Cutlery and Handtool Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 1,000 cutlery and hand tool manufacturers in the US produce nonpowered hand and edge tools; saw blades; and metal kitchen cookware, utensils, and nonprecious and precious-plated metal cutlery and flatware. Large firms may also produce hardware, industrial tools, power tools, and related products, such as storage systems.

Variability in Raw Material Costs

The cost of raw materials, including ferrous and non-ferrous metals, can vary and affect margins and profitability for hand tool and cutlery manufacturers.

Competition from Foreign Manufacturers

Domestic hand tool and cutlery manufacturers compete with foreign producers, which offer the same or similar products but enjoy a more favorable cost structure.

Industry size & Structure

The average cutlery and hand tool manufacturer operates out of a single location, employs 33-34 workers, and generates $9-10 million annually.

    • The cutlery and hand tool manufacturing industry consists of about 1,000 firms that employ about 34,400 workers and generate $10 billion annually.
    • The industry is concentrated; the top 50 companies account for 70% of industry revenue.
    • Large firms that manufacture cutlery or hand tools, which include Stanley Black & Decker, Snap-On, L.S. Starrett Company, and Lifetime Brands, may have global operations and generate a significant percentage of revenue from foreign markets.
    • Handtool and saw blade manufacturers account for 82% of establishments, and kitchen utensil and cookware manufacturers account for 18% of establishments.
                                    Industry Forecast
                                    Cutlery and Handtool Manufacturers Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Mar 17, 2023 - Construction Worker Shortage
                                    • The shortage of construction workers is expected to top 500,000 this year, according to a February news release from Associated Builders and Contractors (ABC). The construction industry will need to attract an estimated 546,000 additional workers on top of the normal pace of hiring in 2023 to meet the demand for labor, according to ABC’s proprietary Construction Spending and Employment Forecast. While construction employment – a driver of demand for cutting tools and handtools – has largely recovered from its pandemic-driven dip, it still isn’t where it needs to be. Moreover, in 2024, the industry will need to bring in more than 342,000 new workers on top of normal hiring to meet industry demand, presuming that construction spending growth slows significantly next year. Per ABC’s model, which converts anticipated increases in construction outlays into demand for construction labor, $1 billion in additional construction spending creates approximately 3,620 new jobs.
                                    • Smaller manufacturers needn’t miss out on the opportunities and benefits of automation as the floor space required to accommodate robots shrinks, Modern Machine Shop (MMS) reports. The growing market for affordable, space-saving robots and pre-engineered robotic work cells enables shops that are tight on floor space to optimize workflows and deliver high consistency, efficiency and quality. Today’s robots boast smaller space requirements, with compact and lightweight six-axis robots that can be mounted close to workpieces and machines in existing lines and cells. Robots deployed for machine tending can improve throughput and operational safety while maximizing overall equipment effectiveness. Smaller robots can also be deployed for secondary operations such as trimming, laser cutting, laser marking, and deburring, according to MMS. Robots can help shops overcome challenges such as evolving customer requirements, supply chain issues, and labor shortages while elevating workforce productivity and maintaining fluid operations.
                                    • As inflation drives up menu costs and shrinks consumers’ discretionary spending power, many diners will choose to trade down by visiting less expensive eateries like quick service restaurants, according to Restaurant Dive. Moreover, low-income consumers may cut back on their restaurant frequency altogether, reducing demand for commercial cutlery. So far, consumers are only dining out 10% less than they were in 2019, according to Paul Westra, managing director of restaurant investment research at Capital One. Continued strength in the job market and $1.7 trillion in extra cash in consumers’ pockets compared to 2019 – although shrinking – could provide a cushion for restaurants for most of 2023, Westra said adding, “Any slowdown and recessionary impact will probably be occurring in the third or fourth quarter.”
                                    • In a move that will impact handtool and saw blade manufacturers, Lowe’s in February sold its Canadian division, Lowe’s Canada, to US private equity firm Sycamore Partners for $400 million in cash. Lowe’s exit from Canada, where it operated about 450 corporate and independent affiliate dealer stores under various banners including RONA, Lowe's Canada, Réno-Dépôt, and Dick's Lumber, signaled a shakeup in the Canadian hardware sector. Lowe’s entered Canada with the purchase of RONA in 2016 but sustained deep losses there. Previously, the company sold its much smaller retail operation in Mexico in 2018. Lowe’s chairman said "The sale of our Canadian retail business is an important step toward simplifying the Lowe's business model,” and gives the hardware retailer the opportunity to focus on its core US retail business where it trails The Home Depot.
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