Snap-on Inc. Overview

Snap-on Inc.

Equipment, tools, diagnostics, repair information, and systems solutions for professionals are manufactured, distributed, and sold by Snap-on Inc. (Snap-on). Hand and power tools, diagnostic software, information and management systems, tool storage, shop equipment, and other solutions make up the majority of the company’s offerings. Snap-on, Blackhawk, Cartec, CDI, John Bean, Williams, ShopKey, Nexiq, and Lindstrom are some of the brands under which the company sells its products. Through direct and distributor channels, Snap-on provides its products and services to government, agricultural, aviation, natural resource, industrial, and vehicle dealerships and repair facilities. Additionally, it uses its website to sell products online. The business operates in North America, Europe, and Asia-Pacific through subsidiaries. The US headquarters of Snap-on are in Kenosha, Wisconsin.

History of Snap-on Inc.

In 1920, Joe Johnson and William A. Seidemann established Snap-On. Before Johnson came up with the idea for “interchangeable sockets,” mechanics used one-piece socket wrenches. The efficiency and adaptability that came from utilizing a large number of sockets and a small number of handles were quickly recognized by professional auto mechanics. Direct customer demonstration of the novel tool sets’ advantages generated sales from the beginning. In 1923, a catalog was released and additional tools were added to the line.165 salespeople were demonstrating and selling Snap-On tools by 1925.

From 1921 until his death ten years later, Stanton Palmer, a former factory sales representative, was the corporation’s president. At that time, William E. Myers, the owner of Forged Steel Products Company, one of Snap-On’s primary creditors, approached the company for financial assistance. Myers later became Snap-On’s new president. Joe Johnson, the company’s conceptual founder, took over as president of both Snap-On and Forged Steel after Myers’ death in 1939.

The sales force continued to expand under Johnson’s direction. In an effort to maintain goodwill with the civilian customer base during World War II, Snap-On began releasing available stock to its sales force when the supply of tools for the military caused a shortage in the civilian market. All salespeople carried stock and made immediate deliveries to their clients by 1945. Snap-On made each seller a separate businessperson in a designated territory shortly thereafter.

Post War Era

In the 1950s, expansion was aided by Canadian and Mexican subsidiaries. Additionally, the Snap-On product line was expanded. Products that addressed the mechanic’s need for increasingly complex diagnostic, maintenance, and repair tools were brought about by corporate acquisitions of specialized businesses. Snap-On also purchased its network of branches during this time, which had previously been independent stores. Snap-On was able to gain greater control over the marketing and distribution systems through branch acquisitions.

When Johnson stepped down as president in 1959, Victor M. Cain took over. A Snap-On store opened in the United Kingdom in 1965. After years of legal debate, a significant wrench “flank drive” design patent was also granted in 1965. Wrenches with the “flank drive” design had better grip and were less likely to round the corners of 12-point fasteners with high torque.

In the years that followed, Snap-On experienced significant expansion. Profits increased from $6 million to $42.6 million, while sales increased from $66.2 million in 1969 to $373.6 million in 1979. When Norman E. Lutz became president in 1974, he was in charge of bringing the company’s global sales force to over 3,000. Edwin C. Schindler was elected president in 1978, and Lutz was appointed chair and CEO. The New York Stock Exchange first listed Snap-On stock in that year.

The management of the company underwent rapid change at the beginning of the 1980s.Schindler took over as chairperson after Lutz retired in 1982, and William B. Rayburn became president; The following year, Schindler passed away, and Rayburn took over as CEO and chair of the company. The 1982 recession was cited as the cause of a slight dip in earnings and revenue. Snap-On looked at how things worked and took steps to increase profitability by cutting costs and marketing more aggressively. However, despite the disappointing year, net earnings were significant at $37.3 million, or 8.7% of sales, on $430.5 million in net sales.

Snap-On maintained its reputation as a leading supplier of high-quality goods and attentive customer service. In the 1980s, Snap-On became NASA’s sole supplier of space shuttle tools. In 1984, Snap-On purchased a 34% equity stake in Balco, Inc., a manufacturer of equipment for engine diagnostics and wheel service. In some cases, the vans carried inventory of hand tools and equipment worth $50,000 to $200,000, and the frequency of customer visits had increased to weekly. Dealers were able to identify and recommend the replacement of worn-out tools thanks to additional services like cleaning Snap-On tools they had previously purchased every six months. Snap-On was able to maintain its premium prices despite the fact that it was beginning to face competition from a variety of sources, including Sears, Roebuck & Co., the Mac Tools subsidiary of Stanley Works, the Matco Tools subsidiary of Chicago Pneumatic, and a number of Japanese companies. However, Snap-On was able to maintain its customer relationships and the services it provided.

While Forbes estimated in October 1986 that “with its long head start and 49 percent of the market, Snap-On has as many dealers tooling about as all of its competitors combined,” Snap-On has stated that its market share cannot be determined. Snap-On was distributing two million catalogs annually at this time. According to Rayburn, who told Forbes that “our industrial people leave them with buyers, purchasing agents, and requisition people,” the 350-page catalogs were Snap-On’s “most valuable single marketing tool”. They are left with mechanics and shop owners by our dealers. They look in the catalog for a tool that can solve a mechanical problem.”

In 1988, Snap-On faced a new obstacle under the new Chairperson, Marion Gregory. In state courts all over the United States, former and current dealers filed an increasing number of lawsuits. Misrepresentation, contract violations, and causing emotional distress were among the claims. George Owens, a former dealer, claimed in a previous case that he was forced to split his territory with another dealer. In damages, a jury in California awarded $6.9 million, which was later reduced in a settlement. Snap-On’s automatic billing of dealers for certain tools provided to them for promotional purposes, misrepresentation of potential profits to dealers, and pressure to extend credit were also claimed in other lawsuits.

In general, Snap-On thought that settlement was better than litigation; According to Snap-On’s 1991 Annual Report, the company incurred or paid a total of $7.9 million for litigation-related costs in 1989, $16.6 million in 1990, and $16.2 million in 1991 before “deciding to pursue more cases to final determination and apply a more stringent policy toward settlement.” In addition, Snap-On made claims of its own against its insurance companies regarding the coverage of specific dealer claims.

In 1991, Robert A. Cornog, who had previously held the position of president of Macwhyte Company, was appointed chairperson, president, and CEO of Snap-On. This marked the end of a long tradition in which employees held these positions. Also that year, Snap-On started enrolling all new U.S. dealers as franchisees and gave existing dealers the option to apply for a franchise. Snap-On saw the transition to a franchise model as an opportunity to gain greater control over its dealers’ marketing and business operations. Costs from new group insurance programs, stock purchase programs, and special volume-purchase discounts were anticipated to offset franchise fees, so the program was not intended to generate additional revenue. For existing dealers, Snap-On waived initial and some recurring franchise fees as an incentive to switch. Regardless, most existing sellers didn’t choose to apply for establishments.

In 1991, in order to acquire the remaining stake in Balco, Inc., Snap-On issued common stock with a value of approximately $21.2 million. Additionally, the company stated that it would relocate product inventories to four regional distribution centers from 51 branch warehouses. By this point, subsidiaries in Canada, the United Kingdom, Mexico, Germany, Australia, Japan, and the Netherlands carried out operations. Even though sales in other countries made up only 5% of operating income, they accounted for 17% of total revenue.

Despite the recessions in the United States and Canada, the company’s 1991 net earnings, which had been lower than they had been for three years in a row, were still $34.3 million on net revenue of $881.7 million, or 8.3% of net revenue. This resulted in an average after-tax return on shareholders’ equity of 11.4%, which was significantly lower than the 18-23% Snap-On had achieved between 1983 and 1989.Snap-On responded by reorganizing its management structure to permit distinct accountability for its three business divisions: Marketing and distribution, finance, manufacturing and technology, and technology.

As Snap-On’s management looked toward the end of the 20th century, they were aware that the company would need to adapt to fundamental changes in its business in order to achieve the high returns it desired. Snap-On was determined to develop new products and services for existing customers while also reaching out to new markets, believing that improved automotive quality and warranty programs had slowed growth in repair volume and shifted work to auto dealers.

The management of Snap-On began to consider whether its credit-proven customers, who were in weekly contact with Snap-On dealers, could benefit from additional services like a general use credit card. It was thought that Snap-On could save money by sourcing products from outside, which already made up 35% of the company’s production. It was thought that industrial and international markets could help Snap-On achieve the kind of expansion to which it had always been accustomed.

The management of Snap-On made the decision in the latter part of the 1990s to enter into a licensing agreement with Stylus Writing Instruments to manufacture and market office products under its own brand name in order to maintain its strategy of expanding into new markets.” Made in the USA” was used to market Snap-On office supplies like staplers, tape dispensers, and staple removers. Stylus management promised that all Snap-On office supplies would be “ergonomic and durable, with unique styling and colors” when the agreement was reached. At the same time, Snap-On changed its mind and signed a private label agreement with Lowe’s Home Improvement Warehouse to enter direct consumer retail sales. The two businesses were preparing to compete with Sears’ Craftsman brand, Wal-Mart’s Popular Mechanics brand, and Home Depot’s Husky brand name tool line by launching a private label tool line called Kobalt. The company’s $1.7 billion in 1997 revenues were anticipated to rise by at least 5%, if not more, as a result of the expansion into retail sales. Management thought that entering retail sales was well worth the effort and risk because Snap-On hand tools sales were expected to rise by 1.5%.

During the summer of 1998, Snap-On announced a comprehensive plan to restructure its entire operation, which included eliminating over 1,000 jobs to boost profitability. A number of product lines would be discontinued, some business units would be combined, and more than 40 small sales offices would be closed across North America and Europe as part of the plan.

Snap-On continues to encourage its R&D team to challenge conventional practices with more than 200 patents and numerous pending patent applications. One of the most innovative marketers in the tool manufacturing industry, the company has been at the forefront of the design of new tools for numerous industrial, medical diagnostic, automotive, and aerospace applications.

Snap-on Inc. operations

Plants in Elkmont, Alabama, Elizabethton, Tennessee, and Milwaukee, Wisconsin, are managed by Snap-on Inc. In Murphy, North Carolina, pneumatic and cordless tools are produced under the “Ingersoll Rand” brand name. Conway, Arkansas, is where tire changers and wheel balancers are made. City of Industry, California, is where torque products are made and assembled. In its plant in Algona, Iowa, the company manufactures tool storage cabinets.

At their Kenosha facility, Snap-on manufactures sockets, extension bars, pliers, and screwdriver blades and bits in addition to hand-held electronic diagnostic tools for the computer systems found in the majority of contemporary automobiles and heavy-duty vehicles. The United States, Ireland, Australia, Mexico, Brazil, and China are all places where software is made. Its diagnostic facility in San Jose, California, is where the equipment for automotive emissions control diagnostics is made. Sun is the brand name used to market Snap-On diagnostic products in Brazil and Europe.

Acquirement

The company paid $42 million for the New Hampshire-based Pro-Cut in 2014.

Car-O-Liner Holding AB, a Swedish manufacturer of collision repair tools, was acquired by the company for $155 million in October 2016.Later that same year, the business paid $13 million to acquire Sturtevant Richmont.

The company paid $72 million in May 2017 to acquire Norbar Torque Tools Holdings Limited.

The company paid $36 million for Tustin, California’s AutoCrib Inc. in September 2020.

Dealer-FX Group, based in Canada, was purchased by Snap-on for $200 million in March 2021.

Finances

The company’s finances for the fiscal year 2021 in USD are as followed:

• Revenue: $2.5 billion.
• Operating Income: $1.12 billion.
• Net income: $0.82 billion.
• Total assets: $6.7 billion.
• Total equity: $4.18 billion.

The total number of employees recorded as at January 2022 is 12,800.