Sears, Craftsman, Stanley, and China

[J. Clarke]

I came upon a bit of information today that sheds a good bit of light on the Sears and Craftsman situation.

The whole article is about a lawsuit between Sears and "One World Technologies", which is apparently a supplier of Craftsman tools. This made no sense to me since I thought that Stanley now owned Craftsman and any purchases of Craftsman tools would be from Stanley from now on. Then I got to this paragraph:

"Sears sold its Craftsman tool brand to Stanley Black & Decker earlier this year in a deal valued at $900 million. The deal gives Sears the right to sell Craftsman products made by its existing suppliers royalty-free for 15 years."

Note--"by its existing suppliers".

So it looks like the Stanley deal doesn't actually change anything for Sears except that they got a cash influx and have to start paying a royalty on the brand 15 years down the road. If they can continue to use "their existing suppliers" then they can continue to use their Chinese wrench manufacturer no matter what Stanley decides to do.

So much for the hope that Stanley will bring Craftsman back onshore. Even if they do how will they distinguish their stuff from what Sears sells?

Anyway, the whole article is at .

[Ed Pawlowski]

They have three options. Keep buying from existing suppliers and make a profit on the resale. After 15 years phase out the existing suppliers and take over manufacturing Phase out the Craftsman brand. That can be done at any time.

It is not uncommon to buy a competitor and shut them down.

[notbob]

I bought some Craftsman combo wrenches about 4 yrs ago. They had a set that was labeled "Made in the USA" and a set labeled, "Made in China". Same set, essentially, but the USA labeled wrenches cost a bit more. Natch, I bought the former.

Were they really made in USA or jes assembled. Even worse, made/assembled on Guam, by Chinese workers, in a Chinese owned factory, and merely labeled "Made in USA"? This is entirely legal, now, and where much of our USA labeled stuff comes from. ;)

nb

[J. Clarke]

Who is "they"? You seem to be conflating Stanley with Sears.

[Ed Pawlowski]

No, "they" is Stanley. Sears does not have those options. Stanley bought the 15 year deal.

[dpb]

On 05/21/2017 9:03 AM, Ed Pawlowski wrote: ...

With the clarification you mean Stanley by "they", that's certainly _not_ "their" options...

Nothing indicates Sears sold the manufactured _product_ or the contracts they have in place for future product; in fact the Stanley releases imply that. Stanley has to either negotiate additional output from existing suppliers Sears has under contract or produce product on their own.

But they have no obligation 15-yr deal or not to use existing contracts and indicate they structured the deal specifically to not incur any Sears obligation Sears might be unable to fulfill.

They indicate they do intend to expand US manufacturing facilities to supply product.

Sears, otoh, has the ability to continue to sell and develop product essentially unchanged until the 15yr window expires at which time they must pay royalties. That is, of course, the big if of it they're still around that long.

Stanley put out a presentation that covers their viewpoint at the time of the sale announcement that gives some insight to their thinking. I think they're all wet, but they didn't ask! :)

Another mag's take...

[J. Clarke]

And the point I am making is that the "deal" doesn't seem to be what I (and apparently you as well) thought it was.

The whole point of my post is that apparently sears DOES have the option of continuing to buy from their existing suppliers and not from Stanley. They are taking one of their existing suppliers to court over a contract to supply tools to be sold by Sears under the Craftsman name. It is SEARS doing this, ***NOT*** Stanley. And the supplier is ****NOT*** Stanley.

There was nothing about Stanley being obligated to use Sears' existing suppliers. Perhaps that is also in the contract but given that Stanley has been talking about moving production back onshore it seems unlikely. Stanley could start making tools in their own factory under the Craftsman brand now. Sears appears to be under no obligation to sell those tools in their stores.

Actually that is not in Stanley's power at all. While they own the rights to the name, they aren't selling much of anything under that brand so there's nothing to "phase out". Sears does have the power to do it since they _do_ have products. Perhaps Sears will choose to do that. Seems a bonehead move if they do but it won't be the first bonehead move a big retailer has made.

Who do you think has the power to shut anything down? Stanley did not buy Sears so they most assuredly cannot shut Sears down. Sears has the right to use the name without royalties for the next 15 years, so Stanley can't shut _that_ down. And the lawsuit shows that Sears (***NOT*** Stanley) now does and expects to continue to buy tools from One World Technologies to be sold under the Craftsman brand. One World Technologies is NOT owned by Stanley, One World is the parent company of Ryobi, and is thus a direct competitor to Stanley. So how is Stanley going to shut Craftsman down?

[Ed Pawlowski]

If Sears sold Craftsman to Stanley they must hve given them some control. Depending on how much, Stanley can just shut down anything sold under that name. Sears won't be around in 15 years. Maybe not even another year as they spirol down.

[nailshooter41]

Sears never made their own tools in their own factory. They used jobbers a nd contractors to make their tools. Absolutely nothing wrong with that, it has been done for centuries. The good thing about Sears was that at one t ime the specifications Sears set made their product quite good. Their bull etproof warranty made it a no brainer for certain tools.

I remember about 30-40 years ago going into the Sears "tool store" they had at the big Sears here in town that was conveniently by my house. I often recognized rebadged products. Different color of molded parts, a usually a couple of Sears marked goodies were all that were different.

Then I noticed a lot of different manufacturers we selling "DIY" lines (for example, Sears "Companion" line) that were made in other countries. Then it became to easy to have a lot of top shelf products made "over there", wh erever that might be, so the crap tool Tsunami began. I couldn't tell wher e tools were made (I ALWAYS wanted to buy American first as an allegiance t o my blue collar roots)after a while. Tools were label on the box they cam e in with their COO, and I thought when I looked at the tool and it had the company's American address on it the tool was made here. Nope, not necess arily; the label could just be a reference to the company.

They American tools were assembled here using parts "sources" from other co untries. So people like Porter Cable, Bosch, etc. had tools made here or o verseas, made from parts made here or overseas. never saw any country othe r than the USA when I was buying and I didn't care if a tool came from Swit zerland, Germany, Italy, or anywhere else. If it wasn't American, I didn't buy it.

I gave that up, though. As companies bought one another, were absorbed by one another, used manufacturing facilities and parts from one another, then were bought by investment firms that saw tools as widgets... I now just bu y using my "bang for the buck" metric.

Now I see that DeWalt is sporting a new American flag logo on the boxes tha t tout MADE IN USA .... and in much smaller print... "using global material s"...

So we now have factories in the USA that have workers that screw parts toge ther and call it tool making, parts that are made somewhere else. I doubt that if it wasn't a populist trend these days, this new logo wouldn't have been noticed.

I don't know how anyone can keep up with who owns who, who can make what pr oducts, which patents are licensed out, which company is a subsidiary or pa rtner of another (remember... Bosch partnered with Fein on a recent project !) and on a on.

I am sad to see Craftsman/Sears go away, but this agreement just seems like an natural end to a tool line (Craftsman and their unrealistic lifetime wa rranty) and even more so, and end to a business model that should have been abandoned years ago.

Robert

[clare]

On THEIR Craftsman tools they put "Craftsman by Stanley" or "Craftsman Proffessional", os some other distinctive branding. Even "Craftsman American". Or "Craftsman Classic" -Not that hard to distinguish.

[krw]

Essentially, Stanley just bought the name. They can sell "Craftsman" to other outlets.

Note sure where that hope came from. The Donald? ;-)

[J. Clarke]

I don't think you get it. "Craftsman" is a name, not a company. What Stanley got was the right to use the name. Sears however did not give up their own right to use the name. The deal was that Sears can use it for 15 years without paying Stanley anything for the privilege of using it and after that they have to give Stanley a percentage of the take.

Stanley didn't get a factory, they didn't get workers, or foremen, or stocks of materials, or contracts with suppliers. There's nothing for them to "shut down". If Stanley wants to sell tools that are labelled "Craftsman" they are going to have to start making them in their own facilities, make their own agreements with suppliers, or buy them from Sears which already has such agreements in place and has stocks of product ready to ship.

[J. Clarke]

"Craftsman Professional" is a brand that Sears uses--there are tools on the shelf at Sears now marked "Craftsman Professional". "Craftsman Classic" is a good idea.

[dpb]

On 05/21/2017 4:09 PM, J. Clarke wrote: ...

I've wondered where the tools Ace Hardware is selling are actually coming from 'ere now and have had no luck in actually finding out the chain.

I've not been interested enough to try to do some specific looking at in-store stock to compare the stock numbers but I'm guessing at the moment it's the latter of the above options they're using. They've not had time to put a new production line together and it isn't at all clear that Sears even has the ability to sell the actual production drawings that would be needed to reproduce the tools that OWT builds for them from the public disclosures and I'd suspect that is their intellectual property, not Sears' anyways; only the higher-level spec's may belong to Sears but it's not clear even that was sold to Stanley.

All in all, looks to me as though Stanley bought the proverbial "pig in a poke" -- not certain what their longterm plans are for making it profitable even from the aforementioned presentation they gave to analysts at the announcement. Seems a peculiar arrangement...

[Ed Pawlowski]

Once Sears is gone (probably soon) Stanley can shut down the Craftsman name if they desire. They own it. They can improve it and bring it back to what it was 40 years ago or get rid of the competition allowing Stanly branded tools take that market share.

[clare]

The Craftsman name IS an assett - shutting it down after paying the price they paid would be EXTREMELY foolish.

[J. Clarke]

To say that they can "shut it down" implies that Stanley has something to "shut down". If Stanley decides not to do anything with the brand that they just paid lots of money for, then it could die with Sears, which is a bit different from being "shut down". Although if the objective is to eliminate a competitor, it would have been a lot cheaper and more effective to _not_ give that competitor a large cash infusion.

[krw]

I don't think Stanley is worried that their cash is going to save Sears.

[J. Clarke]

The point is that if the objective was to eliminate a competitor, why bother at all?

[krw]

To get the name.