The More Things Change

Prior to his other experiences throughout the automotive industry, and before taking over as president of SK Hand Tool in 2001, Michel Moulin had been a racer. From 125 CC Moto-Cross bikes to 350 HP Rally Cars, his ability to handle the bike or automobile in changing course conditions was vital. Little did he know how finding the right groove, laying off the brake or punching down on the gas would also help in keeping a company on the right track.

SK Hand Tools was founded in 1921, and proudly manufactures over 4,000 hand and specialty tools at their facilities in Chicago, IL and Defiance, OH, with distribution, marketing and customer support in McCook, IL. Although its operations have always been centered in the heartland of America, SK Hand Tools only recently retained status as an American company.

Prior to its recent ownership change, the company was owned by Facom, a French company with a very strong European presence. When Facom originally purchased SK in 1985 the plan was to grow and build a North American brand that paralleled their successes in Europe. As good as the company's intentions were, Facom's conservative growth strategies didn't mesh well with the demands of the American automotive aftermarket. The majority of programs that have recently pushed the company forward came after Moulin's appointment, with little involvement from Facom.

Moulin now serves as the President, majority owner and chairman of SK Hand Tools, with CFO Claude Fuger and national director of sales Cliff Rusnak comprising the remainder of the new ownership group. The trio's buy-out from Facom became official at the end of April. It's a process that began about 18 months after Moulin's initial appointment, and one year after the group made an official offer to Facom, whom they still supply on a limited basis. "We're very happy to be an American company," states Moulin. "I was born French, but I'm American by heart."

A New Approach

When you combine the fact that new products are the lifeblood of the tool and equipment marketplace with an understanding that SK Hand Tools are a flagship line for most independent mobile distributors, it's no surprise that a commonly cited benefit of working with SK has been an influx of new products over the last 3 years. It's also no coincidence that this time span coincides with Moulin's tenure.

According to SK, they've unveiled over 1,000 new products since 2002. "Our goal is to continue the strategy that we implemented in 2002, and just keep building on it," states Rusnak. "Our direction hasn't changed with Facom out of the picture, we'll just be able to operate much more quickly."

This is important when developing new hand tools, and vital in producing low-volume, high-profit potential specialty tools, which have become a staple in the company's growth strategies. Additionally, market research identifies end-user demand for specialty tools as second only to diagnostics.

With 20-25 new tools constantly in development, and a strategy that calls for 20 percent of annual sales coming from new products, the flow of new tools shouldn't slow anytime soon. The company has also made investments in the areas of production, research and development in order to deliver special product features, such as Tested Tough™ Corrosive Resistant® and Tested Tough™ SuperKrome®. In addition to specialty tools, Rusnak points to high visibility impact sockets, expanded 1/4"-drive chrome socket offerings and the G-Pro ratcheting wrenches as recent examples of product innovation.

Addition By Subtraction

An engineer by trade, Moulin also brought a background in production and manufacturing to SK. The impact was almost immediate.

"The focus was on refining and improving our personnel, equipment and processes," explains Moulin. "So we invested in new equipment and worked to develop more efficient processes by implementing the SK Production System, which is based on the Kaizen philosophy."

In 2003, an employee would walk an average of 3/4-mile to fill an order. Now, thanks to a new carousel picking system, such tasks can be completed with a few steps. SK feels these process-refining approaches help drive efficiency, keep costs down and improve customer service.

Each of these aspects is part of the Kaizen approach to operational efficiency. By breaking down each part of the entire procedure, measures can be taken to isolate and avoid wasteful steps, or identify and correct areas where mistakes are most prevalent. This results in streamlined processes with greater worker input and responsibility.

"Our first focus is on product, its quality, durability, usefulness, etc. Then we look at ways to improve production. We call it Process Optimization for continuous manufacturing improvement," states Moulin. In addition to a new carousel system, the company has implemented an automated picking system with barcodes. This allows for greater accuracy in filling and tracking orders.

Backing It Up

You can provide the best products available and produce them in the most efficient manner possible, but if nobody knows about them or wants to sell them, then what? Fortunately, the new ownership at SK seems to have a well-defined understanding of promotion and distributor support.

"We can't grow without them," explains Rusnak. "We're a manufacturer, not a distributor. Our goal is to help them utilize the power of our brand so they'll want to sell and market our tools. We also understand the value of the distribution channel, and we'll always remain fiercely loyal to it. That's why so many of our new programs are focused on supporting the distributor," he adds. Some examples of these programs include:

  • Grab The Green.

Grab The Green is like a frequent flyer program for mobile tool dealers. SK estimates there to be about 750 mobile tool trucks that predominantly fly their colors, much like a franchised mobile distributor. SK awards these distributors points, based on sales, which they can cash in for anything from tools to trips. "Grab The Green is really a special support function for independent mobile tool dealers," explains Rusnak. "We're rewarding them for their loyalty, while also working to grow the number of SK trucks on the road."

  • Racing.

SK Hand Tools is a new sponsor for the 23-race ARCA/ReMax Racing Series, including the SK 200 at Chicagoland Speedway on September 10. They also serve as the Official Hand Tool of the series and sponsor the Crew Chief of the Race and Crew Chief of the Year award. In addition to the situational benefits, coverage on the Speed Channel is helping to build brand power and increase awareness.

  • Demonstration Truck.

SK uses a special Demonstration truck to help support their distributors. The truck has made over 1,000 stops within the last year, and always in conjunction with a distributor. Rusnak stresses that the truck is for showcasing and demonstrating new products, as well as gaining end-user feedback. Nothing is sold off the demo truck.

  • VoTech.

The company has also established a vocational program with tool sets focused on specific student needs. Specially designed tool kits and pricing cover collision, mechanical, diesel, industrial, HVAC and electrical repair, as well as the machine trades. Rusnak points out, again, that these sales are always coordinated with their distributor partners.

The revamped website shows end-users where they can find their nearest SK dealer.

  • 2005 Supplemental Catalog.

The new publication showcases over 550 new products.

According to the company, SK has seen double-digit growth over the last two years. "When looking at that figure, we think a lot of it stems from our 3 Core Values; Honesty, which means being straightforward with people in everything we do; Tenacity, so we'll fight to be successful in a competitive marketplace; Team spirit, because we can't succeed alone.

"In the end, we've benefited from an approach that focuses on being loyal to our customers and helping them grow."

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