Milwaukee Tool: on Amazon and American jobs

[Ign]

Here, the President, Steven Richman, doesn't seem to be a fan of Amazon (most of us addicts know Amazon isn't usually the first place we look for Milwaukee tools, although it's gotten better of late, generally through third party sellers). This was reportedly Jan '17:

I'm a little confused by his criticism of Amazon being "all about revenue." What exactly is MET/TTI all about? They're not operating just for fun. What do the shareholders expect but more revenue??

Also lots of bashing on this board because Milwaukee electric tools are built in China. Here at 5:20 the subject is broached and he tries to put a good face on it. I'm not saying he did or did not do a good job answering the question, nor am I saying overseas production is "ok" or "not ok".

I just found it interesting someone had the balls to ask him, but clearly he knew it was coming:

Let the bickering begin in Post #2, see below:

 

[Strouty]

Reserved for snarky post.

 

[jumbojak]

I think that his point about amazon was that anyone planning on using amazon as a distribution platform needs to be prepared to compete with the third party sellers who will be selling knockoffs that show up in searches. So, if you make a widget that becomes enormously popular be prepared to see others move in to undercut your sales while amazon puts your products head to head in searches and won't intervene without legal arm twisting. For some, it might work. For others, it could well be the end of their company.

Makes me think of Sears and the bionic wrench... or whatever the thing was called. Different in the details but a similar outcome could result. In other words, think carefully about using their platform.

 

[stercorarius]

Believe he was talking specifically in terms of contractors offering their services through Amazon now that they offer contractors to do in home installs of products. Just like Milwaukee had to deal with Amazon swelling counterfeit batteries, contractors will have to deal with Amazon offering unlicensed shoddy installers that you'll have to compete with because both will make Amazon money.

 

[WittHay]

The other thing is there is some corporate politics involved. I imagine Amazon wants a lower price from Milwaukee, and then sells the products cheaper than Home Depot and the traditional authorized distributors. So Milwaukee position is why bother with Amazon

Amazon.ca used to have good prices on Proto items. They are no longer available or are out of stock. My guess is that in order to get a good deal from Stanley, Amazon had to buy a huge quantity of tools, that included a lot of uncommon Stanley branded tools.

The in it for the money comment, is that once Amazon figures out that items are sitting around in a warehouse for a year or two, they are not going to purchase those items again.

 

[mmason7764]

This guy's voice sounds like a TV infomertial.

They make saw blades in Mississippi.

Stanley B&D is ahead of red in US manufacturing, and hopefully is moving more in this direction.

I have talked to Milwaukee company representatives in Home Depot on two occasions. Being young guys, they had no idea what the PRC is doing with the money we send by the boatload. Towards the end of our little education session, I pulled a pair of Milwaukee tongue and groove (aka water pump) pliers off the peg and turmed the package around. Made in china. $ 14. Two pegs over were a pair of Channellocks, the same size. Fiercely made in Meadesville, Penn. Also $ 14.

Exact same price.

People say we cannot compete with asian labor. Channellock can. Aparantly a family owned company can find a way. If you want to enough.

I then asked the young man if he had ever seen a video of channellock pliers being made. "No"

"Well, let me give you the highlights:
American steel bars are cut to length and heated to glowing red hot in a furnace.
Then an American worker in a heavy leather apron, gloves, and a face shield pulls a rod out with steel tongs and places it in a drop forging die.
When the forge strikes, red hot sparks of metal fly in all directions.
Americans do this all day long, every day, and the are happy to.
We can compete.
Milwaukee china $14, Channellock USA, $14."

These were pretty much my exact words. I asked him to pass this along to his management.

I have only one Milwaukee item, a drill bit made in Germany.

I can't even begin to count how many pairs of blue handles pliers I own (and have given as gifts).

Mark

 

[Stuey]

With Milwaukee hand tools, they're probably not going to produce them here unless or until Milwaukee buys a brand and the manufacturing capability to do so. It simply won't be economical.

Is someone going to buy a USA-made Milwaukee tool for more than they could buy the same imported tool for? No.

They bought Empire Tool and have been funneling money into the brand and their USA facility.

Every time I visit their HQ for a media event (3 times now), they're either opening or building more R&D space.

Right now, Amazon is still selling certain Milwaukee tools directly. I asked Milwaukee about it, and they have no idea where the tools are coming from, because they won't sell to or through Amazon directly.

There's more to be done, and I definitely want to see Milwaukee bring more production to the USA. But from an objective standpoint, it's going to be hard. Also keep in mind that they serve tools to a global audience. A product category is going to have to have big enough USA demand for them to justify spending money on new infrastructure and manufacturing capabilities.

It won't serve anyone well if they bring manufacturing to the USA and nobody buys the tools because there's a 50% premium.

And if their hand tools are selling successfully, they might see that as a reason to keep proceeding as usual.

I would not be surprised if Milwaukee is actively looking to scoop up more USA tool brands. It will be a more economical path than for them to start from scratch.

 

[packet]

People say we cannot compete with asian labor. Channellock can. Aparantly a family owned company can find a way. If you want to enough.

We can't compete with Asian labor. When a guy in the US costs you $15/hr, and the Chinese equivalent costs $1/hr, there's no competing. The only way out of that game is through mass automation. In that case, the $15/hr worker still doesn't have a job. Germany has done this well. Focus on the high end and automate everything you can.

Milwaukee likely has much higher margins at $14, while Channellock is likely just getting by. It's a matter of time before Channellock's tooling wears out and they have to invest in their physical plant. This will likely be when stuff moves to China.

 

[jonesg]

We can't compete with Asian labor. When a guy in the US costs you $15/hr, and the Chinese equivalent costs $1/hr, there's no competing. The only way out of that game is through mass automation. In that case, the $15/hr worker still doesn't have a job. Germany has done this well. Focus on the high end and automate everything you can.

Milwaukee likely has much higher margins at $14, while Channellock is likely just getting by. It's a matter of time before Channellock's tooling wears out and they have to invest in their physical plant. This will likely be when stuff moves to China.

And the guy making $15 is convinced he's getting screwed by the "rich".
Not worth the trouble, I'd be all over China if I were in that game.

 

[mmason7764]

I hear y'all,

Let me give you a little more of my conversation with the young Milwaukee representative.

It started by me noticing that his shirt carried the name Heart. I asked if HD carried Heart hammers. He showed them to me. I turned the tag around and all the Hearts were made in Vietnam. They were priced $ 26.

Right above them were Estwings of the same size for $ 30.

I told him that consumers are getting smarter. We know that offshoring those hammers resulted in a drastic manufacturing cost reduction, way more than the $4 difference. This looks like a case of feeding corporate greed more than passing along any savings. I bought Estwing, want to still have that option in the future.

One may make the case that the entry cost to manufacturing here is too high. How is Stanley Black & Decker doing it?

A better question is why is SB&D putting the flag on more products ? Sounds like they have caught wind that there is a market for products made here.

Mark

 

[jonesg]

Here, the President, Steven Richman, doesn't seem to be a fan of Amazon (most of us addicts know Amazon isn't usually the first place we look for Milwaukee tools, although it's gotten better of late, generally through third party sellers). This was reportedly Jan '17:

I'm a little confused by his criticism of Amazon being "all about revenue." What exactly is MET/TTI all about? They're not operating just for fun. What do the shareholders expect but more revenue??

Also lots of bashing on this board because Milwaukee electric tools are built in China. Here at 5:20 the subject is broached and he tries to put a good face on it. I'm not saying he did or did not do a good job answering the question, nor am I saying overseas production is "ok" or "not ok".

I just found it interesting someone had the balls to ask him, but clearly he knew it was coming:

Let the bickering begin in Post #2, see below:

I'll send him some cheese to go with his whine.