Power & Hand Tools

US demand to increase 4% annually through 2014
Power and hand tool demand in the US is forecast to increase 4.0 percent annually through 2012, reaching $10.9 billion. Although facing difficulty in the shorter term, the US construction outlook is expected to recover by 2014, creating demand in the professional sector. In the meantime, consumer demand will benefit from continued interest in DIY and home remodeling activities. In addition, the introduction of new products -- especially improved cordless tools -- will create gains in both markets.

Professional segment to outpace consumer market
Growth in professional tool demand will outpace that of the consumer segment, reflecting the rebound in the economy and rising employment in the construction and manufacturing sectors from a low 2009 base. In addition, professionals use a greater variety of tools, most of which are also more expensive than those used by consumers. Among the large professional markets, the construction sector will post the best gains through 2014, reflecting an expected recovery in residential construction activity, coupled with continued strength in nonresidential and nonbuilding construction.

Still, consumer tool demand will rise a solid 3.3 percent per annum, benefiting from the ongoing popularity of do-ityourself activities and the trade-up by consumers to feature-laden power tools. In addition, the US mortgage crisis will compel many homeowners to remain in their current homes rather than trading up to larger or more modern houses, thereby boosting home remodeling and repair activity. In addition, a growing number of women have become interested in DIY activities, as evidenced by websites and classes geared toward this group.

Power tools to continue outpacing hand tools
Maintaining established trends, power tool demand is forecast to outpace hand tool demand due to the continuing popularity of cordless electric products such as saws, sanders and screwdrivers. Hand tool demand is limited by the inherent durability of these products. Unlike power tools, common household tools such as hammers frequently outlive their owners, dampening replacement demand. In addition, product innovation is less common than in power tools, limiting opportunities for value gains. Cordless products will continue to post the best gains, benefiting not only from macroeconomic factors but from their performance advantages vis-a-vis plug-in models. Furthermore, the development of improved battery technology, such as lithium-ion chemistry, has encouraged both consumers and professionals to use cordless technology.

Power and hand tool production has shifted to Asia
US production of power and hand tools has been adversely affected by competition from imports, which comprised more than 40 percent of demand in 2009. Asian countries are leading suppliers of power and hand tools due to their labor cost advantages relative to the US. In particular, China has become the major source of US imports. Electric tool production has been dramatically reduced by outsourcing to lower cost nations. In contrast, a larger share of hand tool production has remained in the US, reflecting the strong brand recognition of many smaller, specialized hand tool producers.

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