INVOKING A 'MYSTICAL' NAME Black & Decker hopes DeWalt tools' reputation will conjure new business

THE BALTIMORE SUN

Bill Mihaliak, a third-generation construction worker, is exactly the type of customer that Black & Decker is after with its new DeWalt line of tools.

A carpenter foreman for Richard D. Poole Inc. in York, Pa., Mr. Mihaliak said he probably has every tool made by Makita, a Japanese power tool maker and Black & Decker's nemesis.

But now he has changed his brand loyalty, seduced by the name DeWalt. "I specifically came out to check out the DeWalt line," Mr. Mihaliak said recently at the annual John H. Myers' show and sale in York, where suppliers to hardware stores show off their wares. "That's what my dad always had," he said about DeWalt.

After looking over the line, Mr. Mihaliak was a convert. "I was impressed," he said, buying a miter saw on the spot. "If I could trade in all my Makita tools, even up for DeWalt tools, I would," he said.

That reaction is exactly what Black & Decker had in mind when it rolled out the new line of DeWalt tools last January.

Reviving the DeWalt name goes hand-in-hand with trying to unseat Makita as the No. 1 seller in the professional power tools market.

"This is the largest initiative in the history of our company," said Joseph Galli, vice president for sales and marketing for Black & Decker U.S. Power Tools. "Our whole company has been focused on this for a long time," he said.

Mr. Galli declined to say how much the company is pumping into the effort, other than to say it is "millions and millions."

Black & Decker is already the dominant company in two of the three segments of power tools, Mr. Galli noted: the do-it-yourself consumer market and large industrial customers.

But starting in the late 1970s, Makita started carving out a new niche, focusing on the small to medium-sized contractor who buys his equipment at retail outlets.

"That market really wasn't big before," Mr. Galli said. Makita "created that segment."

That market is worth $432 million and growing at 9 percent a year. Makita controls about half of it, and Black & Decker is a distant second with about 10 percent, industry observers said.

If Black & Decker reaches its goal of capturing more than half of that market, that could provide more than $200 million in revenue, Mr. Galli said. It also would increase Black & Decker's market share in the accessories and service business for those tools. The accessories market alone for professional power tools is $600 million a year, Mr. Galli said.

The DeWalt effort had its origins with Michael Hammes, executive vice president and president of the company's power tools and home improvement group. Moving from Chrysler to Black & Decker in 1990, Mr. Hammes brought the "Acura concept," a method by which Honda was able to enter the upscale automobile market by adopting a new name.

As it turned out, Black & Decker already had an old, underused brand name that was still magic to construction workers.

Essentially meaningless to most consumers, in the world of construction workers the name DeWalt conjures up memories of high school shop classes and reliable old radial-arm saws that never wore out. But more important, the name is not Black & Decker.

Before its reintroduction, the DeWalt name was recognized by 70 precent of tradesmen in a nationwide market survey done by Black & Decker, Mr. Galli said. Better yet, of those who knew the name, 90 percent had a favorable reaction, he said.

"The brand name lives on in the minds of the users," Mr. Galli said. "It's almost mystical."

Although Black & Decker is one of the best known brand names in the world, it is too closely associated with lighter-weight consumer tools -- not the heavy-duty equipment that professional builders want. To make matters worse, Black & Decker's old professional line of tools was charcoal gray and barely distinguishable from its black consumer tools, Mr. Galli said.

In contrast, the DeWalt tools are yellow, which is associated with safety equipment on construction sites and stands out nicely in store displays, he said.

Another problem with Black & Decker was that it wasn't considered a macho name.

"They want the most macho brand name out on the work site," said David S. Myers, vice president of retail sales for John H. Myers & Son Inc. "They don't want the same brand as their blender," he said.

So far, the name change and the stepped-up promotion seem to be having the desired effect, Mr. Myers said. In his five hardware stores in York, DeWalt is outselling Makita 3-to-2, he said.

The male-dominated market for power tools was evident at the Myers show and sale, where construction workers were lined up to have "Miss Makita" sign photos of herself in a bathing suit holding a Makita drill. Not to be outdone, Black & Decker hired a "Miss DeWalt" from a modeling agency and had her signing bathing-suit pictures, too.

But besides not being the Black & Decker name, the DeWalt name brings with it the legacy of a Lancaster, Pa., company Black & Decker bought in 1960.

DeWalt was known primarily for its radial-arm saws, introduced in 1922. Those saws are still found in high school shop classes and carpentry operations around the country, Mr. Galli said.

Black & Decker stopped producing DeWalt equipment in Lancaster in the mid-1980s, but kept using the DeWalt brand name on a few tools made in other plants.

But now the name has been resurrected and put on a new line of 33 power drills, saws and other equipment.

Besides being yellow, heftier and more expensive, the DeWalt tools are distinct from their Black & Decker brand sister tools in being more powerful and offering more features. Yet the new tools are manufactured in the same plants as the consumer products.

Black & Decker is backing up the new tools with a high-powered promotional effort and improved service features.

The company is sending 70 salespeople across the country to throw "sawdust parties" at hardware stores and lumberyards to demonstrate the new drills and saws to local contractors.

The salespeople are stressing that the equipment is U.S.-made, and there are little American flags on the boxes to remind them. "We think the user is prepared to support an American alternative," Mr. Galli said.

Although Makita is a Japanese company, it has a plant in Buford, Ga., where many of its tools are made.

Black & Decker is beefing up its service operation, offering to repair tools within 48 hours or give the customer a new tool. The company also will lend the customer a replacement free for the two days it takes to fix the tool.

The DeWalt program is part of a growing trend of businesses introducing products that are not linked with the names of the well-known parent company. That was the strategy with the Acura automobile, made by Honda, and the Infiniti, made by Nissan.

"This is in keeping with the trend toward narrower and narrower niche markets," said Sanjit Sengupta, assistant professor of marketing at the University of Maryland in College Park. Instead of appealing to broader markets with well-known brand names, the companies want to attract more select groups with different names.

Mr. Sengupta said it is somewhat unusual to resurrect a brand name that was popular 30 years ago. But if it is still as popular at Black & Decker says it is, then the company made a mistake decades ago.

"If it was that strong, they goofed up by not capitalizing on it when they first bought it," he said.

The introduction of the new line comes as Black & Decker continues to wrestle with a $2.9 billion debt from buying Emhart Corp. in 1989.

Last month the company announced it would raise more than $800 million by selling 18 million new shares of stock and PRC Inc., a government contracting business it acquired as part of the Emhart purchase. The money will go to pay down the debt.

Stock analysts think the new effort could boost Black & Decker's profits.

"It looks like a very well planned program," said Clifford F. Ransom II, a managing director in the institutional research department of Ferris, Baker Watts Inc., an investment firm in Baltimore and Washington. But the big winner in the effort may be the consumer brand tools, he said.

With the similarity between the different types of Black & Decker tools eliminated, it gives the company more leeway to expand the consumer market without the fear that it might hurt the professional market. "They can take the gloves off in the consumer market," he said.

Katherine M. Stultz, a research analyst for Dean Witter Reynolds, says Black & Decker has done its homework on the project.

"It looks like it's off to being a very successful product," she said. "Apparently they did a fair amount of market research," Mr. Stultz said.

Makita, the chief object of Black & Decker's attention, is considering various options, but for the time being it is staying with its proven formula, said Roy L. Thompson, product market manager for Makita USA Inc.

"We came in and said we would work for the business and earn it and give them value," he said. "We have the hardest working sales force."

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