Power tool bosses also hate whiny leaf blowers. âIt always seems like when I take my week or two to go to my condo in Florida, and I go down there in the lounge chair at 10 in the morning, all of a sudden the landscapers come with their gasoline. motorized equipment â, says
Stanley Black & Decker
CEO Jim Loree. “And it’s like I might as well just stay upstairs.”
Tools that run on batteries are quieter and less harmful than those that use gasoline, and the shift to them is well underway. Loree says more than half of hand-held tools sold today are electric, along with a quarter of push mowers. He has an eye on ride-on mowers and robots, and works on technology that comes from both the automotive world and outdoor tools. âMore to come,â he said.
Electrification is good for business, at least for Stanley (symbol: SWK) and
or TTI Group (669.Hong Kong), traded in Hong Kong. They could turn the battery-powered tool market into a two-horse race after five years of market share gains. Stanley owns its eponymous brands, as well as DeWalt, Craftsman, Porter Cable, Bostitch, etc. TTI in Ryobi and Milwaukee. Stanley also owns a 20% stake in mower specialist MTD Products, with the option to purchase the remainder at a reasonable price. MTD brands include Cub Cadet, Troy-Bilt, and Robomow, which make stand-alone mowers smaller than carry-on suitcases.
Lawn power tools can give their manufacturers something even more reliable than brand affinity: interchangeable batteries, which give the buyer of a weed killer, for example, a reason to buy the same brand. snowblower. Rob Wertheimer, who covers Stanley for Melius Research, estimates that the electrification of lawn and garden tools will add one to three percentage points to annual sales growth this decade.
Based on Stanley’s recent financial results, this may sound like peanuts. Sales jumped 31% in the March quarter compared to a year earlier. Loree attributes this to a âgenerational shift in end-user behavior,â with the pandemic spurring home purchases and DIY projects. He expects demand to stabilize at this higher level, with growth slowing to a more typical level of 4% to 6% per year, and with Stanley outperforming the market by one or two points. Even if growth slows, the tailwind of electrification will remain.
A Few Other Loree Nuggets: Right now, Stanley is only able to keep pace with in-store purchases, not reloading inventory, which is lower than retailers would like. When the pandemic hit, the company was in the process of moving some of the manufacturing from China to North America, so three new factories will be commissioned soon, two in Mexico and one in Texas.
Stanley has three times as much e-commerce as its next competitor, Loree estimates. In markets where it is under-represented, such as China, India, Japan and Germany, it is selling directly to customers. In North America, the company is satisfied with its retail relationships, including online. âI know a lot of people who say that
is hard to do business, âsays Loree. “We haven’t had that experience.”
Inflation appears to be here to stay. âAt first I thought it was just a transient supply chain phenomenon,â says Loree. âBut from what we’re seeing … labor rates are going to have to go up. And once you get labor inflation, it’s hard to contain prices in the end markets. ”
Historically, Stanley has passed 30% to 50% of inflation on to customers through price increases.
Loree expects the company to have significant pricing power, as buyers have become accustomed to soaring prices for construction products like lumber, and Stanley has so far kept the line on big increases.
Stanley’s sales and profits are expected to exceed not only pandemic levels this year, but pre-pandemic ones as well. The stocks are just under 20 times this year’s profit forecast. Melius Research’s Wertheimer predicts that Stanley will soon receive a Tesla-like boost from a powerful player. “We would be very surprised if regulations don’t push electric lawn and garden equipment very hard by the middle of the decade,” he wrote in a recent investor note.
Already, more than a quarter of Californians live in municipalities with restrictions on leaf blowers, mostly due to noise levels and times of day, but a handful of outright bans on gas blowers. Local laws could help Loree continue to use battery tools for years to come, and maybe cut a few decibels from her breaks in Florida.
You already know it New Zealand economist Bill Phillips hypothesized that unemployment and inflation are inversely related. There has been endless talk in recent years about the Phillips curve and his death, as there have been periods of low unemployment combined with low inflation, which is not supposed to happen. Globalization may have made the unemployment rate in the United States a less meaningful indicator.
Less well known is that shortly after World War II, Phillips built a transparent hydraulic computer to analyze monetary policy, using, among other things, spare parts from a Lancaster bomber. Before turning to the economy, he worked in banana picking, crocodile hunting and running a movie theater. As a prisoner of the Japanese during WWII, he exploited the lighting system to build a secret tea kettle for his fellow inmates. The curve might not be among the 10 most remarkable things about humans.
The computer was called Moniac, probably a play about Eniac, the first programmable digital computer, built four years earlier. Moniac used tanks, pipes, pumps, floats, counterweights and fluids to simulate the flow of funds through the UK economy and to measure the effects of taxes, interest rates, trade, etc. . The popularity of the machine helped Phillips, then a student at the London School of Economics, take up a teaching position there, where he later published an article on his curve. And whether the curve is dead or not, Moniac lives on: Leeds University has the prototype, and there are a dozen models owned by schools and central banks.