The hand tools and accessories market is one of the consistently profitable industries worldwide, despite its low profile, and is forecast to reach $28 billion by the year 2018, according to Global Industry Analysts, Inc., a market researcher.
Major factors driving market growth include rebound in the construction activity, growth in the automotive sector, and increased demand for Hand Tools from the emerging markets, specifically the rapidly growing residential construction work in China and India. Although the products are "low-tech", the industry as such is highly automated, and employs state-of-the-art technology to produce high quality products at its factories. Research is focused upon improving the quality, durability, and usability of different tools.
Growth in the hand tools and accessories industry has been considerable over the past years. The global market for hand tools and accessories, as such, remained relatively modest to the global economic recession, when compared to the various other industries. This was mainly attributed to the increased preference by consumers to carry out general repair works on their own. Resultantly, market growth was supported by the increasing demand for DIY activities. Remodeling, in contrast to new constructions, took centerstage due to the downturn in the housing sector, helping the hand tools industry to sustain growth during the difficult market situation.
In general, the demand for hand tools is moderately steady and manufacturers are undertaking various steps to survive in the highly competitive market. For instance, manufacturers are addressing the issue of high labor costs, which over the years have negatively impacted the growth prospects of the industry, by rationalizing production processes and increasing concentration on the production of products, which have high value added content.
Another factor which is influencing the profitability margin of manufacturers is the risk of commoditization. Although hand tools are not a commodity item, the rising similarity of quality between products imported from developing nations has led to an evolution of a commodity-like market. Other major factor is the power toolmakers specifically the cordless variety, which is eating into the market share of hand tools manufacturers. Also, low product innovations in the sector due to the inherent simple designs of the tools constitute one of the key limiting factors for the hand tools market.
Despite various factors impeding the growth of the hand tools industry, recovery in residential housing sector of the leading market, such as the U.S., is forecast to boost the demand for hand tools through 2018. Also, the region is witnessing turnaround in professional markets for tools, which is expected to propel the demand for hand tools in the coming years.
Going forward, the hand tools industry is expected to gain stimulus from the heightened demand for hand tools from the emerging markets in the Asia-Pacific region. The rapidly growing residential construction work in China and India is likely to trigger the growth in the hand tools and accessories market in the coming years. As the industry continues to reel under the pressure of compressed profitability margins, scientific and technological innovation could become the key product differentiator for manufacturers operating in this space, in the upcoming years.