Power Tool Industry November 2021
Robert Bosch Tool Corporation
Robert Bosch North America is teaming up with Carnegie Mellon University to explore spatial computing in manufacturing environments. The $3 million collaboration will be trying to determine how augmented reality (AR), virtual reality (VR) and extended reality (XR) can be used in the Industrial Internet of Things (IIoT) to make factories and manufacturing plants safer, more reliable and more productive.
Stanley Black & Decker
Q3 Sales rose 10.7% to $4.26 billion. Tools & Storage segment sales rose 14%.
Q3 Conference Call with Analysts:
Q3 organic growth of 10% was driven by 13% organic growth in Tools & Storage due to what they called the strongest demand environment in history.
Tools & Storage delivered record results with 14% revenue growth. Volume was up 11%, price was up 2% and currency contributed an additional point to growth.
Power Tools delivered 11% organic growth across their brands. Hand tools, accessories and storage grew 16%, fueled by high demand and new product launches for Craftsman and Lenox.
Volume, price, productivity and benefits from innovation were more than offset by accelerating transit costs incurred to meet the strong market demand. Additionally, rising commodity inflation and new growth investments related to digital marketing and adding to the sales and support staff all added costs.
All regions delivered organic growth with North America up 9%. North American retail grew 6% as point of sale demand remained high and channel inventory remained below historic levels.
They made a decision to incur higher expediting costs in order to secure components and get products where they need to go in order to meet demand and fulfill customer needs. Data analytics gives them visibility into every container on and off the water so they can prioritize and expedite the most critical items, which means paying premium freight.
They could expand their power tools supply chain up to 25% if demand warrants because they have been able to secure commitments for enough battery cells, electrical components and chips.
They are using price increases, surcharges and productivity measures to help offset the additional expenses. They believe these actions will help them normalize margins in 2022. They anticipate a 4% to 5% base price increase overall during the fourth quarter that will roll forward into 2022. They are also adding a 5% surcharge in North America in Tools & Storage. That should produce a 100% recovery on the price side.
They will be “doubling down” on their investment in innovation and new product commercialization in order to support the largest new products pipeline they have ever had across all their major product lines and end users.
Over the last 12 months they added 1,300 new employees with deep domain expertise and technical knowledge in critical areas, including sales, engineering, product management, brand, industrial design, ecommerce and end user insights.
The new PowerStack battery from DeWalt is 25% smaller and 15% lighter than the comparable 20-volt 2 amp battery and reportedly delivers 50% more power with two times the charge cycles. It will be their longest lasting compact battery and is compatible with the DeWalt 20-volt system. PowerStack will be targeted at Pros and carry a 10% to 20% premium price tag. PowerStack batteries will begin shipping in the fourth quarter of this year. They estimate annual growth potential will be in hundreds of millions.
This year they are opening two new power tool plants and one new hand tool facility in North America. With the addition of these three new facilities, they will have tripled their North American capacity since 2016. These new manufacturing plants will be accompanied by a parallel regional development of their local supply chain base to enhance local market sourcing and cut down on the time it takes to get products to market.
They have co-invested with key battery suppliers to secure dedicated capacity for the next several years. They are also adding new qualified suppliers to diversify sourcing and working to increase inventories for battery cells.
Their updated full year 2021 guidance calls for organic revenue growth of 16% to 17%. They expect consistent revenue for Tools & Storage across Q3 and Q4, which represents total growth in the mid-to-high 20s versus the comparable periods in 2019.
They cut their guidance for the year due to rising costs in several areas. Key commodity inputs, including steel resins and purchase components, added an incremental $100 million in costs during the quarter.
Container and transportation costs rose dramatically over the quarter. Average container spot prices are now nearly seven times what they were paying earlier this year. Average transit time from Asian suppliers to the North American manufacturing facilities and distribution centers have more than doubled from approximately 40 days to 85. Combined, these container and transit cost impacts added $130 million to cost pressure.
They raised their full year commodity and supply chain headwinds to approximately $690 million and expect approximately $600 million to $650 million of carryover cost headwinds for 2022.
They will be managing their new products to make sure they are pricing them at the right premium that is justified by the degree of innovation.
They expect to close on their acquisitions of MTD and Excel late this year or early in 2022. The two companies are both complimentary to their existing outdoor business.
They plan to use the acquisitions to build on their existing position in retail and expand their sales in the pro-dealer network. MTD has approximately 1,500 dealer locations. Excel exclusively distributes through its 1,400 outlet dealer channel, which is largely geographically complimentary to MTD’s dealers. They also see an opportunity in the $4 billion high margin parts service segment.
SB&D celebrated their fourth annual Maker Month in October with a series of promotions designed to recognize and honor those in the skilled trades. This year’s Maker Month introduced several new initiatives, including a spotlight on four professionals in different trades, including construction, manufacturing and woodworking. They held weekly social media giveaways and allowed nonprofits to apply for their “Empower Makers” Global Impact Challenge designed to promote vocational skills training programs with the goal of creating more than 3 million additional skilled workers.
SB&D teamed up with Eastman Chemical to create a new line of sustainable power tools under the Black & Decker brand that uses Eastman’s Tritan Renew copolyester. The new line, called Reviva, is expected to be introduced in early 2022. The manufacturing process uses Tritan Renew material produced through a process known as molecular recycling that reduces the use of fossil-based resources and lowers greenhouse gas emissions, delivers the performance of virgin plastic materials and uses 50% recycled content.
SB&D CEO Jim Loree received a Lifetime Achievement Award from the Hartford Business Journal and CTO Mark Maybury received the Chief Technology Officer Award. The awards are presented to business executives in Connecticut who were nominated by the local business community. This year’s winners come from nonprofit, private investment, banking and manufacturing sectors.
SB&D was named one of Forbes 2021 World’s Best Employers, a list that is based on surveys from 150,000 full-time and part-time workers in 58 countries. SB&D ranked 252 out of 750 companies overall and number 11 in the “Semiconductors, Electronics, Electrical Engineering, Technology, Hardware & Equipment” category. Forbes partnered with market research firm Statista on the survey, which considered every aspect of an employee’s experience, including working conditions, salary, potential for growth and diversity.
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