Association warns against big power tool brands muscling out independent manufacturers

Certain large power tool brands are using their heft to squeeze SME tool accessory manufacturers out of tool dealers, said the Association of German Tool Manufacturers (FWI).

Warning against monoculture and dependence in the tool accessory market, FWI said the moves threaten the existence of many small tool manufacturers in Germany and Europe, while also risking less innovation and rising prices for retailers and consumers left with fewer choices on what products to stock.

According to a recent survey by FWI, independent manufacturers of accessories for power tools are increasingly disadvantaged by the business models of some large power tool manufacturers. For example, 67% of the tool manufacturers surveyed report that these machine manufacturers are increasingly offering tool dealers an additional discount on their machines, if they also include their accessories tools exclusively in their range.

“Independent manufacturers cannot oppose such offers from certain large corporations and are gradually listed out, although their products are competitive in terms of performance and price," explained FWI Managing Director Stefan Horst the consequences for small and medium-sized manufacturers of drills, saw blades, grinding and cutting wheels, bits and brushes.

“We also have reports that dealers are offered preferential supply of new machine models via partner models of some power tool manufacturers when they switch their range of accessories to this machine manufacturer.”

In the FWI survey, 71% of manufacturers confirm this, while the remaining 29% believe that such offers have increased in recent years. The payment of premiums for switching suppliers to dealers by some power tool manufacturers confirms 100% of respondents to the survey, with 50% even seeing an increasing trend here.

From the FWI’s point of view, this explains the trend that more and more specialist retailers are switching their accessories’ wall to the power tool brand, to the disadvantage of smaller manufacturers.

“Our member companies face a fair competition over quality, tradition, innovation and sustainability. However, there is no question of equal opportunities in competition with these power tool companies," Horst added.

"Power tool brands risking small tool manufacturers existence"

Should this trend continue, the FWI sees the existence of many small tool manufacturers in Germany and Europe threatened.

But the FWI also sees long-term disadvantages for customers. “Retailers and users have to ask themselves whether they want to live with a monoculture and a strong dependence in the field of accessories tools in the future – with the risk of less innovation and rising prices,” warned Stefan Horst.

FWI represents around 110 tool and dowel manufacturers with production in Germany. The tool industry generated a turnover of more than €4.7 billion in 2020 and employed more than 32,000 employees. Maintaining the wide variety of German manufacturers, designing fair competition and strengthening Germany’s production location are the main objectives of the association.

In addition, there are around 50 extraordinary members of the FWI. These are industrial companies close to the tool and its distribution channels as well as service providers and foreign companies.

www.werkzeug.org

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