Tool Maker Drops Its Mask
American-Lincoln, private label supplier of power tools to Sears, Roebuck for 18 years, now will retail its tools directly through a new division, American Power Tool Co.
What makes a company that for more than 20 years has done a large a profitable private label business in power tools decide to shed its anonymity and, under a new unknown name, join 60-odd other companies in this highly competitive field? For American-Lincoln Corp. of Toledo the answer is relatively simple. It thinks it can make more money with less risk.
Careful Design—The decision may seem drastic, but American-Lincoln has given it plenty of forethought. A well-established company whose main business is the manufacture of floor maintenance machines (sold under its own name), American-Lincoln spent two years painstakingly laying the ground-work for unmasking its power tool operation. Its newly created division, American Power Tool Co., starts life with a complete line of 11 newly-designed quality power tools for use in the home, farm and installation trades; a sales organization made up of veteran tool salesmen who had worked for rival companies; and a ready-made network of 43 sales and service branches.
In moving into the power tool field under its own name, however, American is not abandoning the private label...
...bone of contention between it and Sears. "They were always wanting to come in to take a look at our books to check on our costs, since we established the basic price on our products. But we never let them do it."
Crucial Difference—About two years ago, American says, Sears began asking it to expand its production facilities...
...portable power tools to Sears' Craftsman line. Though American continued to serve a few other customers under a private label arrangement, the bulk of its power tools went to Sears. Chmn. Thomas J. Dolan conservatively estimated the Sears' business as over several hundred thousand dollars a year.
But Dolan said the company was under pressure from Sears not to sell anyone else or under its own name.
Nevertheless, American retained a certain independence of management...
"We designed our own tools and turned them over to Sears, who would put them through exhaustive tests," says Dolan. "Then we set the price and they could take them or reject them." Since American has never opened its books to public gaze, price was one..."
...It says American never was a large sales Supplier.
On Its Own—But regardless of how the break came, American assessed its chances of making a living in the power tool field under its own name and found they were pretty good. "We studied this market for two years," says Dolan, "and we concluded that in view of the expanding population, the spread in the do-it-yourself trend, high repair costs for home jobs, there is a definite place in the power tool market for another line of quality tools." And so it began a buildup of its facilities.
The company first hired more engineers until it had a 28-man staff and put them to work to design a completely new family of tools—five drills, two circular saws, a dual action saber saw, dual action sander pad, belt sander, and an electric trimmer for hedges and bushes.
Sales Philosophy—Then American began to build a sales staff for its new power tool division. In 1957, it hired E. L. Holland, former sales manager for Remington Arms Co.'s air tool division, to head the new sales staff. He put together a sales force of 47 veteran salesmen who had reached the top income level in other companies, mostly American's competitors, and established their own independent sales agencies.
With the guidance of top sales people...