Stanley Black & Decker plans to move production of its Craftsman brand wrenches from China back to the U.S., the latest manufacturer looking to use automation to increase domestic output as tariffs raise the cost of imports from overseas. Stanley is investing $90 million to open a plant in Texas that will employ 500 people to make 10 million Craftsman wrenches and 50 million sockets annually. Robots and fast-forging presses will help boost output about 25% above the older forging machinery now used to make these wrenches in China, helping keep production costs at the new plant in line with those in China.
The company’s strategy mirrors moves by other manufacturers in recent years to bring some foreign production back to more automated factories in the U.S., reports The Wall Street Journal (May 16, 2019). Whirlpool is making some KitchenAid appliances in the U.S. again after they were made in China for years. Caterpillar has moved the assembly of excavators and small bulldozers from Japan to new plants in the U.S.
“We’re pushing very hard to manufacture where we sell it,” Stanley’s CEO said. The company moved production of Craftsman products to China years ago to reduce costs after decades of manufacturing in the U.S. (Some Craftsman tools are already assembled at 8 Stanley plants in the U.S.) Craftsman wants 50% of its tools to be made in the U.S. a few years from now, up from 30% today. The firm remains reliant on foreign-made components for motors for its power tools. After the administration recently raised U.S. duties on components imported from China to 25% from 10%, Stanley said its tariff costs on components from China this year will increase more than 60% over 2018 to about $250 million.
Classroom discussion questions:
- Discuss the implications of the tariff increases.
- Why is the U.S. now able to compete with China?