Labor and the Good Stuff

During monthly rides on tool trucks, I still hear customers express concerns about the quality of tools made overseas. But distributors have taught me that, for professional tools, brand means more than anything. Here’s why.

Labor is the most important cost to most types of business. As a technician or shop owner, labor is the only thing you have to sell. You make money on parts too, but you can’t sell them without your labor. Your tools, knowledge and skill all play a role determining your bottom line, but your time is limited, so you must sell your labor at the highest price your market and your reputation (your brand) will allow.

The price of labor impacts a manufacturer’s bottom line too. The lower the unit-labor cost (labor cost divided by the selling price of one product unit), the more profit is made on each unit. Throughout history, whole industries, indeed whole economies, have been built on low labor costs (but even slave labor isn’t free).

Today, labor for manufacturing is an international market. Assuming it’s possible to keep quality and non-labor costs acceptable (common, if not always easy), the price any one manufacturer pays for labor has a major impact on the whole market. If one company moves its manufacturing to a lower-cost labor market, their competitors must do the same just to remain competitive. That’s one reason several European car companies have opened production plants here in southern U.S. states (I wonder how the Germans feel about exporting jobs to America?).

A product’s country of origin isn’t the main thing that determines its quality. Design, engineering, materials and the name on the product all play a role, but the biggest factor by far is the customers’ expectations of the product. That’s right, the customer controls the quality with their decision to buy or not to buy the product.

And that’s the point. Companies selling to professionals understand what their customers expect, and they do what’s necessary to protect their brand and keep their customers coming back. The quality of tools you find on a tool truck is also guaranteed by a real person who visits you every week. If a tool doesn’t meet your expectations (that’s the definition of quality; meeting expectations), a real human being will do what it takes to make you happy. Rest assured that a tool guy doesn’t want to sell tools that he thinks he’ll have to buy back.

No doubt about it, the junk tools are out there, but luckily we insist on buying the good stuff.