Professionals key to growth
By Staff -- Industrial Distribution, 11/1/1998
Do-it-yourselfers will make up a dwindling portion of hand tool buyers while overall sales should grow modestly the next few years.The Freedonia Group, Inc., a Cleveland, Ohio market research firm, expects the highest sales gains to occur in the professional market during the next four years. In a recent report, the firm said more contractors and mechanics will need specialized, multifunctional tools for increasingly sophisticated tasks such as steel framing for buildings. Product innovations will also stimulate demand.
Freedonia estimates shipments of hand tools reached $3.5 billion in 1997, and projects 3.4 percent growth through 2002. During that time net imports of hand and power tools should rise nine percent to more than $1 billion.
The dominance of hand tool use by professionals over do-it-your selfers should rise slightly from 73.7 percent of the market last year to 74 percent in four years. While construction applications will continue to dominate with 43 percent of sales in 2002, industrial and the automotive after-market sectors should show faster growth, the firm estimates.
John Foote, technical director of the Hand Tools Institute in Tarrytown, N.Y., says the aging of do-it-yourselfers is a concern for the industry. As they grow older, more homeowners are apt to hire contractors to do repairs. "The baby boomers have passed their fixer-upper stage," he says. Sales of existing homes have also peaked while new housing starts roared ahead, which Foote says also led to more professionals buying tools compared to homeowners.
Meanwhile, construction of new homes and apartments finally began to slow in August after hitting the fastest rate in more than a decade, according to the Commerce Department. Building starts fell by a combined 5.5 percent for both categories, although they were still more than 16 percent higher than August of 1997.
Foote says demand from auto mechanics is also expected to drop because of longer-lasting models and more computerized parts. "These things such as the 100,000 miles before a tune up are starting to cramp the business," he says.
In a related matter, 242 hand tool distributors indicated in a recent survey the leading methods they are using to grow their business. Those include, from the most frequent responses, adding to their customer base, doing strategic planning, deleting customers, increasing product lines, and Internet sales, according to Industrial Distribution's 52nd Annual Survey of Distributor Operations. Hand tool distributors also report that their top three concerns this year are finding more qualified people, the economy and more distributor competition. I
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