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To have and to hold

BY Ken Clark

Most merchandise managers follow design trends. David Ross, tool storage merchandise manager for Burnsville, Minn.-based Northern Tool & Equipment, took matters a step further by designing his own trend. From the initial drawing on the back of a napkin to rollout in stores, Ross spearheaded the introduction of the retailer’s Crank Case Rolling Toolbox.

“It’s a throwback to a muscle car,” Ross explained. “It’s not for everybody.”

With exhaust pipes, flame accents and five-spoke mag wheel casters (optional), the heavy-duty product, which starts at $399.99, speaks to the “gearhead,” the company’s affectionate term for the serious auto enthusiast. “We want it to be like him opening the hood of his car,” Ross said.

According to Ross, the Crank Case was the result of identifying a need for a colorful, flamboyant alternative in the heavy-duty end of the category. Ross’s experiment in tool-storage design shows individual initiative, but it is also a reflection on the entire category of tool storage, which continually evolves through trends in design, materials and functionality. As Ross describes Northern’s tool storage category as “an exploding” area, manufacturers (including Stanley Works and Custom LeatherCraft) are busy promoting innovations to their boxes, bags and buckets.

Tool storage used to be so simple. The merchandise mix consisted, for the most part, of red toolboxes and black toolboxes—both constructed of a durable metal and chrome hinges.

Those classic metal, hand-held boxes fell out of fashion about 15 years ago, according to Ross’ estimate. “Everything went to plastic, and that’s really the way it was for a long time,” he said.

The metal carry box is making something of a comeback, he said, as vendors approach him with retro designs. Large and small toolboxes are evolving, offering improvements that revolve around efficiency, endurance or portability, or all three.

Ross describes soft-sided boxes, bucket-tool organizers, truck boxes—both cross bed and under body—as all part of the storage universe. “DIY is a big, broad audience,” said Ross. “It goes from the guy who doesn’t know jack to the pseudo-expert.”

According to research from the Home Improvement Research Institute, what manufacturers are doing appears to be working. There is a general high level of satisfaction in the category.

Of the 16 hand tool and accessory categories tracked in the HIRI report—toolboxes had the highest level of “very satisfied” at 81 percent. (The rest of the categories ranged from 46 percent for stud finders to 80 percent for saws.)

Moreover, 52 percent of consumers reported the top reason for their purchase of a toolbox was merely a “new product addition,” as opposed to a replacement or “to have on hand for repeated use.” Only wrench purchasers pointed more frequently (56 percent) to “new product addition” as a top reason for purchasing a product.

The research, conducted by Synovate, included responses from 6,614 consumers and was released in May.

The study also found the average price for a toolbox was $41, while the median price was $20.

Storage innovation

On one end of storage spectrum are products such as Northern’s customized Crank Case and the high-tech Craftsman AXS. On the other is the entry-level plastic carry case from Northern Tool that carries a $5 price point.

In between are a host of increasingly specialized and sophisticated products, and helping to generate more interest in the category are innovations.

“People today have higher expectations in our categories,” said Ian Kilgour, product manager, storage for Stanley. “We’re constantly under demand of the end user to create better products.”

It’s not just style that drives sales in this category, he added. There’s a bottom line incentive, particularly when selling to pros.

“If you’re an electrician and you know exactly where your wire snippers are and your electric tape is, that makes you that much faster,” he said. “Ease of use and speed put money in [the professional’s] pocket.”

Novel features

During a new product press event in New York City in May, New Britain, Conn.-based Stanley unveiled new storage products, including the line of FatMax Xtreme Tool Bags.

Some of the features of the soft-sided tool bags include a one-piece polypropylene-injected bottom for added strength. “From what we see, the tool bag typically gets thrown around a lot,” he said. “The impact in a soft-based bag, even if it has little feet on it, can damage the tools inside, especially if you have a volt meter in there.”

Strong plastic bottoms, combined with leather, ballistic nylon and strong polyester (1200×1200 denier) also help keep water out, he added.

Soft-sided storage revolves around the concepts of flexibility, storage and efficiency, he said. “In storage, our job is to help people take everything they’re using from A to B to C and back to A,” Kilgour said.

Weatherproofing is one of the areas of innovation that has caught the eye of Tom Wissink, senior merchandise manager at Jensen Distribution in Spokane, Wash. Specifically, he pointed to the new line of “Climate Gear” tool storage bags from Custom LeatherCraft (CLC), which offers particular value to tradesmen in the rainy Northwest or those in marine areas.

The Climate Gear line features soft-sided but durable interwoven tarpaulin construction, polyester bottoms with rubber strips and weather resistant zippers to keep tools and equipment dry. The line offers a half-dozen variations on the water-resistant theme.

In general, Wissink was quick to agree that the tool storage category lends itself well to experimentation.

“They continually come out with bags that are more useful to people in the various trades,” he said. “And this is a good thing to see.”

South Gate, Calif.-based CLC specializes in tool holders and storage bags. At press time, the manufacturer’s CLC Megamouth Tote Bag is described on the Ace Hardware Web site as “top seller” (at $37.99) and “top rated” in the Web site’s tool buckets category.

Tool storage of the heavy duty and high-tech variety made an appearance at a recent unveiling of Sears Craftsman products. The Craftsman Magnetic Tool Storage Mat, MagMat, was among the showpiece products, as was the high-tech, garage-focused AXS tool storage system. Among the features, it serves as a docking station for an MP3 player and a digital information center that provides time, date and temperature in the work space.

Whether it’s automotive-related, word-working-related or home improvement-related, tool storage is described as a recession-proof category—at least relatively recession proof.

“Storage is a very healthy category for Northern,” said Ross. “Everybody has stuff, even in recessive markets. Maybe a guy isn’t buying a house, but he still has stuff to store and, he has to put it somewhere.”

Northern Tool purposely talks about the customer as a male.

“We have a strong automotive segment in the grand scheme of what we do. We serve the warrior,” Ross said. “The whole philosophy can be summed up by saying, ‘My wife owns the entire house, and I own the garage. That’s my cave.’”

That cave continues to be a source of product evolution in the tool storage category, with no signs of letting up.

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Mansfield named chairman at Valspar

BY HBSDEALER Staff

Minneapolis-based paint and coatings company Valspar has named current president and CEO William Mansfield as chairman of the company’s board of directors, effective immediately.

Mansfield succeeds Thomas McBurney, who has served as chairman for the past two years. McBurney will remain chair of the board’s governance committee and lead director.

Mansfield, 59, joined Valspar in 1984. After working in lead roles at most of Valspar’s businesses, he was named COO in April 2004. He has served as president and CEO since February 2005.

Mansfield holds a B.S. degree in engineering from Drexel University and an M.B.A. from Lehigh University.

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Top 350 pro dealers cope in a difficult housing market

BY HBSDEALER Staff

When the Chinese Year of the Dog came to an end on Feb. 17, 2007, some pro dealers looked at their 2006 sales figures and saw an apt comparison. Sagging lumber prices and dwindling housing starts had a negative effect on many dealers’ revenues. But overall pro sales for the industry’s top 350 players, according to HCN’s annual survey, grew by 9.0 percent, to $55.98 billion. View the top 350.

Although some dealers posted double-digit declines, others were able to break even or grow their business through the downturn. Of the 350 dealers on the list, 119 reported revenue increases, 77 experienced declines and 154 companies are listed with flat sales.

In terms of rankings, Pro-Build, Stock Building Supply, 84 Lumber, BMHC and ABC Supply still occupy the first five positions among lumber and building material dealers. Several of the Big Five continued making acquisitions through 2006, which helped boost their revenues. Altogether, they accounted for 35 percent of the Top 350 sales.

One of the businesses acquired was Rowley Building Products, a 10-unit chain of lumberyards in New York’s Hudson Valley. Rowley’s owners decided to join Strober, a division of Pro-Build, when they noticed national builders moving into the area. But by the time the deal was finished, in July 2006, single-family permits in the New York, New Jersey region were on track for their weakest year since 1996.

“[Strober] has been around awhile, and they understand the cyclical nature of the business,” co-owner Brian Rivenburgh told HCN at the time.

Most of the pro dealers on the Top 350 list have been through housing downturns before, the last one beginning in 1995 and lasting three years. But this downturn is different, with production builders pulling back on the reins quicker than anyone can remember.

“Literally, in early July, it was just as though somebody turned off the faucet,” said Builders FirstSource CEO Floyd Sherman, speaking to a group of analysts last October.

Builders FirstSource showed a decline of 4.2 percent in sales last year, despite expanded manufacturing capacity in Greenville, S.C.; a new lumberyard in Lake City, Fla.; and an acquisition, Freeport Lumber, in the Florida Panhandle.

Florida dealers listed on HCN’s Top 350 scorecard showed a pattern of similar results, with 14 out of 18 companies reporting sales that were flat or down for the year. But the story behind the numbers is one of robust sales in the first half of 2006 followed by steady declines in the last two quarters.

“By the end of the year, many of our dealers had [experienced] a solid year,” explained Bill Tucker, president of the Florida Building Material Association.

Of course, 2007 is another story. “It continues to fall off the roof,” Tucker said. “I’ve spoken to dealers whose sales are off by 40 to 50 percent.”

One of the bright spots on the building landscape — commercial construction — is doing well in Florida, according to Tucker. Dealers across the country are turning in similar reports. O.C. Cluss, a nine-unit pro dealer based in Uniontown, Pa., acquired an Ohio truss manufacturer last year that makes, among other products, steel trusses used in commercial construction. Other Cluss acquisitions in the past two years include a glazing operation and a wholesale plumbing supply company, both of which serve the light commercial market.

O.C. Cluss reported a 30 percent rise in sales in 2006, from $85 million to $110 million.

Even the big guys, the ones who grew more muscle during the production home cycle boom, are turning toward commercial work now that times are lean. BMHC’s construction services division is “pursuing limited commercial construction work where it makes good business sense to do so,” according to SelectBuild president and CEO Mike Mahre.

Although the first half of 2006 was a busy time for acquisitions, M&A activity tapered off toward the end of the year as the outlook grew dim. Stock Building Supply announced employee layoffs in June and November, and the other major LBM players quietly reduced their work forces. Pro dealers who had relied on tract home builders for revenue began looking at multi-family housing, the remodeling contractor, and in some cases, the consumer.

Chip Mortimer, president of Mortimer Lumber in Port Huron, Mich., served home builders from his four locations in southeastern Michigan during the boom days. But with single-family building permits in the Detroit metropolitan area down by 44 percent this year, Mortimer calls his housing market “the worst place to be right now.”

Yet business is holding steady at this $25 million chain, which has shifted its customer mix by redirecting advertising dollars and beefing up its kitchen cabinet and decking division. “We never abandoned our remodelers and our consumers, so business is still strong,” Mortimer said. “The customer count and the transactions are just different.”

Dealers also turned to multi-family housing as single-family starts dried up. Although the condo market has weakened considerably, there are still pockets of intense multi-family building activity in some urban centers. Condo and apartment projects are going up all over downtown Seattle and Bellevue, Wash., some with commercial mixed in, all fed by the job growth in those cities.

In San Jose, Calif., ORCO Construction Supply store manager Mark Tabaldi said his sales figures are running 12 percent to 15 percent higher than last year’s. He attributes the growth to commercial and multi-family construction in the Bay Area.

“Everybody is going up,” Tabaldi said, referring to high-rise residential projects like those being built next to a Bart station near ORCO’s corporate headquarters in Livermore, Calif. “There’s a lot more hardware in these kind of projects, and the order is always pretty big,” he explained. Threaded rods that go between the floors of an apartment building — commonly known as a “hold down system” — can add up to $50,000 for a large project, according to Tabaldi, who isn’t mourning the slowdown in single-family construction.

For more on the Top 350 pro dealers, read the Aug. 27 issue of Home Channel News. 

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