THE CRAFTSMAN BRAND CHANGES HANDS

It’s more than likely that if you were to go out to your toolbox right now you wouldn’t have to dig around much among the collection of wrenches, screwdrivers, hammers and pliers to find several items stamped with the “Craftsman” brand name.

The prevalence of Craftsman tools isn’t surprising when you consider that the Sears stores registered the name on May 20, 1927 and for many people a trip to Sears over the decades has not been complete without a visit to the hardware department. Furthermore, the Craftsman name is found on quite a variety of tools and accessories, as evidenced by the sampling of images on this page.

But given the fact that Sears has experienced declining sales and financial difficulties for years now, and the shuttering of some stores around the nation has made the headlines more than once, it’s understandable that fans of the Craftsman brand have been led to wonder if one of their favorite tool choices may soon be found only at swap meets and garage sales.

Then last May Sears announced that it was considering the sale of its “KCD” (Kenmore, Craftsman and DieHard) brands to raise cash. And in January another very well-known name in the tool world, Stanley Black & Decker, reached an agreement to purchase the Craftsman brand, thus assuring that not only would Craftsman tools continue to be available but they will now be sold through other outlets in addition to Sears.

“This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels,” said Stanley Black & Decker President and CEO James M. Loree. “We intend to invest in the brand and rapidly increase sales through these new channels, including retail, industrial, mobile and online.”

One very interesting aspect of this agreement is that Craftsman-branded products sold through Sears will continue to be sourced from Sears’ existing suppliers under a perpetual license from Stanley Black & Decker.

Sears has never manufactured Craftsman tools itself and several years ago it started buying some of its Craftsman products from manufacturers in China and Taiwan, a move which has caused some folks to say that Craftsman tools have suffered a noticeable drop in quality.

Stanley Black & Decker, on the other hand, has said that the Craftsman products it will sell through what it referred to as “previously underpenetrated channels,” will be manufactured in this country.

“To accommodate the future growth of Craftsman, we intend to expand our manufacturing footprint in the U.S.,” Stanley Black & Decker’s Loree said. “This will add jobs in the U.S., where we have increased our manufacturing headcount by 40% in the past three years.”

While it’s not been said when the new Craftsman tools might start to enter the market or where they will be available, once they are being sold no doubt more than one person will want to compare the Craftsman products from Stanley Black & Decker with those from Sears.

As for the cash involved here, Stanley Black & Decker has agreed to give Sears $525 million at the closing of the deal, another $250 million at the end of the third year of the agreement, and make annual payments to Sears of between 2.5% and 3.5% on new Stanley Black & Decker sales of Craftsman products through the 15th year. Stanley Black & Decker has projected that “the net present value of all these cash payments is approximately $900 million.” Sears will not have to pay royalties to Stanley Black & Decker on its Craftsman product sales for the first 15 years but will have to make 3% royalty payments thereafter.

Just to show how times have changed over the years, consider that Sears did not create the Craftsman brand name 90 years ago, a man named Arthur Barrows, head of the Sears hardware department at the time, bought the rights to use the Craftsman name from the Marion-Craftsman Tool Co. That transaction cost Sears a total of $500.