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Pentair plc Message Board

  • redfish5708 redfish5708 Jan 21, 2000 9:15 PM Flag

    Chinese Tools

    I believe Porter Cable is beginning to import
    from the Pacific Rim as Delta has been doing for some
    years. Not sure, but it wouldn't surprise me. They are
    doing business with Home Depot aren't they? Isn't that
    where their main growth has been?

    Delta went
    down this road when they got into the Homecenter
    market - most noteably Home Depot. The tools from Taiwan
    weren't too bad, but when they went to China - quality
    suffered.

    Unfornatly for tool lovers, the home centers are taking over
    the market and the important thing to them is the
    price point - not the quality. Look at HDs profits and
    you will see this strategy has been successful for
    them.

    Meeting the home centers price demands forces down the
    quality of the product. If your new drill broke, simply
    take it back to the HD and they will cheerfully refund
    your money or give you a new one. HD will then return
    it to the manufacturer at the manufacturers expence
    for credit. HD keeps the profit on the sale. Cool
    huh?

    PC makes many good tools as does Dewalt, but expect
    quality to suffer if they are to remain in the Home
    Center Market.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • No, I am not a broker - just a former Pentair
      employee keeping an eye on my stock.
      As large as
      Pentair has gotten over the past 5 years, their assets
      (personnel and financial) remain limited, of course. These
      assets need to be focused on legitimate rates of
      return.
      I believe low margin segments do not interest
      Pentair - as well they shouldn't. The exceptions are
      where Pentair can improve margins by streamlining or
      combining operations. In my opinion, the pool business is
      not such an opportunity. Therefore I made my earlier
      comments on a potential spin off of this segment.
      I do
      not have (nor would I post if I did) numbers
      regarding the GP margins of the pool segment. However, I do
      believe these margins to be significantly below Pentair
      standards. The obvious answer is to divest the pool segment
      (provided a suitable buyer can be found) and re-invest
      whatever proceeds result in a higher GP margin segment
      that has additional potential. Pentair has done this
      before and I would not be surprised to see it again.

    • In my local Home Depot, Ridgid tools now occupy
      the prominent front isle location outside the tool
      corral where I thought I saw Porter-Cable a few months
      ago.

      Ridgid is made (if I remember correctly from Forbes'
      recent cover story on HD) by Emerson at Home Depot's
      request in factories that had made Craftsman tools before
      their manufacturing was moved out of the US.

      Not
      a good sign for Porter-Cable volume at Home Depot
      if my sample of one store is representative and HD
      continues to grow the Ridgid line. I'll check to see how
      much overlap there is between the two product lines
      and watch how long Ridgid keeps it premimum
      location.

      -dh

      • 2 Replies to dh868
      • If you look again you'll see that Rigid competes
        DIRECTLY with Delta not P-C although they will likely
        introduce portable electric tools eventually. Still not
        good for PNR as Delta is, obviously, at risk, and, in
        fact, has been hurt because of Rigid.

        BTW Rigid,
        Emerson Electric, and HD are all partners in the venture
        for the Rigid tools sold exclusively in Depot. This
        exclusivity does not carry over to the traditional threading
        machines, etc. that Rigid continues to market in other
        channels.

      • As an ex-Pentair employee who still holds stock,
        I have watched this board for some time with casual
        interest. The amount of misinformation and half-researched
        ideas are often amusing. Had this board ever generated
        any real volume, I might have been worried.
        The
        introduction of the Ridgid line to Home Depot was no surprise
        to PC or Delta and steps were taken to insulate the
        Delta line against the move. Presently the Ridgid line
        is all stationary equipment and therefore has had no
        effect on PCs portable line of tools. No shelf space was
        taken from PC for the Ridgid line.
        The real loser in
        the move was B&D/DeWalt. B&D had just taken several
        years and spent millions on developing a stationary
        tool line designed to go into Home Depot stores. The
        Ridgid line eliminated 30 - 40% of B&Ds anticipated
        market.
        Not that there are not threats. Every portable tool
        manufacturer with product on the shelf at Home Depot is taking
        moves designed to insulate themselves against the
        expansion of the Ridgid line into portable tools. Home
        Depot has not yet taken this step.
        The recent talk
        of the horrors of off-shore product sourcing is also
        unfounded. The domestic manufacturing facilities of Delta
        and PC are going full blast with no plans to switch
        production overseas. The products sourced from Asia have
        been additions to the product lines. For example, PC
        in now the #1 supplier of pnuematic nailers in the
        US. This is a market PC was not even in 4 years ago
        and represents millions in incremental volume. The
        quality is not an issue. PC does not just purchase tools
        from offshore for private label. They design the tools
        in-house and then dictate the production process. The
        offshore partner is held to very high standards with PC
        employees present at the offshore facility at all times for
        monitoring. Delta began sourcing small, benchtop machines
        from offshore years ago to remain competitive in this
        market. Consider this, if Delta had invested millions in
        additional domestic production capacity to enter this
        market, what would the Ridgid move have meant to Delta?
        Expensive excess capacity and tremendous unrecouped fixed
        costs. Since Delta sources this product, what did the
        Ridgid move mean? Expected lower volume with a
        subsequent reduction in the variable cost of goods sold.
        Don't condemn moves for which you lack a complete
        understanding.
        Keep up the quick, incomplete observations and
        half-informed judgements. If you do, I'm sure your portfolio
        will reflect your knowledge.

 
PNR
71.78-0.06(-0.08%)Jul 24 4:05 PMEDT

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