Snap-on Incorporated 2007 Annual Report: "Expanding on Strong Foundations"
The title alone gives you an idea of what "changes" are revealed inside.... these are all presented in a positive light!
Page #7 quote:
"Snap-On's Asian manufacturing capability expanded again in 2007 with the opening of a hacksaw blade operation in our Kunshan, China, facility."
Page #8:
"Snap-on continued to invest into the emerging markets
of Asia-Pacific and Eastern Europe and our capabilities to serve those regions increased again in 2007. We completed our SECOND PLANT in Kunshan, China, on schedule. It’s already helping to fuel our ongoing growth. We also continue to expand our sales capabilities, adding a substantial number of distributors and sales offices to our on-the-ground network throughout the EMERGING REGIONS." (emphases mine)
Page #22 quote:
"Continue on the company’s existing path to improve and transform GLOBAL MANUFACTURING and the supply chain into a market-demand-based replenishment system, with LOWER COSTS;" (emphases mine)
Page #23 quote:
"The global tool, equipment, and diagnostics and repair industry is competitive. We face strong competition in all of our market segments. Price competition in our various industries is intense and pricing pressures from competitors and customers are increasing. In general, as a manufacturer and marketer of premium products and services, the expectations of Snap-On's customers and its franchisees are high and increasing. Any inability to maintain customer satisfaction could diminish Snap-On's premium image and reputation and could result in a lessening of its ability to command premium pricing. We expect that the level of competition will remain high in the future, which could limit our ability to maintain or increase market share or profitability."
Page #24
"Approximately 43% of our revenues in 2007 were generated OUTSIDE of the United States." (emphases mine)
All of this sounds like "corporate speak and spin" for the globalization trends of the world economy and the "need" for corporate america to find cheaper and cheaper places to produce their products to be "competitive". For some reason, I don't think there is that much demand for hack saw blades in China; this production isn't just for the asian market; they seem to want to cast this as supporting "emerging markets" but I think the blades are for us! Could Page 23s quote in particular, be a possible scenario for the future of Snap-on? This corporate "fear" could also be used as a rationalization of more and more offshore manufacturing.
Ultimately, I think there will always be a demand for a premium grade quality tool regardless of where its made or what brand it is sold under. These annual reports provide interesting insights into the tool market and corporate thinking on the future of their business; although we may not like the trends, they are not exactly hiding what they are doing either!
What are they then? 