A&E Hand Tools has edge over Chinese competitors

Last updated on May 13th, 2019 at 02:39 pm

Some of the wrenches or other tools made by Racine-based A&E Hand Tools are probably sitting in a tool box somewhere in your house, car or garage.

Even if you don’t, your mechanic probably uses them. They might carry the logos of Craftsman, Snap-On, Matco or NAPA, but there’s a good chance some of those hand tools were made in Racine by employees of A&E Inc.

A&E Hand Tools is one of two divisions of A&E Inc.

Since it was founded in 1932, A&E Hand Tools has been making wrenches, gauges and other hand tools for the private label sector. Companies such as Sears and Snap-On remain A&E’s biggest customers, making up 80 to 85 percent of its sales.

A&E Hand Tools’ products are made for professionals in the auto, diesel truck and motorcycle repair and maintenance industries. Most of the company’s production is devoted to private label manufacturing for Sears, Snap-On or others, but its four corporate brands are also known to both professionals and some consumers.

A&E Inc. currently manufactures four lines of hand tools and related products under its A&E Hand Tools division. Those lines include Kastar Hand Tools, Star Products, Hi-Tech Hand Tools and Tool Control Solutions. A&E Hand Tools also distributes a fifth line for Germany-based Hazet. A&E Inc. also operates Eckmann Pressed Metal, a metal stamping company, located in Racine across the street from A&E Hand Tools.

Of A&E Hand Tools’ brands, Kastar Hand Tools and Star Products are the best known, said Michael Nelson, marketing operations manager for A&E Hand Tools.

Kastar’s products include ratcheting and adjustable wrenches and specialty tools for the automotive market. Those tools include battery carriers, feeler gauges, thread restorers and gear alignment tools. Star Products manufactures fuel injection and compression testing equipment.

Kastar Hand Tools were formerly sold in auto supply stores such as Pep Boys and Checkers, Nelson said. The company decided several years ago to renew its focus on the professional tool market and de-emphasize the retail market, said Dan Peterson, president and chief operating officer.

“On the A&E (Hand Tools) end of the business, we make tough jobs easy for professional technicians,” Peterson said. “These are not really consumer items. And we’re not making them in the huge amounts that would go to China.”

Some of Kastar’s products can be found in Pep Boys and several other retail auto suppliers, but most of A&E’s sales are to the private brand sector, Nelson said. Hand tools made for the private label market are emblazoned with the customer’s logo, placed in the customer’s packaging and shipped to them, ready to be placed on the shelf.

Although Craftsman tools are widely sold in Sears’ retail stores, they carry a higher price than many other hand tools, largely because they’re guaranteed for life. However, the Craftsman reputation for quality and a lifetime guarantee makes them appealing to homeowners.

A&E Hand Tools manufactures its Kastar and Star Products lines, as well as private label work, at its 80,000-square-foot manufacturing facility at 5501 21st St., Racine, where it has about 170 employees.

The company makes extensive use of temporary workers, largely because its orders fluctuate greatly throughout the year. Its two largest customers, Sears and Snap-On, fluctuate orders depending on the season.

Most employees in the manufacturing facility were hired from a pool of temporary workers, Nelson said. Skilled laborers are the only exception, largely because they’re much harder to find.

A&E Hand Tools has been able to compete with Chinese and other foreign manufacturers by implementing lean manufacturing principles, Nelson said. Customers in the professional market, where A&E sells a portion of its tools, like the fact that the tools are made in America.

“Sometimes they’re willing to pay more for that, but some of the ‘Made in the USA’ mystique is going away,” he said. “That’s why we have to go with lean, but still keep top quality.”

Lean manufacturing also gives the company flexibility to quickly change its operations, Peterson said. For example, the company is able to quickly change models by changing settings on just a few machines.

Research and development is also playing a big role in enabling the company to be competitive with Chinese manufacturers. A&E Hand Tools currently employs six people in its research and development department. The company’s goal is to become an arm of its customers’ own R&D departments, a place they can turn to for innovations, testing or product design.

“We try to be a manufacturer’s manufacturer … an outreach of their company,” Peterson said. “They can’t do everything for everybody. That’s why we built up our R&D department. They ask us to bring new ideas to them.”

The company is increasingly interested in developing products for the specialty tool market, where it can manufacture fewer tools that it can sell at a higher price.

“We’re trying to look proactively for tools to feed the market,” Nelson said. “We want to bring better tools to market instead of reacting to China or other foreign competitors.”

A&E is also willing and able to take smaller orders than many of its foreign competitors.

“If you only want to order 5,000 products, it’s not worth it to go with a foreign producer,” Nelson said. “We’re trying to be the one place (for our customers) to come to. That’s why Snap-On comes to us for a lot of different items.”

A&E was founded in 1932 by Daniel Lang. The company is still family-owned, with John R. Lang, Daniel Lang’s grandson, serving as chairman of the board and chief executive officer. A fourth generation of the family is now working at the company as well.

Acquisitions have played an important role in the growth of A&E. Kastar was the company’s first acquisition in 1985, when it was purchased and moved from Long Island to Racine. Hi-Tech Hand Tools was purchased in 1998, and Star Products was purchased in 2003, and production was moved from New York to Racine. A&E started Tool Control Systems in 2003, and it established its distribution relationship with Hazet in 2001.

After purchasing Star Products in 2003, A&E’s engineers revised the company’s product line, making its gauges and testing equipment more up to date.

“In the last three years, we’ve put together 40 different sets and probably 100 to 200 different adapters for that market,” Nelson said. “We want to be someone (customers) can come to for anything in that market.”

The acquisitions have given A&E significant growth. In 2005, the company grew revenues by about 20 percent. Growth in the first half of 2006 has been more modest – about 3 percent, Nelson said.

A&E is eyeing future acquisitions now to add to its growth.

“When we go to trade shows, we spend time networking and telling other people to keep us in mind (if they want to sell their company),” Peterson said. “We try very hard to keep in people’s minds that we’re in the mind for acquisitions.”

A&E is also looking at other industries where it could market its products to professional technicians.

“You’ve got to be careful not to chase rainbows,” Peterson said. “We sell largely to the professional technician, so we’re looking at that consumer and then at those markets. We’re strong in automotive, and we’re making progress in our motorcycle offerings to appeal to that market.”

Heavy duty diesel products are another identified growth area, Peterson said. Because A&E develops a few hand tools for aerospace mechanics, it may develop additional products in that market. And because of the increasing popularity of snowmobiles, all-terrain vehicles and recreational watercraft, A&E may start developing unique hand tools for technicians that work on those vehicles.

“We’re looking more at power sports,” Nelson said. “Our growth in R&D should allow us to go after that market more.”

A&E Hand Tools
Address: 5501 21st St., Racine
Founded: 1932
Products: Hand and specialty tools for professionals in the auto repair market
Revenue growth: 20 percent in 2005, anticipated 3 percent for 2006
Employees: 170
Web site: www.aeincorporated.com
Send news about manufacturing to eric.decker@biztimes.com or by calling him at (414) 277-8181, ext. 144. News can also be sent to Eric Decker, Small Business Times, 1123 N. Water St., Milwaukee, WI 53202.

Sign up for BizTimes Daily Alerts

Stay up-to-date on the people, companies and issues that impact business in Milwaukee and Southeast Wisconsin

No posts to display