Name: Stanley Black & Decker CEO: “This business boom is not going away any time soon”
Uploaded: 2021-09-15
Duration: 9 min 48 s
Description: CEO Jim Loree says inflation is one risk slowing the tool maker’s growth.

CEO Jim Loree says inflation is one risk slowing the tool maker’s growth.  

Stanley Black & Decker CEO: “This business boom is not going away any time soon” 

James M. Loree - CEO, Stanley Black & Decker

Leadership

Stanley CEO: “This business boom is not going away” 

jim so great to see you again and thank you so much for joining us to talk about Stanley black and decker as you know, people are very familiar with your brand, everything from power tools to take measures, but one thing that they may not be aware of is that your company's business has been booming and it's kind of surprising because and this time of the pandemic, so many companies have been struggling, so tell us what's behind and driving all this growth. So what happened is the there is a D I Y boom and a home improvement boom which are somewhat related but you know you have the professionals and you had the folks working at home and folks working in their gardens and it wasn't just a north american phenomenon which you might, you know at first blush you might think it was really a global phenomenon. So latin America asia, europe all over the world, people were in their homes and they were reconnecting with their homes and their gardens and it was actually quite good for our industry and for our company. Well you've been working at Stanley black and Decker for more than 20 years and as ceo for five of them, what surprised you the most about what's been going on at your company with this room of activity, the rapid pace of change, you know the acceleration of digital, the acceleration of e commerce was with lightning speed, I think we went into advanced maybe five or you know six years in terms of the implementation of e commerce, you know in our industry and our consumer behaviors. That was a big one. I think the ability of of our people and this is not just us. I mean I see this across the board with companies but to work remotely uh and to be actually more efficient at some things. But what we've been able to accomplish working remotely almost instantaneously with the marriage of people in technology and we were ready for it and it's it's been really, really a pleasant surprise. You mentioned a moment ago that this whole home improvement boom, both by professionals and And regular folks when you look at the housing market and the commercial construction market and also just the overall American economy. Do you see these trends continuing and also the demand for your tools? We absolutely do. We expect to grow significantly in 2022 on a pretty high base. Uh and you know this, this is not going with this boom is not going away anytime soon, but it's fueled or I should say finance by rising stock prices in general and also rising home equity values and people are still spending a lot of time. They've reconnected with their homes and gardens and so forth. And I don't know if anybody's uh and your families trying to get a contractor recently, but they are really, really busy and you know, in some cases years out. So yeah, I expected to continue now what could rain on that parade? I think, you know what could rain is inflation if interest rates follow inflation and go up considerably. Uh that, you know, that could, that could be a dampener, but so far, you know, the Fed has been quite dovish and so we don't, we don't see that as a near term risk. Anyway, we'll talk to us a little bit about inflation. Uh I know that many companies have been raising their prices uh including your, your company, do you see this as a short term business issue or is it something bigger? It's definitely a 28 21 22 issue. Uh And we are raising prices and our competitors are raising prices and in some cases multiple times and you know, it's necessary to offset this pretty significant impact in our latest Inflation estimated $600 million dollars of margin impact. This is the first time in my 20 plus years that we've been able to recover 100% with price increases. And so I think that is a really favorable development for Stanley black and Decker. What about other constraints? Jim whether it's shortages of supplies or the higher prices that you're paying for the raw materials that you need. Uh how are you dealing with those kind of pain points? Well, it's all about execution and I put it into two categories, one strategic components for us, those will be batteries and chips and then secondly, the supply chain transportation routes and so forth are very clogged up right now and suppliers in our industry are also operating a capacity levels, you know, they'd never production levels versus capacity, they've never operated at before. So you have a major operational undertaking in the supply chain and we feel really good about the strategic components, the chips, the batteries. I went to Korea earlier and negotiated some deals on batteries and we're working the chip issue like everyone else, but making good progress there and then the day to day operational, uh, you know, management that's required for the supply chain is unprecedented in my, my career. But I will say that, you know, we're getting so far, we're getting the job done, but it's getting more challenging by the day. So let's talk a little bit about what's next for Stanley black and Decker. You've been making news recently on two acquisitions in the outdoor power equipment business. Why are these critical building blocks for your company? Sure. MTD one of America's great outdoor power equipment Business is $2.5 billion dollar business. And Excel industries out of Kansas, A almost a $400 million dollar revenue business that makes professional outdoor power equipment riding mower zero turn mowers, that sort of thing. We're so excited about this because it really opens the door to a new growth platform for Stanley black and Decker and it's one that has Great runway ahead could be as big as $10 billion how far off is that and why is this trend important for your company? I'd say it's important because number one, it's a revenue generator. But secondly, and maybe as importantly it is at the foundation of what we can do as a company as it relates to S. G and S. G. The phone notion of environmental, social and governance is where it's at these days. The younger generations are demanding that companies are responsible as it relates to their activities, their impact on the environment, their social impact, you know, their governance and so forth. So it's really uh you know, the opportunity to get involved with carbon greenhouse gas emission reduction in the outdoor power equipment industry is something that is really going to be a very positive impact for society. Just a little fact that not too many people are familiar with the emissions from these types of of engines are pretty significant in relation to Uh say automobile. So for instance, running a simple gas blower for an hour is the equivalent of driving a Toyota Camry for 1100 miles. So big social impact potential And we're looking forward to being a part of that. I want to ask you Jim about an article you wrote recently saying that the pandemic is accelerating stakeholder capitalism and it's an urgent imperative for business leaders to step up. And you did just that this week when you announced a $25 million dollar commitment to skill and re skill more than three million people to fill jobs in manufacturing and construction. Tell us a little bit more about why you're doing this. Well, we're keenly aware that the accelerating pace of technological change is upending lives and then the pandemic has only exacerbated that and we have so many unemployed folks and we have so many open jobs and there's this mismatch and this challenge really makes a significant dent, especially in the construction and manufacturing sectors where number one, we will benefit from more construction workers out there helping to make our markets for us. And secondly, we will have a really positive impact on society And we're very excited about that. So I understand there's something like 400,000 manufacturing construction jobs that are unfilled here in the US and 10 million globally. Do you think that this program that you're launching will help to fill the skills gap? Absolutely. I mean, we call it the global impact challenge because we think we can have a really dramatic impact. We're signing up for three million up skilled people. I think we can actually exceed that. So we're putting something on the table, It's very doable with that set. We're not the only solution, but I think this is all about corporations teaming up with governments and non profits and making it happen and millions of jobs, millions of people re skilled is going to have an impact. You know, when you look at the kinds of numbers, you were just sitting there, you know, ever since you became ceo of Stanley, black and decker back in 2015, you set out to turn the company into a purpose driven company. How has the pandemic influence a lot of the leadership decisions that you're making these days when it comes to leading with purpose? The most significant epiphany if you will during the pandemic has been the human touch. Empathy care for the people, care for their well being, the employee health and safety aspects of managing through a pandemic. And I think that's been a glue that's held this company together through the pandemic. And you know, the purpose has been our north star. It's been really, really uh you know, heartwarming to feel the impact from a human point of view that we're able to have on people and provide that support they need during the pandemic