open in manufacturing. Recruits to the program must be nominated and could be current employees, high school and college grads who are interested in the trades or others who will familiarize themselves with the concept known as Six Sigma, a set of techniques and tools used to improve business processes and practices. Learning is labor-intensive and requires a robust training schedule over a twelve-month period.
SB&D was named to the World Sustainability Index for the third consecutive year and the North America Index for the tenth consecutive year. SB&D’s Social Responsibility Strategy includes creating a more sustainable world. The Dow Jones Sustainability World Index recognizes the top 10% of companies within each industry globally, while the top 20% of companies in the US and Canada are included in the North America Index.
Trimble reported Q3 revenue rose 1.0% to $792.1 million, with North American revenue dropping 5% to $415 million. Trimble stated that their financial results for the remainder of 2020 will be impacted by continued global economic uncertainty due to the CV19 pandemic. Therefore, Trimble did not provide a financial outlook for the fourth quarter of 2020.
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