Machinery Industry, Research Paper Example

Introduction

This small machine industrial manufacturing industry in the United States has been subjected to the trends in the business cycle and the housing market. The companies which will be reviewed have been examining methods of increasing productivity and profits. In this research paper, SWOT analysis will be conducted on the tool manufacturing segment as a whole in order to evaluate the strengths, weaknesses opportunities and threats.

Industry

The small machine manufacturing industry manufactures hand tools, electrical power tools, lawn and maintenance machinery and irrigation products.  Steel is a requisite for the manufacture of small machinery equipment. Steel is commonly used in all of these manufactured items. The steel industry is in a crisis due to the government regulation, increased domestic labor costs, foreign competition, and the application of non- ferrous substitutes in the finished goods which are produced.

Economic Impact of the American Machinery Manufacturing Industries

The sales which had been realized by the American machinery manufacturing industry have exceeded $360 billion annually since 2010. The largest manufacturing export of the United States is machinery with a total export of over $141.7 billion annually during the past three years.  The annual export growth of the American machinery segment has been assessed at 19.2% annually. The exports account for 39.2% of the American machinery manufacturing sales. Over one million employment positions are held by individuals who work in the American machinery manufacturing segment. The share of the United States with regards to market share of machinery manufactured products is 14.1%. The American machinery manufacturing industry accounts for over 39.4 percent of the domestic market in the United States (ITA 1). The nominally measured GDP of the United States has been assessed at $17.1 trillion (BEA 3).

Global Impact of the Machinery Products Industry

Globally, machine manufacturing consists of 70% of the trade which is composed of finished goods. There have been over forty five million employment positions created in the world in the machinery manufacturing segment annually since 2010. The American machinery manufacturing segment is a segment where in exports the United States is the leader. The trade surplus which has been created by industrialized economies as a result of the machinery manufactured products is $726 billion.  Machinery manufacturing accounts for over 25% of the production which is realized by industrialized nations in the world (McKinsey vii).

Stock Performance of Snap On, Inc., Toro Company and Stanley Black and Decker, Inc.

SWOT Analysis

Strengths        

The strengths of the American industrial tool manufacturing segment  is that the productivity is increasing at an annual rate, the capacity of the development of innovative technologies, abundant communication resources and skills, access to the raw materials and highly elevated manufacturing engineering abilities.

Weaknesses

The weaknesses of the American industrial tool segment is that they are focused on producing instead of making profits, complacency with position and the strength U.S. currency, hesitant to adopt novel manufacturing technologies, diminishing industrial dimensions with regards to personnel and plants, the perception of American products in the global marketplace, the regulatory restrictions which must be followed and the elevated labor rates (Spada, 2007).

Opportunities

The opportunities which are realities for the American industrial tool manufacturing segment are a fast time from prototype to markets for new products, the capacity of communicating with ease with global clients very near to the primary customer base, elevated educational indices of the client base ability to perform state of the art casting designs for tool products capacity of transforming to machining and the elevated number of joint ventures and strategic alliances with global partners.

Threats

The threats which are faced by the American industrial tool manufacturing segment are a reactive nature in lieu to a proactive nature with regards to market challenges, the application of metals which are formulated from powders, the application of carbon and non-metal substances and the international competitors (Spada, 2007).

Companies

The organizations which were selected for the industry analysis are for Snap On, Inc. (SNA) Toro Company (TTC) and Stanley Black and Decker (SWK). The rationale which is the foundation of the selection of these organizations is their tenure in the industry and the robust financial aspect of the three companies with regards to their financial statements. All of the organizations are acknowledged as being reliant on the production of steel for their products.

Snap On, Inc. (SNA) Overview

Snap On, Inc. (SNA) Financial Valuation 2010- 2013

Dividends (%)

Efficiency

Financial Robustness

Administrative Success

(The Motley Fool 1)

Snap On, Inc. had been able to acquire Bahco which is a Swedish tool manufacturer whose designs are made by SNA Europe. SNA Europe is a European subsidiary of Snap On, Inc.  Snap On had developed opportunities in producing the manual diagnostic implements which are used to review the coordinating systems in automobiles and trucks. Snap Onalso has developed an opportunity in the market of emission testing equipment (Cummings 76; Gant 414; Rosenbloom 566).

Snap On had been conceived as a wrench company which manufactured tools in Milwaukee Wisconsin almost a hundred years ago. The quality which the Snap On became famous was the attribute of producing sockets which would snap onto handles and were interchangeable. Snap On became famous prior to World War Two as a result of this attribute. Subsequent to the Second World War, one of the officers of the company who had been in charge of marketing solicited for a military veteran to manage  the sales team. Newton Tarble was chosen. The second strength of the Snap OnCompany which had been to develop clients along a sales route and to visit them on a regular weekly basis (Atherton 10; Cummings 72; Gant 414, Rosenbloom 565).

The marketing strength which had been developed by Snap On tools became so robust that the salesmen who had routes were advanced to independent dealerships.  This enabled the salesmen to develop more expansive mobile stores which were placed in large walk in panel trucks. In addition, Snap On maintained an increasing and developing product line which catered to the needs of the customer base, the automobile and truck mechanics of the United States and Canada. In addition to their product line, the manufacturing processes which Snap On tools applies have caused them to be nominated as one of the most successful industrial manufacturing plant s in America by Industry Week. This plant is located in Murphy, NC (Cummings 76; Gant 414; Rosenbloom 566).

International Presence

Snap On, Inc. products and services maintain a presence in one hundred and thirty nations. The nations which Snap On, Inc. maintains its presence are distributed throughout the continents of North America, South America, Europe, Africa, Asia and Australia.

Toro Company (TTC) Overview

Toro Company Financial Valuation 2010- 2013

Dividends (%)

Efficiency

Financial Robustness

Administrative Success

Toro Company Financial Valuation 2010- 2013

Dividends (%)

Efficiency

Financial Robustness

Administrative Success

(The Motley Fool 1)

Considering the garden and lawn mower industry as a whole, it can be observed that Toro is an industry leader with sales which have extended over $1.77 billion in 2005. Toro Company produces employment for over five thousand employees and the organization marketed products under diverse brand names which include Lawn Boy, Lawn Genie and Toro. The Toro brand had been so effective in its marketing perspective that an Australian based irrigation concern; James Hardle Industries, Inc. had been purchased and added to the Toro brand. The James Hardle Irrigation company produces irrigation products for commercial and residential consumers. Toro strengths are invention (Lawn and Landscape 1; Toro 1).

The Toro Company had been conceived in 1914 in the town of Bloomington Minnesota. Toro is a professional planner and vendor of professional lawn maintenance services and equipment. The Toro Company had been initially conceived as an engine manufacturer and supplementary machine components to market for the main company which is Bull Tractors. The Toro Company has evolved from a tractor engine manufacturer which supplied the Bull Tractor Company to being a global leader in the design and supply of lawn maintenance equipment. The Toro Company also designs, fabricates and markets agricultural and commercial irrigation components (Melrose 24). The lawn and garden maintenance segment has augmented by over five percent in the years of 2004 – 2005. It is predicted that the lawn and garden equipment maintenance segment will continue to increase at a rate of 4.1%. The progresses are anticipated to be minimal in the short term perspective, notwithstanding, as the housing market experiences an upsurge in 2013- 2014, the consumer market for Toro Company’s products is anticipated to rebound. The anticipated upsurge in the housing market is expected to have an assertive effect on Toro company’s revenues (PR Newsweek 1).

It is expected that lawnmowers will continue being the company’s most rapidly increasing durable goods. There is a trend toward augmented durability in the original components; it can be observed that the accessories and components will continue to rise in demand as a result of the number of inventory elements which are presently being applied. The residential proprietorship of the client base and the accompanying statistics had been strong forecasters of the market conditions for lawn maintenance products. The decreased amortization rates for residences facilitated the purchase of residences for many families in the 1990s. The residential homeowners who procured homes became engaged in landscaping activities and maintaining their residences in a tidy condition (PR Newsweek 1).

The members of the professional contracting community rely on Toro Company in order to provide the maximum combination of dependability, durability and performance in order to maintain their concerns profitable and viable. This is the causal attribute for Toro Company’s provision of riding mowers which possess a zero turn aspect in order to quickly accomplish the green and turf maintenance tasks. In the agricultural segment, the concerns which are responsible for the provision of nutritional supplies relay on Toro Company’s products in order to sustain healthful agricultural yields.  This aspect is independent of whether the agricultural concerns produce vineyards, year round orchards, field crops or row agricultural arrangements (Melrose 24; Toro 1).

The industry which is detailed as professional lawn maintenance is relatively novel in the country, notwithstanding that the lawn mower is an invention which had been created in its mechanical form over 75 years ago (Melrose 24). The garden and lawn maintenance companies fabricate a variety of mechanical tools. It should be considered that the industry has been the recipient of adverse conditions which include the economic situation in the United States, demographics, the sluggish housing market and the climate. The garden and lawn mower industry has experienced a number of changes in the business cycle. In the period from 1997 to 2002, the shipments which were produced by the industry decreased by more than one billion dollars and experienced an increase of five percentage points between the periods from 2004 to 2005 (Toro 1).

One of the novel services which are being promoted by Toro Company is the Rain Master’s Zip ET. This service enables the clients to get up to date weather information which is based on the client’s postal code by means of the ICentral Toro Company application. The Toro Company has also promoted innovated irrigation systems which include the TMS – 424 modular system of irrigation. This is a state of the art irrigation implement which is basic in its operation. The Toro Company has also fabricated a water saving system which is called the Rain Bird 2.0. These products are assembled by Hunter Industries. This innovative line facilitates the work of irrigation contractors in installing more effective irrigation systems (Lawn & Landscape 1; Solomon 105; Toto 1).

The Toro Company has evolved from a concern which had been dedicated to building engines and engine components for Bull Tractor Company to a leader in the garden and lawn industry (Melrose 24). The Toro Company has increased with regards to its income and assets. In 2009, the Toro Company board of directors gave authorization for the purchase of a supplementary five million shares of Toro Company’s stock. The Toro Company had experienced a robust cash flow which has enabled the distribution of profits to shareholders by means of share repurchases and dividend payments (Toro1).

International Presence

Toro is a worldwide leader with a presence in over one hundred and forty nations around the globe. Toro has been able to remain viable and efficient in the development of elevated performance durable goods. There are diverse forms of competitors which Toro must address, as the marketplace for garden and lawn maintenance equipment has been experiencing enhanced growth. The competitors which Toro must address are Stanley Black Stanley Black and Decker, Inc. and John Deere, Inc. Other international competitors are the Ariens Corp., Textron, Inc. and the Kubota Corp (Toro1).

Recent News

The fiscal revenues for 2012 totaled to over $1,900 million (PR Newsweek 1). Golfing enthusiasts rely on the products which are manufactured by the Toro Company in order to provide maintenance of the golfing greens, fairways and bunkers. Over sixty six percent of all of the global golf circuits apply Toro Company’s products in order to maintenance their facilities. The gold circuits also apply Toro Company’s irrigation products (Toro 1).

The Toro manufacturing processes have adapted to the EPA requisite of making the lawn mowers cleaner with regards to emission standards. This increase in efficiency has been attained by the application of minimized spark ignition intervals. The Toro Company is dedicated to the preservation of the environment for the future generations. Toro has built its brand name on providing superior quality and state of the art innovations.  Toro has evolved into becoming an industry leader by separating the functions of the personnel in its facilities into groups and objectives (Toro1). In the Toro perspective, all of the employees receive training with regards to the administrative aspects of the company (Melrose 30).

Stanley Black and Decker, Inc. (SWK) Overview

Stanley Black and Decker, Inc. Financial Valuation 2010- 2013

Efficiency

Financial Robustness

Administrative Success

(The Motley Fool 1)

Stanley Black and Decker originated as a machining concern in Baltimore during 1910. Since then Stanley Black and Decker has applied the availability of a horizontal organizational perspective. This perspective enables the Stanley Black Stanley Black and Decker Company to provide a diverse range of dependable household goods. Stanley Black and Deckerinitially applied for the patent on the pistol type drill in the late 1910s. Stanley Black and Decker Company had been able to acquire DeWalt over fifty years ago (Turner 41; Vault Editors 71).

These innovations and acquisitions have facilitated the formation of a reliable brand in the home improvement and home construction segment. Subsequent to the acquisition of General Electric’s home products division thirty years ago, the Stanley Black and Decker organization has amplified its perspective by establishing a reliable household and construction brand.  The market segment which Stanley Black and Decker has targeted with its industrial tools has been the industrial market segment, professional and home consumers. Stanley Black and Decker has demonstrated substantial performance in the industrial and consumer segment. Notwithstanding, the production in the tradesman and professional contracting market segment has been lackluster (Turner 46; Tyson 158; Vault Editors 73).

As a result of the invention of the electrically powered drill, Stanley Black and Decker has strived to form a brand which is acknowledged for its reliable service and well made products. Stanley Black and Decker is a well-recognized trade name which holds the 7^th position as one of the world’s most robust brands. These nontangible assets provide increased consumer confidence in the products which are marketed. Subsequent to the purchase of General Electric’s household products line, Stanley Black and Decker had become enabled to attain an increased market share in the home consumer market. Stanley Black and Decker had only attained a nine percent market share in the professional and tradesmen market segment (Turner 42; Tyson 158; Vault Editors 73).

The positioning of Stanley Black and Decker as a brand which was applied by professional and tradesmen demonstrated lackluster performance after the purchase of General Electric’s household goods. Stanley Black and Decker has been able to prosper in the industrial and consumer market segment, the company was subject to the elevated obstacles to entering the tradesmen and the professional contracting market. The strength which is derived from increased market share in the professional and contracting segment is that this market segment is dependent upon long lasting and durable implements. The choice of substituting products for this market segment is not an option. Any tool which is less than a professional standard could prove to be a menace to the livelihoods of the tradesmen and professional contractors (MacDonald 72; Turner 42; Tyson 158; Vault Editors 73).

The positioning of the Stanley Black and Decker brand continues to be a challenge in the professional contracting and tradesmen market segment as many of the members of these markets did not wish to use the Stanley Black and decker brand. Milwaukee Tool Manufacturing Corp and the Makita Corp. have been dominant with regards to the professional and tradesman market segment. The Milwaukee Tool Manufacturing brand has maintained a fifty percent market share and Makita brand has maintained a ten percent market share in the professional and tradesman market segment (Tyson 158).

International Presence

The Stanley Black and Decker organization maintains a presence in over one hundred and fifty nations. The primary markets which Stanley Black and Decker, Inc. maintains its presence is in Asia, Australia, South America and North America.

Conclusion

The companies of Snap On, Inc. Toro Company and Stanley Black and Decker have been reviewed. These are a few of the companies which are reliant on the steel industry for production of their products. The steel industry has been experiencing a number of changes in the past few years which can be attributed to elevated labor costs, increased government regulation, foreign competition and substitute products.  Snap On, Inc. Toro Company and Stanley Black and Decker are organizations which have well positioned themselves for a global expansion and increased technological progress with regards to the manufacture of products which are derived from steel. The strengths which are possessed by the American steel products manufacturing industry are elevated indexes of manufacturing engineering expertise, close proximity to primary markets and ease of communication with supply chain elements all over the world.

The opportunities which are presented to the American steel manufacturing segment are the capacity of forming strategic alliances with other actors in the global market, fast time from the development of prototype designs to placement of the product in the market and a robust economic perspective. The threats of foreign competitors, substitute products and government regulations have caused the focus to shift from profitability to production in the American steel industry.  Considering the availability of commercial and consumer credit in the market for residential home purchases and the effect which this increase has on the aspect of lawn maintenance and construction, from an investor’s perspective, these conditions cause the Snap On, Inc. Toro Company and Stanley Black and Decker to be companies to watch with regards to profitability and P/ E ratios.

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