Irish Mike
Well-known member
I did some work in his subterranean garage that can easily hold 30 cars. It's right under his indoor pool. It's quite a place....
Harbor Freight Billionaire
- Thread starter 3baygarage
- Start date
jeeper46
Well-known member
Did you use HF tools?
FMC1959
Well-known member
Kind of like, if you owe the bank $100 thousand, you have a problem. If you owe the bank $100 million, the bank has a problem.
Tarriffs are based on landed price. As cheap as Harbor Freight is, they still bring that stuff in for zip. I doubt it if it would increase the price very much.
Sent from my SM-G900V using Tapatalk
HF is privately held; huge dividend recaps are not out of the norm...otherwise you have a super valuable company and your only outlet is buying real estate that you don't want to own.
The astonishing thing is the HF growth rate...when will it saturate? Our local HF stores have started running every checkstand on the weekends. Meanwhile, we have all seen Sears, who was perfectly positioned to be Amazon, repeatedly shooting themselves in the foot because of their brick and mortar infastructure. Every day they hand more of their localized business to HF with a silver bow on it (Sears gets more crappy every year, HF improves every year).
HF is going to stomp everybody, and if/when they ever need to slow down, the real estate won't be a millstone...it's just a bunch of leases in mom and pop strip malls.
The astonishing thing is the HF growth rate...when will it saturate? Our local HF stores have started running every checkstand on the weekends. Meanwhile, we have all seen Sears, who was perfectly positioned to be Amazon, repeatedly shooting themselves in the foot because of their brick and mortar infastructure. Every day they hand more of their localized business to HF with a silver bow on it (Sears gets more crappy every year, HF improves every year).
HF is going to stomp everybody, and if/when they ever need to slow down, the real estate won't be a millstone...it's just a bunch of leases in mom and pop strip malls.
Last edited:
pcmeiners
Well-known member
"If such a thing does happen it may help bring tool manufacturing back to the US."
A lot of Chinese/foreign stuff is **** but without low cost items from outside the USA prices will increase due to lack of competition tremendously, then all the US manufacturers will screw us royally; without foreign imports lets see how American companies support us. They screw us right now by purchasing foreign items for $4 and selling for $50 + shipping. Do you really want tools/materials which cost >5-10x as much to produce? .....be careful what you wish for.
A lot of Chinese/foreign stuff is **** but without low cost items from outside the USA prices will increase due to lack of competition tremendously, then all the US manufacturers will screw us royally; without foreign imports lets see how American companies support us. They screw us right now by purchasing foreign items for $4 and selling for $50 + shipping. Do you really want tools/materials which cost >5-10x as much to produce? .....be careful what you wish for.
tdellenburg
Well-known member
I don't think that's accurate. For decades we had low cost Craftsman, mid cost Armstrong and high cost Snap-On, all A,erican made. Nobody felt they were getting screwed, there was a price point for every level of user, and they didn't "jack up" the prices. Of late, they have just had to "offshore" our jobs in a race to the bottom!
Irish Mike
Well-known member
HaHa, nothing from there. I had guys there for three months. I went once a week. There were no cameras allowed and I walked around and never found the kitchen? I heard from the G.C. superintendent that the minimum cost to run the place would be 250k a month. To a guy with 2.5B, that's nothing. If a guy was worth $2,500 dollars, that's .25 cents to run that house. It's all about how many zeros you have...
yep. not a great strategy IMO. when something happens with the dollar or trade or whatever, and they have to stop the freebies and 20% off coupons, the revenue stream will slow and that leverage will still need paid.
seen this with LBO's back in the 90's...
sberry
Banned
Eventually everything that goes up will come down. But Sears has done it to themselves, instead of going up a notch they went in a race to the bottom. HF is gong to raise its prices some along the way, a good move. They have been sourcing better tools. Sears and Cman should have been shooting for the SK spot instead of competing with Walmart, they should have went up a pinch and held their brand value.
I'd wager only about 10% of GJs members even know what these financials statements are, nevermind the fact that Harbor freight is private haha hence my armchair statement on the other page....
sberry
Banned
You can b8uy cheaper stuff than they sell, the 9$ grinder is scrap but the 20$ one is pretty good. You can buy a so9cket set cheaper than the one Wally sells but not one as good at that cost. They don't want to be a warranty return center, Stanley can get a set for a dollar more at their cost and when it sells for 30 they don't have to keep taking returns.
Trey T
Well-known member
HF is no different than any construction firm that profits from hiring HD-parking-lot crew, particularly in the southern US.
tdellenburg
Well-known member
I agree wholeheartedly...
kythri
Well-known member
New batch of users, new batch of brand-bashing.
Good times!
Good times!
kythri
Well-known member
Likewise, it doesn't do your argument any good to willfully misrepresent the price of truck tools.
kctyphoon
Banned
Not sure why people are being so critical of the guys finance choices. They have a HUGELY successful chain, and the guy took money out of something HE HELPED CREATE, and invested it into real estate and some other things which he happens to live in and enjoy himself. WHO ELSE should benefit from what he built??? Stop hating - or has nobody in the forum taken a home equity loan?? That's basically what he's done.
It's funny how the biggest critics know better, yet never seem to be able to amass any wealth of their own.. haters gonna hate.. good for him..
It's funny how the biggest critics know better, yet never seem to be able to amass any wealth of their own.. haters gonna hate.. good for him..
aka Larry
Well-known member
My buddy told me something one day I'll never forget. He said people at his company (large privately owned GC) like to complain about the big boss being rich. My buddy said "Poor people don't employ other people like myself, so I'm not complaining about our boss being rich."
fowldarr
Well-known member
HF definitely fills a needed niche in our country. There was a time that it was the best that I could afford, and so it is what I would buy. Financially it made sense, I could by 5 angle grinders from HF for the price of one DeWalt or other big brand (and that darn thing still runs). Now, I'm in a different financial situation (though I'm a CEO, not a CFO), and I've learned the value in quality tools (I still buy a lot of them at yard/garage/estate sales), and I tend to be acquiring nicer items. There are still several HF tools throughout my garage.
I'm with the people above, the guy identified a niche, he filled it, and made lots of money. He also employs people across the country to work in the stores. I say good for him, and I wish him continued success.
I also wish for an new influx of quality tool manufacturing in the USA, but that is a whole other topic of conversation.
I'm with the people above, the guy identified a niche, he filled it, and made lots of money. He also employs people across the country to work in the stores. I say good for him, and I wish him continued success.
I also wish for an new influx of quality tool manufacturing in the USA, but that is a whole other topic of conversation.
4 FN 27
ALLIANCE MEMBER
I would love to see HF Financials. Love to lay them out right on GJ and we could have a little class...see what it takes to, as someone else here said "Sign the other side of the Check"...
Now I am not the keen on how he has structured his debt and I'd like to see how it effects his cash flow based on how the debt is structured.
Guys that leverage themselves like this usually don't land well...but they have a hell of a time while in the air.
As my ol'Man always said "Have you ever worked for someone going broke? It does last very long."
Provincial
Well-known member
He's 57 years old and probably isn't looking past his own lifetime. If you don't care if you leave anything to your kids, it changes your outlook. He probably has it figured that he'll be fine if the business goes broke, so in the meantime he is pulling as much out of it as possible. Plenty of Private Equity groups do the same thing, but he doesn't have other shareholders to deal with.
At least he has established that there is a market niche and someone will fill it if HF goes away.
It really shows that there is a lot of money to be made selling disposible products in our country. Walmart is based on the same idea.
At least he has established that there is a market niche and someone will fill it if HF goes away.
It really shows that there is a lot of money to be made selling disposible products in our country. Walmart is based on the same idea.
jeeper46
Well-known member
I don't think HF is going away any time soon-they are the new Sears/Craftsman. They provide affordable tools of adequate quality to working people, and they have a good replacement policy. They are popping up everywhere, so if you need some tool or have to replace a broken one, they are conveniently close. Like I said, they filled the spot that Sears vacated. 30 years from now, people are going to be writing about their tools on forums like this, and debating whether the new HF tools made in Uzbeckistan are as good as the ones that used to be made in China......
A debt recap is an extremely common way for a private company to extract equity from the business on the form of real cash.
This guy isn't doing anything that 10,000 other business owners haven't done on varying levels of scale.
Much ado about nothing.
This guy isn't doing anything that 10,000 other business owners haven't done on varying levels of scale.
Much ado about nothing.
kctyphoon
Banned
Pretty sure his business will remain successful for decades.. there's no reason it wouldn't. If items don't sell, they get removed from shelves.. they "create" their own line of tools from what's available. It's not like they are carrying someone else "collection" and taking a chance on many items at once.
To be quite honest, I'm very surprised someone else hasnt copied this business model. There's obviously room for another big retail chain similar to this.
To be quite honest, I'm very surprised someone else hasnt copied this business model. There's obviously room for another big retail chain similar to this.
Wanna Ride
Well-known member
- Joined
- Jul 28, 2010
- Messages
- 2,790
I travel to Canada frequently, they have Princess Auto there. Similar, but different. Even if I don't buy anything, every time I go to Canada, I make a point to stop at a PA, even if just to look around. Eventually, I'd say PA will come to the states, and/or HF will go to Canada.
Then... let the games begin!
Can't blame Smidt at all for his tactics. He's in business... to make money. And that he has. Good for him.
Someone earlier mentioned the failure of Sears/K-Mart was due to over-saturation. No, it wasn't. It was a combination of mismanagement and failure to adapt to the times and changes in market. Sears successfully sold inexpensive tools to the masses, and they were of decent quality. Some improved over time, and others didn't. But at the end of the day, that's not what did Sears in. Their mismanagement did them in. They are all but a corpse now, every financial breath they take, is than the previous. The family's gathered at the hospital, and it's all over but the funeral for them now.
And in twenty years, HF may or may not fall to the a similar fate. Just depends on Smidt's moves in the next five-ten years. He may maneuver the landscape, or may not. But I can see him either going public, or selling out to another entity... who knows.
Yes, people without money, will always "feel better", paying more, for something they don't really want to have to buy in the first place.
A tariff is a tax, which will go to the Government, to waste on something else. We already have plenty of taxes.
How is (was) a 120 old business, who started bailing from mail order 60 years ago, with 180,000 employees, a conglomeration of failing financial subsidiaries, ancient failing mall retail locations, positioned to be an Amazon, a streamlined Internet startup, from the get-go?
Just curious.
Sears has a ton of brand cache, nostalgia, etc.. Also, they cut their teeth on mail order for their first 50 or so years, so they could (if they install the right people) become an Amazon competitor.
Doubtful, but who knows.
Nobody likes seeing someone else, being extremely innovative and then making a pile of money, doing so.
It's the new American meme.
Nobody likes seeing someone else, being extremely innovative and then making a pile of money, doing so.
It's the new American meme.
Nothing wrong with what he's done to create his wealth. It's all legal and above board. However, he'd probably have more fans if he spent some of the wealth on making a "made in the USA" push for at least some of his products.
Not that 95% of the populace cares about things like that. The average HF customer just cares about prices.
4 FN 27
ALLIANCE MEMBER
Dividend Recapitalization...Yep...he is just getting his now. However with the ol'Man filing suit prior to dying might lead one to believe they both operated the business fundamentally differently. I suspect the ol"Man wanted no debt and well the son...obviously he doesn't mind.
jakemac
Well-known member
I have no problem with how he makes his money, my issue is how he's taking money out of the company. It's putting the company at risk and threatens the jobs he's created.
Wanna Ride
Well-known member
- Joined
- Jul 28, 2010
- Messages
- 2,790
Easy for people without substantial wealth and success, to criticize those who do.
His business model isn't built on a "Made in the USA" strategy, and he doesn't care if less than one percent of the market is concerned with that strategy.
And... why should he?
His business model isn't built on a "Made in the USA" strategy, and he doesn't care if less than one percent of the market is concerned with that strategy.
And... why should he?
The business model which relies upon global wage arbitrage is going to die, sooner rather than later. There are only so many countries in the world, and after you've exhausted all of the cheap labor, the chickens come home to roost.
Trump has vowed to impose tariffs. A lot of people say he won't do it. I am betting he will try as hard as he can. Look at what he's done in less than a month in office. He's instructed ICE to start rounding up illegals as fast as possible, he's talking about the border wall, he tried to put a stop to legal immigration until we figure out who these people from Syria, etc. actually are. He seems to be trying to keep his word.
I wouldn't want to be a company relying upon Chinese products at this point in time. Profits could evaporate in the blink of an eye leaving a smoking hole in the balance sheet.
Trump has vowed to impose tariffs. A lot of people say he won't do it. I am betting he will try as hard as he can. Look at what he's done in less than a month in office. He's instructed ICE to start rounding up illegals as fast as possible, he's talking about the border wall, he tried to put a stop to legal immigration until we figure out who these people from Syria, etc. actually are. He seems to be trying to keep his word.
I wouldn't want to be a company relying upon Chinese products at this point in time. Profits could evaporate in the blink of an eye leaving a smoking hole in the balance sheet.
Saying that you have to be a man of means in order to be objectively critical of a system which is unfair to the masses is ludicrous. That's like saying a slave has no right to question his master.
We've been returning to a "Grapes of Wrath" situation where companies have complete and total control over employees, where wages don't pay for the cost of living, the old "company store" model. It doesn't end well for anybody.
We've been returning to a "Grapes of Wrath" situation where companies have complete and total control over employees, where wages don't pay for the cost of living, the old "company store" model. It doesn't end well for anybody.
When I see HF customers, they don't strike me as particularity wealthy, but then I could be wrong.
Them being part of an American economy, that taxes for everything, usually giving to to someone else, who does not need or deserve it, then there are companies that charges $300 for an $10 epi-pen, employers offers part time, minimum wage jobs, with no insurance to pay for that pen. It's not to hard to believe they are not willing to dump more of their hard earned money, into that system
Maybe they are just wising up on how the game is played.
They could pay extra to an American tool company (Apex), so the creeps like Bain Capital, can **** off that additional revenue, profit out, then dump the carcass, right back in their laps, as taxpayers (ala Chrysler).
When people are struggling to make ends meets, spending more more just to supports someone else's higher paying job, is usually not a high priority.