Editor's note: News that Stanley Tools is creating 500 jobs in Texas as it brings Craftsman production back to the USA shows that tariffs are working.

Automated Texas factory to produce wrenches and sockets at costs similar to work now done in China





[Bob Tita | May 15, 2019 | WSJ]

Stanley is investing $90 million to open a plant in Fort Worth, Texas, by late next year that will employ about 500 people to make 10 million Craftsman wrenches and ratchets and 50 million sockets annually. Robots and fast-forging presses will help boost output about 25% above the older forging machinery now used to make Craftsman wrenches in China, helping keep production costs at the new plant in line with those in China, Stanley said.

The company’s strategy mirrors moves by other manufacturers in recent years to bring some foreign production back to more automated factories in the U.S.Whirlpool Corp. WHR +1.86% is making some small KitchenAid appliances in the U.S. again after they were made by a contractor in China for years. CaterpillarInc. has moved the assembly of excavators and small bulldozers from Japan to new plants in the U.S. to free up production capacity for the Asian market.

HomemadeStanley Black & Decker is making more of its products in markets where they are sold. Percentage of tool and tool-chest sales from locally manufactured products

“We’re pushing very hard to manufacture where we sell it,” Stanley Chief Executive James Loree said in an interview.

Stanley is facing higher tariff costs and weakening demand for tools from a slowing U.S. housing-construction industry and a slowing economy in Europe. The company beat sales and net-income expectations in the first quarter, though, and shares are up 14% this year, slightly better than the gain in the S&P 500.

The Connecticut-based maker of hand-and-power tools bought the Craftsman brand in 2017 from Sears HoldingsCorp. , which moved production of Craftsman products to China several years ago to reduce costs after decades of contracting with manufacturers in the U.S., including Stanley.

Stanley sells Craftsman tools and lawn equipment through Amazon.com Inc.and home-improvement retailer Lowe’s Cos., as well as Ace Hardware Corp. stores. The brand isn’t sold in some other chains including Home Depot Inc.to avoid competition between Craftsman and other Stanley-owned brands sold there. As part of the purchase agreement with Stanley, Sears continues to contract with suppliers for the Craftsman-branded tools sold at its stores and keeps the profit from them.

Mr. Loree said restoring Craftsman’s made-in-America credentials will strengthen a brand with broad appeal to customers as diverse as homeowners and professional mechanics. Craftsman sales are forecast to increase fourfold to $1 billion by 2021, analysts estimate. Stanley’s tool business generated $10 billion in sales last year.

Some Craftsman tools are already assembled at eight Stanley plants in the U.S., including power tools in North Carolina, tape measures in Connecticut and utility knives in South Carolina.

Mr. Loree said he wants 50% of Craftsman tools to be made in the U.S. a few years from now, up from 30% today. Stanley remains reliant on foreign-made components for some of those tools, such as motors for its power tools.

After the Trump administration raised U.S. duties on components imported from China to 25% from 10% last week, Stanley said its tariff costs on components from China this year will increase more than 60% over 2018 to about $250 million.

Mr. Loree said he is ready to shift to suppliers outside of China if the two countries don’t reach a trade deal.

“If we knew that the tariffs were going to be permanent, we would make sweeping changes to the supply chain,” he said.

Read the original article here.