Power-Driven Handtools

SIC 3546

Companies in this industry

Industry report:

This industry includes establishments primarily engaged in manufacturing power-driven hand tools, such as drills and drilling tools, battery-powered (cordless) hand tools, pneumatic and snagging grinders, and electric hammers. Establishments primarily engaged in manufacturing metal cutting type and metal forming type machines (including home workshop tools), which are not supported in the hands of an operator, are classified in SIC 3541: Machine Tools, Metal Cutting Types and SIC 3542: Machine Tools, Metal Forming Types, and those primarily manufacturing power-driven heavy construction or mining hand tools are classified in a range of construction machinery and equipment industries.

Industry Snapshot

The U.S. power-driven hand tool industry includes professional and nonprofessional tools such as electric drills, portable chain saws, portable electric sanders, and pneumatic hammers. The hand tool industry is closely linked with the residential and commercial construction and home repair and renovation industries. The weak economy of the early years of the first decade of the 2000s lowered demand in the commercial and industrial sectors, but then strong performance in new housing starts helped drive the industry through the middle of the decade. Finally, the housing market collapsed in the late years of the decade and sent this industry spiraling downward. However, advances in ergonomics and battery power technology, especially appealing to the do-it-yourself consumer, increased sales within the battery-powered sector as more consumers looked to save money by doing home repair themselves.

According to statistics from the U.S. Census Bureau, the value of products shipped in 2009 fell dramatically to $1.39 billion, down from $2.35 billion in 2008 as the housing industry fell victim to a banking and credit crisis and, as a result, consumer discretionary spending was very low. The industry leaders were Black & Decker and Danaher Corp. The top 3 percent of the largest establishments--those employing 250 or more--generated almost 80 percent of the industry's revenues.

Organization and Structure

Success for the power-driven hand tool industry depends on a variety of economic factors influencing industrial and consumer spending. Capital spending by business and industry directly affects power-driven hand tool manufacturers, particularly in their manufacture of pneumatic power tools.

Pneumatic hand tools operate by forcing compressed air through rotor blades. They are lightweight, durable, high-performance tools used in demanding industrial applications. Examples of pneumatic products include drills, grinders (metalworking machinery), pneumatic chip removal guns, hammers, ratchet wrenches, and sanders.

Background and Development

According to the 1996 edition of Manufacturing USA, retail sales to the do-it-yourself (DIY) consumer sector accounted for 57 percent of the industry's shipments in 1992 and began to increasingly influence the success of the industry. Black and Decker Corp., for example, received $1.8 million, or 39 percent, of its revenues from its power tool division by the end of 1995, largely as a result of DIY retail sales at home improvement stores such as The Home Depot. Because of this success, Black and Decker introduced an assortment of products for DIY customers in 1996. This sales strategy emphasized the industry's sensitivity to spending trends for home improvement, maintenance, and repair. Electric power hand tools dominated these sectors because they generally were less expensive than pneumatic tools. The cordless battery-powered hand tool market also gave the industry a boost in the early 1990s and continued to be successful into the early years of the first decade of the 2000s. Examples of electric power hand tools include buffing machines, chipping hammers, drills, grinders, hammers, polishers, sanders, saws, shears, screwdrivers, and wrenches.

The power-driven hand tool industry also includes gasoline-powered chain saws. This product class is directly tied to the success of the timber industry. Lower timber harvests, due in part to environmental concerns, became a serious problem for chain saw manufacturers in the early 1990s and continued to affect sales through the end of the twentieth century. Moreover, lower consumer purchases resulting from a declining use of firewood for home heating contributed to a decade of flat sales. Gasoline-powered chain saws comprised an estimated 11 percent of the industry's total shipments in 1992, but internal combustion tools together accounted for less than 10 percent of shipments in 1997.

The power-driven hand tool industry developed in conjunction with the rest of the United States' industrial growth. U.S. manufacturers often started as small operations producing specific power tools for local markets. As the United States grew into a world economic leader, the power-driven hand tool industry likewise expanded internationally.

For example, Black and Decker, which was founded in 1910 in Baltimore, Maryland, first began manufacturing candy dippers and capping machines for milk bottles. By 1917 Black and Decker patented the first pistol-grip, trigger-switch electric drill. The company's success led to international operations by 1918. Black and Decker products helped define the power tool industry. For example, the company introduced the first portable screwdriver in 1923, the first electric hammer in 1936, and the first portable electric drill for consumer use in 1946. In the last half of the twentieth century, Black and Decker was the world's leading power-driven hand tool manufacturer.

Another industry leader, Danaher Corp., originally was organized in 1969 as a Massachusetts real estate investment trust called DMG Inc. In 1989 the corporation entered the hand tool market when it merged with Easco Hand tools Inc., and by the mid-1990s hand tools made up approximately half of Danaher's sales. By opening its doors to this market, Danaher achieved sales of $897 million in 1992, the best year in the company's history for per-share earnings. A year later, the company's international sales rose to more than 10 percent of total sales.

According to U.S. Industrial Outlook, the recession in 1990 and 1991 seriously hurt the hand tool industry, and overall shipments dropped $163 million, or 6.9 percent. The industry recovered by 1994 when the value of shipments reached $3.5 billion, up from $2.9 billion in 1992.

During the early to mid-1990s, automation played a major role in reducing the number of workers employed by the industry. The falling employment rate had not affected the industry's continued status as a net importer by 1992, however, when imports comprised 27 percent and exports represented 14 percent of shipments.

The proliferation of large home centers, such as The Home Depot and Lowe's, gave manufacturers additional markets in which to sell their products. Technology also boosted the power-driven hand tool industry by opening new markets for cordless tools, which accounted for 15 percent of the industry's shipments.

Industry growth depends upon increased expenditures in the home improvement, home repair and maintenance, and residential and commercial construction sectors. In addition, new battery technology helped the industry expand the market for advanced cordless tools, and companies continued to introduce products to generate consumer demand in this category.

Ergonomics, which is the engineering of tools for maximum comfort and minimal hazard to the human body, was an increasingly popular consideration for this industry. In 1999, Stanley Works redesigned the handles of many of its tools to better fit the human hand and to reduce the likelihood of injury from vibration and other stresses. For instance, the company incorporated a carbon-steel shank into its AntiVibe framing hammer to absorb the shock that traditional hammers transmitted to the human arm. Stanley Works also offered an ergonomic screwdriver with a diamond-textured handle made of soft elastomer and a layer of hard polypropylene, so that consumers could grasp the tool firmly without needing to squeeze hard enough to hurt their hands.

Despite a sluggish economy in the early years of the first decade of the 2000s, the climate for hand tools remained positive. Extremely low interest rates caused a surge in new housing starts from 1.2 million in 2000 to an estimated 1.6 million in 2003. While residential construction boosted sales among professionals, consumer uncertainty about the economy, as well as the war against terrorism in Iraq and Afghanistan, caused a trend toward "nesting." Home improvement and DIY projects rose as people postponed travel and other major undertakings, thus driving the consumer hand tool market. By 2005, increased purchases by women, who were tackling more DIY projects, also drove sales and demand for lightweight, easy-to-use designs. On the other hand, the global recession of 2008-09 had a huge impact on the housing industry. New housing starts reached an unprecedented low of just 494,000 as of May, 2009, which was down nearly 13 percent from just the previous month. This in turn severely impacted the financials of the major industry players, such as Black & Decker, who saw sales of their power hand tools drop by more than $800 million or 23 percent compared to the previous year.

Current Conditions

As the U.S. economy began to slowly recover into the early 2010s, the hand tool industry was expected to follow, despite a miserable showing in 2009. According to The Freedonia Group, industry growth through at least 2012 was projected to be driven by powerful, high-end tools for the reemerging housing market and the continuing proliferation of cordless products, both of which would be helped by an uptick in consumer discretionary spending. Professional buyers were anticipated to continue to generate more revenues than consumers, but in the DIY market overall growth was expected to outpace professional sales.

The industry�s competitive landscape shifted significantly during 2010 when Stanley Works made a bold move to purchase Black and Decker. The mega merger, which was planned to reduce costs and increase profits, was met with both positive press and positive economic results. Anthony Currie and Rob Cox praised the merger in the The New York Times soon after its announcement in 2010. In its first annual report, Stanley Black & Decker reported net sales in 2010 of $8.41 billion, up significantly from $3.74 billion in 2009. The company�s sales continued to grow, both through organic sales increases and mergers and acquisitions, during 2011.

Industry Leaders

With 48,200 employees and sales of approximately $13.2 billion in 2010, Danaher Corp. of Washington, D.C. was the industry leader. Founded in 1984 as a holding company, Danaher expanded by merging with Chicago Pneumatic Tool Company, Acme-Cleveland Corporation, Pacific Scientific Co., and Joslyn Corp. Danaher produced a full line of hand tools as well as a wide range of industrial technologies, test and measurement instruments, environmental instruments, and life sciences diagnostics and devices.

Stanley Black and Decker Corp. of New Briton, Connecticut, had 22,100 employees and sales of just over $8.41 billion in 2010. The company was formed in March of 2010 when Stanley Works bought hand tool giant Black and Decker. By the early 1990s, Black and Decker had become an international company that carried the seventh most recognized brand name in the United States. Its brand recognition also was among the top 20 in Europe. In 1995, the company had expanded its international presence by beginning joint operations in India and China and introducing DeWALT power tools to Europe and Latin America. The new company, Stanley Black and Decker, which boasted a wide array of products, sold most of its merchandise through big-box, DIY stores such as Home Depot and Lowe's.

Workforce

The U.S. power-driven hand tool industry reported 5,032 employees in 2009, down from 7,160 employees in 2006 and 9,150 in 2005. Payroll for the industry was $217 million in 2009, down from nearly $349 million in 2008. There were 3,430 production workers in 2009, down from 5,503 in 2008. Some of the occupations in the power-driven hand tool industry include tool and die makers, machinists, mechanical engineers, drafters, blue-collar worker supervisors, inspectors, industrial production managers, and stock clerks.

Research and Technology

Most research in the power-driven hand tool industry has been directed toward ergonomics and portability. Ergonomic designs create tools that are more comfortable and efficient for the user. The long-term use of poorly designed power-driven hand tools can have serious consequences to workers' health and safety. Constant exposure to noise and vibrations can cause such injuries as hearing loss, carpal tunnel syndrome, and hand-arm vibration syndrome (HAVS). Injuries of this type cost companies an estimated $100 billion annually.

The power-driven hand tool industry also has changed due to the development of cordless, battery-operated tools. The key advantages of this kind of power hand tool are indoor safety and outdoor convenience. In the early 2010s, manufacturers continued to develop tools with higher powered, longer lasting, and interchangeable battery packs, so that users could easily switch back and forth between cordless tools.

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