Power Tools

Expect moderate growth to continue

By -- Industrial Distribution, 5/1/2000

Despite signs of moderating construction markets, power tool sales overall are expected to continue growing in the mid single-digit range this year.

James White, executive vice president of the tool and equipment group at Pentair Corp., and president of the Power Tool Institute, says economic indicators continue to generally bode well for the industry, which has enjoyed solid growth since about 1994.

"We don't expect to see much of a change typically in an election year... housing starts continue to be good, interest rates remain relatively low," he says. "We expect to see good growth this year." White adds, however, that the big box home centers, like Home Depot, are the fastest growing channel.

The construction industry has slowed its torrid growth of 1998-99. The pace of U.S. home building slipped seven percent from January to February, for example, construction analyst F.W. Dodge reports, while a rise in fixed mortgage rates is beginning to dampen housing demand.

Still, Robert Murray, vice president of economic affairs for Dodge, says a slight improvement during the first two months of 2000 compared to a drop in activity at the end of last year suggests that "the construction industry is now stabilizing at what is still a very healthy level." Nonresidential building shot up 13 percent in February, led by commercial structures such as hotels.

While power tool sales average from five to seven percent growth across the industry, White says some segments like cordless tools are growing in low double digits, at least. Cordless tools are widely expected to continue growing at the fastest rate.

For example, air nailers enjoyed sales increases from eight to 12 percent overall last year, he says, "because of upscale do-it-yourselfers and because of home construction."

Corded woodworking products like circular saws, routers and sanders show mid-level growth, White says, because do-it-yourselfers are "moving up in quality [in terms of] the tools they buy ... a lot of older people are retiring, they want hobbies and get into woodworking."

Overall, sales of woodworking and home construction tools continue to grow faster than drills and grinders, he says. Corded drills and grinders show growth rates in the low single digits, he says.