Last Christmas, Sears had a brisk seller in the Bionic Wrench, an award-winning, patented tool with spiffy lime green accents. This holiday season, though, Sears has a special display for its own wrench, in the red and black colors of its house brand, Craftsman.
The Bionic Wrench is distinguished by its gripping mechanism, a circle of metal prongs that, inspired by the shutter in a single-lens reflex camera, descend evenly to lock onto almost any nut or bolt.
Since Sears has halted new orders, the Pennsylvania company that makes the Bionic Wrench has had to lay off 31 workers, said Keith Hammer, the project manager at the company, Penn United Technologies. “And that’s not to mention our suppliers,” he added.
Mr. Brown sees a broader issue than just the fate of his wrench. “Our situation is an example of why we’re not getting jobs out of innovation,” he said. “When people get the innovation, they go right offshore. What happened to me is what happened to so many people so many times, and we just don’t talk about it.”
Inventors typically spend $10,000 to $50,000 to obtain the type of patent Mr. Brown has on the wrench, said John S. Pratt, a patent expert at Kilpatrick Townsend & Stockton in Atlanta. Though he said he could not comment on the merits of Mr. Brown’s potential suit, patent infringement cases can be especially difficult in the tool field, where many improvements are incremental, Mr. Pratt explained.
A defendant in such a case would most likely argue that either the tool did not warrant a patent in the first place, or that its own product did not violate the patent.
The fact that Sears made some changes to the wrench’s design, like making the grooves that allow the metal prongs to slide back and forth visible instead of hidden, will make the case more challenging, he said. “It’s hard for me to imagine that Sears isn’t particularly careful about breach of patent, so there’s probably another side to the story,” he said.
After patenting the wrench in 2005, Mr. Brown formed a company,
LoggerHead Tools, to bring it to market, making a point of having it made in the United States.
The Bionic Wrench was greeted with enthusiasm at trade shows and in industrial design competitions, and the company survived the downturn in 2008. Mr. Brown resisted overtures from large chain stores that wanted to sell the tool under their proprietary brand, he said, and rejected the lure of cheaper manufacturing in China. “I was raised a different way,” he said.
The tool sold fairly well on its own — LoggerHead has shipped 1.75 million of them — but
Mr. Brown, 56, who teaches industrial design at Northwestern University, says LoggerHead operated on a shoestring and he plowed much of the profit back into the company. “You cannot have big offices and fancy cars and everybody with an administrative assistant, because we are competing with China,” he said.
In 2009, LoggerHead hit pay dirt when Sears agreed to do a test sale. The product sold out, Mr. Brown said, and Sears ordered 75,000 Bionic Wrenches the next year. In exchange Mr. Brown agreed not to sell the wrench to Sears’s competitors, including Home Depot and Lowe’s.
In 2011, sales at Sears increased again, far outpacing LoggerHead’s other outlets like the QVC shopping channel and smaller hardware stores. But LoggerHead’s profit margin remained small, in part because it produced a television commercial and paid Sears to show it.
The Sears Holdings Company, which owns the Craftsman brand, declined multiple requests to comment on the Bionic Wrench or the Max Axess Wrench. The company would not answer questions about patent infringement or the volume of sales.
But in a string of e-mails provided by Mr. Brown, the buyer at Sears who had the LoggerHead account wrote, making liberal use of exclamation points, that the wrench’s holiday sales last year exceeded its target by 23 percent.
In the manufacturing world, lead time can determine price, and from the beginning cost was a particular issue for the Bionic Wrench, because of the competition from China. A 2006 article in The Wall Street Journal was headlined, “Wrench Wins Awards, but Is It Priced Too High to Be a Hit?”
According to Mr. Brown’s account of his dealings with Sears, the chain was pleased with the tool’s performance and agreed to place an order for 2012 in plenty of time to keep the cost low. Then his buyer at Sears changed and that agreement seemed to get lost in a new round of haggling. When the order for Father’s Day
finally cam
e, Mr. Brown said, it was too late to guarantee the lower price. He refused the order.
Sears responded by agreeing to the higher price. But when it came time for the Christmas holiday order, negotiations stalled once more, again pushing LoggerHead past the deadline to get the best price, according to Mr. Brown.
“We were sitting there going, ‘Why do they want Father’s Day so bad but they won’t commit for Christmas?’ ” Mr. Brown said. Now he believes that the company had already placed its order for the Craftsman version.
In late September, Mr. Brown said, his suspicions were confirmed. LoggerHead got a “customer feedback” e-mail from Mr. Craig, the tool connoisseur, describing the new Max Axess wrenches. “Sadly, they are made in China,” Mr. Craig wrote. “Can you tell me if LoggerHead has authorized these?”
Craftsman has come under fire before, accused of misleading customers into thinking that its tools are made in America and for stealing intellectual property. In one case, Sears spent two decades defending itself against a claim by Peter M. Roberts, who as a young Sears employee had, on his own time, invented a type of socket wrench.
Mr. Roberts told the court that Sears had played down the value of his invention, paid him $10,000 for the rights, and then made tens of millions of dollars. He eventually received settlements of less than $10 million, according to news reports.
In another, more recent case led by Lee Grossman, Mr. Brown’s lawyer, a judge awarded $25 million to the maker of a tool called the Rotozip who said he had disclosed trade secrets to Sears in an attempt to get the store to carry a new version of the tool.
Sears, a jury decided, took the trade secrets and had the tool made abroad for Craftsman.
“You have LoggerHead out, Dan Brown out, and dozens of American workers laid off — all in the name of profits for Sears,” Mr. Grossman said.
LoggerHead’s lawsuit, Mr. Brown said, will most likely include claims that Sears interfered with the company’s ability to do business with other stores.
“I’m in favor of free trade,” Mr. Brown said. “The person who’s out-innovated loses. But it’s destructive when someone competes but doesn’t out-innovate, they just produce it in a different market without regard to safety codes and human conditions.”
The company that makes the Max Axess wrench and other tools for Craftsman, the
Apex Tool Group, is being acquired by Bain Capital, the company founded by Mitt Romney, in a $1.6 billion deal.
Throughout the presidential campaign, Bain was criticized on the grounds that it encouraged outsourcing by companies it buys at the expense of American workers. Apex makes many of its tools overseas. A company spokesman referred all questions to Sears.
Mr. Brown and his lawyer say they believe they have a solid case against Sears, but it could take years to litigate. “What happens to us in the meantime?” Mr. Brown asked.
Mr. Brown is also concerned that while he fights in court, Sears can undercut the price of his wrench.
For now at least, Sears still has some of Mr. Brown’s wrenches in its inventory. On the Sears Web site, the Craftsman and the LoggerHead wrenches are listed at the same regular price, $24.99 for the 8-inch version, and today both are on sale. But for at least a few days in recent weeks, only the Craftsman version was on sale, for $19.99.
A version of this article appeared in print on November 9, 2012, on page B1 of the New York edition with the headline: An Innovator vs. a Follower.
Made In America Has A New Ring
Uncategorized11/19/2012
The data shows that Made in the USA resonates even stronger for U.S. consumers, of course.
Naturally, this presents a great opportunity for the many small businesses and manufacturers to tap into a new market like China with over a billion people. Many have tried to tap overseas markets only to fail because of the cultural differences, government red tape (on both sides), and shipping logistics, just to name a few of the challenges. The good news is there are many international trade resources for navigating this complex arena.
If you are looking to understand what your competitors are shipping, you can check out a company like Manifest Journals where a business connection of mine, Michael Heffernan, helps companies make sense of U.S. Customs Import Trade Data. Or head to the International Trade Administration to start your exporting journey. The USA.gov site on international trade is also a powerful resource.
The findings—part of BCG’s ongoing study of the changing global economics of manufacturing and its Made in America, Again research series—support previous BCG analysis showing that the U.S. is becoming increasingly attractive as a location for making certain products for the U.S. market and as a base for global exports.
The U.S. has improved its cost competitiveness compared with China and the advanced economies of Western Europe and Japan, leading BCG to estimate that higher U.S. exports—combined with production “reshored” from China—could create 2.5 million to 5 million new U.S. jobs in manufacturing and related services by the end of the decade (which I’ve reported on earlier this year).
In both the U.S. and China, respondents of all age groups and income levels expressed a concern for quality, a key driver of the consumer preference for U.S.-made products. Eighty-five percent of U.S. consumers and 82 percent of Chinese said they “agree” or “strongly agree” that they feel better about Made in USA quality. Patriotism is another strong consideration among U.S. consumers: 93 percent said that they would pay more for U.S.-made goods in order to keep jobs in the U.S., and 80 percent said that buying U.S. products demonstrates patriotism.
In contrast to U.S. and Chinese consumers, European consumers strongly prefer products made in their own countries. More than 65 percent of consumers in both Germany and France said that they would be willing to pay more for products made in their home country than for those made in the U.S.
Shopping for American-Made Holiday Gifts – Renewed Focus on Gifts Made in USA
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The Revival of American Manufacturing: An Update
UncategorizedChris Mayer
Nope. Made in the USA. The Solo Cup Co. makes them in Lake Forest, Ill.
Recently, another company started making an almost identical-looking reusable red cup. Trudeau USA makes millions of these cups, which they call simply the Red Party Cup. This was a job that in another year not so long ago might’ve headed to China. Not today.
American manufacturing is quietly enjoying a revival on some levels. Goods once made in China are now coming back to the USA — a process called re-shoring. In May, I wrote to my Capital & Crisis readers about “A New Trend ‘Sneaking up on People’”. I talked to Scott Huff, a principal at Innovate International, an engineering design and contract manufacturer for several industries. Scott was actively involved in re-shoring. Recently, I talked to Scott again to get an update.
“That red cup has been one of the most successful things we’ve re-shored,” he told me. I love this story precisely because it goes against what so many people think they know. They think US manufacturing is in inevitable decline. The red cup story is another strand in a growing thread of anecdotal evidence to the contrary.
As Scott says:
The end result is kind of like what we see in the mortgage market: superlow rates that not many borrowers can access. Ergo, manufacturers need to run lean these days.
“So,” Scott continues, “if you can make your manufacturing process leaner, you can free up cash. One way to do that is to make it local and turn over the dollars faster.” This way, you don’t have cash sitting in goods on a boat from China.
Driving the renaissance is more than just shipping costs, of course. Many of the factors we talked about back in May are still in play today. Namely: It is getting expensive to do business in China.
“The glory days of China’s export business are over,” Scott says. “Now it is down to hard work. The adjustment in the renminbi [China’s currency] took some of the pressure off the export companies, but the cost of living continues to just crawl upward — the cost of food and the cost of housing, especially. Those don’t come down. There is only so much you can do with currencies.”
Cheaper US energy prices also help along the re-shoring trend. Fertilizer and chemical firms want to put down roots in the US and plug into cheap sources of natural gas. In Asia, natural gas costs at least four times the price.
“Natural gas production has gotten to the point where we can’t store it all,” Scott says. “Natural gas prices should be even lower. And things that include natural gas as a raw material, such as olefin plastics, propylene and ethylene, should be cheaper to make here. We should have the cheapest propylene and ethylene in the world in the US.”
The same could happen with oil. US production is up 25% since 2008 as new technology cracks up new supplies. As I write, the price of West Texas Intermediate, the US benchmark oil price, is down nearly 16% on the year.
So China’s cost advantages have been ground away in several ways. Still, there are challenges bringing stuff back to the US — like a dearth of manufacturing know-how.
“You have a base of experience in Illinois and Michigan and places that have traditionally been the centers of excellence for some of these manufacturing processes,” Scott said. “A toolmaker who is capable and has kept up with the technology — well, let’s just say there aren’t very many unemployed toolmakers. There’s plenty of opportunity now as people are trying to re-shore stuff.”
I was fascinated by a role reversal Scott described.
“The vast majority of my design engineers are Chinese and work in my office in China,” Scott said. “And these are guys that have been with me for five years or more, in some cases as long as I’ve been in China. I’ve been there eight years. They’ve got a lot of experience.
“So,” he says with a chuckle, “one of the things we’re starting to do is bring some interns from the States to work with them. It’s kind of a role reversal. We have design engineers that actually put lines on paper in China for the products being made in Chicago. Eight years ago, I was taking a handful of older American guys to China with me to help work with these young Chinese designers. And now it’s going back the other way. Now I have young American graduates I’m shipping over there for six months to get experience with people that know what they’re doing.”
Incredible, isn’t it? All things change. As I like to say, if you stand around long enough in markets, you’ll see them come full circle.
US consumers also favor US-made products — to a point. “People love this story,” Scott said. “Having US-made products is an advantage in the marketplace. But on consumer products in particular, as much as people love US-made products, there is a limit to what they’ll pay for them. The economics of it all will still rule the day.”
There are a handful of publicly traded US manufacturers headquartered in places like Milwaukee, Wis., and Mansfield, Ohio, that are lean and world-class competitors. They are in good position to gain from this trend. But, as always, patience is key.
The stock market may be somewhat overzealous in its enthusiasms at this very moment. While keeping my eye on this still-nascent trend, I’ve determined to wait for better prices — and they will come, I have no doubt. In the meantime, though, the revival of American manufacturing is an important story to keep in mind…especially for contrarians who don’t mind getting paid to go against the crowd.
Made in USA Label Popular in China, Too: Study
UncategorizedNovember 14, 2012
The report, by the Boston Consulting Group (BCG), found 61 percent of Chinese consumers would pay more for a product made in the United States. When products are of similar price or quality, about 47 percent prefer the U.S.-made alternative, more than double the number who would pick the Chinese-made item.
“The Chinese consumer is quietly concerned about what they’re getting,” said Hal Sirkin, a BCG senior partner and co-author of the BCG study.
Consumers are responding to recent cases of lead paint in toys, tainted milk and other scandals that, in some cases, led to severe penalties for those responsible. As more Chinese enter the middle class, they will increasingly look for value in the goods they buy rather than just the lowest price, which will pressure Chinese manufacturers to improve quality, Sirkin said.
Chinese consumers’ preference for U.S. goods, of course, is not as strong as U.S. consumers’, and its causes are different: Chinese shoppers more often cite durability and environmental impact than do shoppers in the United States.
But the survey still shows a potential advantage for manufacturers or retailers of consumer products, who may be able to charge higher prices for goods made in the United States.
BCG cited several examples of U.S.-based manufacturing: Dell Inc. makes computers; Google Inc. makes Motorola-branded phones; and General Electric Co manufactures home appliances in Kentucky.
PREMIUM FOR U.S. GOODS
The survey of more than 5,000 consumers helps support the argument that more manufacturers should base production in the United States, according to BCG.
As the cost of producing and shipping goods from China rises, more U.S. manufacturers are expected to expand U.S. capacity, BCG predicts. And as U.S. factories churn out more autos and auto parts, electrical equipment and furniture, they could spark an industrial renaissance with 5 million new jobs, it says.
BCG recommends retailers lock in U.S. suppliers to attract shoppers, and is advising consumer brands to make their U.S. sourcing as visible as possible. For now, relatively few do.
“If you’re going to have things that have a long life, like mechanics’ hand tools, there’s real premiums for ‘Made in USA’ over a foreign brand because the quality is better,” Sirkin said. He named Stanley <SWK.N> brand tools as an example.
In both the United States and China, more than 80 percent of those polled cite quality as a reason to pay more for U.S. goods. Baby food, household appliances, tires, car parts and furniture are items for which most people are willing to pay a premium, generally of 10 percent or less.
Some categories are outliers: shoppers in China would pay 77 percent more for U.S.-made athletic shoes, a status symbol.
Patriotism motivates U.S. consumers. More than nine in 10 cited domestic jobs as a reason for choosing “Made in USA” goods. Overall, 81 percent of Americans are likely to pay more for goods that carry the “Made in USA” label. More than a quarter of people are willing to pay at least 10 percent more for appliances, furniture, and baby food.
The BCG study, to be published Thursday, focused on consumer goods rather than pricy capital equipment geared toward business and government. It found only minor differences in attitudes based on age, income and whether respondents had children.
The appeal of U.S. goods is by no means universal, however. French consumers see U.S.-made mobile phones, shoes or baby toys as less valuable than local equivalents, and almost two-thirds of Germans would pay more for German products.
AMERICAN MOUNTAIN CO.: U.S.-MADE ALPINE GEAR WITH STYLE
UncategorizedNovember 14, 2012
Driven by a desire to make products with fortitude and inspired by passion for the experiences unique to the magnificient peaks, the company makes mountain wear reminiscent of a time when climbing was in its purest form and excellence was found in all aspects of a product—when performance and quality were as important as style and design.
American Mountain Co. uses high-tech materials combined with classic style for its products, all manufactured in the United States. Every single stitch of their wears is sewn by a craftsman who takes personal pride in each pass of the needle. And every garment is arduously tested to ensure you can rely on it for a lifetime. When a product is finally deemed perfect, the crafter signs the garment before it’s sent to you with American Mountain Co.’s lifetime guarantee.
The company is launching on Kickstarter now with two products: the No. 907 High-Altitude Hardshell Jacket and the No. 307 Mid-Altitude Windproof Fleece Jacket.
The company took a ground-up approach to design these pieces. The made-in-the-USA fabrics are the best available, and the jackets have innovative features, like a system to keep the base of the jacket tight around your waist, which is far superior to the ubiquitous elastic waist drawcord used in most other jackets. And American Mountain Co.’s hightop collar offers increased wind protection and heat retention.
—Berne Broudy
@berneb
Available February 2013, $325 for the #307 and $625 for the #907 at americanmountainco.com.
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American Manufacturing Loses Another Member
UncategorizedNovember 13, 2012
Third-generation owner Walter Meck and other family members bought the company back from the Fessler family after Meck’s father had sold it in 1960. After the advent of “free trade” and NAFTA had claimed its three biggest customers, the company shifted from high-volume mass-market apparel to higher-end products made with more expensive fabrics produced quickly in small quantities. The company adopted a policy of offering organic cotton, and fabrics made from bamboo.
FesslerUSA thrived. So much so that five years ago the company doubled its capacity and moved into a new factory. But it finally fell victim to the Great Recession with its tighter credit standards, Asian competition, and weak consumer spending.
The Detroit News, itself a part of a dying industry (the printed newspaper), quoted Meck as observing, “We knew that it was change or die. We had to reinvent ourselves.”
So reinvent they did. Meck laid off half his workforce and maintained a leaner, more profitable company until 2010, when sales again plummeted. New markets and new product proposals were promising, but not in time to avoid the bank calling the company’s loan.
Meck noted that his company could have survived had he been able to find a lender, but that tightened credit is a common problem for small manufacturers. Chad Moutray, chief economist for the National Association of Manufacturers, told The Detroit News,“Many of [the member companies] have complained to me that the standards for borrowing have become a lot more strict since the recession. It’s much tougher to get a loan today than it was in the past.”
In particular, new lending standards, a casualty of the country’s bailout policy, are what have made it much more difficult for struggling companies to get a loan. That, along with a national program of increased taxation and regulations on producers, has resulted in jobs and production going overseas. Meck also blamed part of his company’s problem on lack of investor interest — not surprising to analysts, given that the economy is scaring investors into hanging onto their money.
Fessler was one of the few remaining vertically integrated companies, meaning that all aspects of production remained under one roof. The company wove its own fabric, and did its own cutting and sewing.
Los Angeles-based American Apparel is an example of a highly successful clothing manufacturer using the vertical integration model, having carved itself a good chunk of a niche market. It has bucked the system. According to The Detroit News report,
“’It’s going to be tough for me to get a job because of my age,” said Bambrick, who became the sole breadwinner for her stepdaughter and elderly mother after the recent death of her husband. “I am very strapped. I will need a good job.”’
Americans still do have choices, although they are shrinking. Though die-hard label-readers are finding fewer and fewer items made anywhere but China, analysts note that perseverance can pay off. In addition to American Apparel, “Made in the USA” labels can still be found at Munro Shoes, Finley Shirts, Unis, and Patricia Wolf, among others.
For Fessler, however, the run is over. Production will shut down in November after nearly 113 years, leaving 130 employees out of work. Meck commented,
New U.S. Address in Foxconn's Future? Don't Bet On It
UncategorizedNovember 9, 2012
I was skeptical about this story — which talks about production of LCD TVs, not iPhones — and that might have been the end of it.
But maybe it’s not quite as crazy as it seems. A spokeswoman for Foxconn told me in an e-mail that the company “already has multiple facilities based in the U.S.” but she also went on to say that “there are no current plans to expand our operations there at this time.”
Suppose, however, you want to make the case that once the camel gets its nose under the tent, why should it stop there? I’d imagine Exhibit A could include the comments offered up the other day by Foxconn’s Chairman Terry Gou, who revealed just how badly the company was straining just to keep pace with current iPhone production demands. Any extra manufacturing capacity coming online would go a long way to help relieve that crunch. Then there’s the political benefit of turning out products with “Made in the U.S.A.” labels stamped on the back, no small benefit given the touchy state of U.S.-Sino trade relations these days. And it is entirely possible that Foxconn is getting prodded by one of its major customers because of those same political considerations.
And more jobs equals good politics. The two cities mentioned by Digitimes are Detroit and Los Angeles where both Mayors Dave Bing and Antonio Villaraigosa would be eager to put out the welcome mat: Los Angeles, with an 11.2 percent unemployment rate and Detroit, where 18.1 percent of the labor force is out of work, are doing far worse than the national average of just under 8 percent.
“If you want to make things in America, we know how to make things,” said Ned Staebler, formerly of the Michigan Economic Development Corporation and now Wayne State’s vice president for economic development.
Michigan business circles have indeed been buzzing about “a big announcement” related to technology, according to Staebler, though it’s still unclear whether we’re talking about Foxconn or some other company. Word has it that the site in question might ultimately wind up in one of Detroit’s suburbs. The announcement also may have more to do with software than hardware. We’ll know more in a few weeks.
Now to the question whether Foxconn would ever employ Americans to put together iPhones or iPads in the U.S. The skeptics will note that while Foxconn has already crossed the Pacific to Brazil — last year it began operating an assembly plant not far from Sao Paulo in a the bedroom community of Jundai — average wages in Brazil remain lower than in the U.S. This becomes a case where math really matters. Foxconn — and by extension its bigger clients, like Apple — rake in fat profits from Chinese sites where hourly wages and production costs are much lower than those in the United States. (Foxconn pays its assembly workers a monthly wage of 2,500 RMB ($400).) It’s hard to imagine that tax breaks from Detroit, L.A. or Oshkosh would be enough to compensate for taking lower margins just for the “benefit” of being on U.S. soil. Economists have estimated that paying a U.S. labor force to make the devices” would add between $65 to $100 to the cost of an iPhone.
“It would be a positive if Apple made at least some percentage of their products (here) and I would like to see them do that,” notes Scott Nova, the executive director of the Worker Rights Consortium, a Washington D.C.-based labor rights monitoring organization. “But it would be a huge leap from their current manufacturing policy… and would be a radical change You cannot replicate Chinese working conditions in LA.”
Foxconn would also have a tough selling job to win hearts and minds given its spotty labor history, which is rife with complaints about worker conditions in factories making iPhones and other high-volume tech products. As much as Foxconn would want to keep the unions out, a new U.S. factory would still have to conform to local labor standards. Would it be worth the hassle?
Nothing is out of the realm of possibilities, but those aren’t the sorts of jobs that the political class says America ought to invest in for the future. As President Obama noted during his third debate with Mitt Romney, echoing what the late Steve Jobs told him during a dinner in Silicon Valley in 2011, “There are some jobs that are not going to come back, because they’re low-wage, low-skill jobs.”
And in this case, it may be a good enough reason not to invite them back. To be continued.
Popular Wrench Fights a Chinese Rival
UncategorizedNovember 8, 2012
The tools have one significant difference, Mr. Craig noted. The Bionic Wrench is made in the United States. The Max Axess wrench is made in China.
The shift at Sears from a tool invented and manufactured in the United States to a very similar one made offshore has already led to a loss of American jobs and a brewing patent battle.
The story of the Bionic Wrench versus Craftsman, which bills itself as “America’s most trusted tool brand,” also raises questions about how much entrepreneurs and innovators, who rely on the country’s intellectual property laws, can protect themselves. For the little guy, court battles are inevitably time-consuming and costly, no matter the outcome.
Still, the inventor of the Bionic Wrench is determined to fight. He is Dan Brown, an industrial designer in Chicago who came up with the wrench after watching his son try to work on a lawn mower. Mr. Brown says he believes that the Max Axess wrench copies his own and he is planning to file suit against Sears, which declined to answer any questions about the wrenches for this article.
Since Sears has halted new orders, the Pennsylvania company that makes the Bionic Wrench has had to lay off 31 workers, said Keith Hammer, the project manager at the company, Penn United Technologies. “And that’s not to mention our suppliers,” he added.
Mr. Brown sees a broader issue than just the fate of his wrench. “Our situation is an example of why we’re not getting jobs out of innovation,” he said. “When people get the innovation, they go right offshore. What happened to me is what happened to so many people so many times, and we just don’t talk about it.”
Inventors typically spend $10,000 to $50,000 to obtain the type of patent Mr. Brown has on the wrench, said John S. Pratt, a patent expert at Kilpatrick Townsend & Stockton in Atlanta. Though he said he could not comment on the merits of Mr. Brown’s potential suit, patent infringement cases can be especially difficult in the tool field, where many improvements are incremental, Mr. Pratt explained.
A defendant in such a case would most likely argue that either the tool did not warrant a patent in the first place, or that its own product did not violate the patent.
The fact that Sears made some changes to the wrench’s design, like making the grooves that allow the metal prongs to slide back and forth visible instead of hidden, will make the case more challenging, he said. “It’s hard for me to imagine that Sears isn’t particularly careful about breach of patent, so there’s probably another side to the story,” he said.
After patenting the wrench in 2005, Mr. Brown formed a company, LoggerHead Tools, to bring it to market, making a point of having it made in the United States.
The Bionic Wrench was greeted with enthusiasm at trade shows and in industrial design competitions, and the company survived the downturn in 2008. Mr. Brown resisted overtures from large chain stores that wanted to sell the tool under their proprietary brand, he said, and rejected the lure of cheaper manufacturing in China. “I was raised a different way,” he said.
The tool sold fairly well on its own — LoggerHead has shipped 1.75 million of them — but Mr. Brown, 56, who teaches industrial design at Northwestern University, says LoggerHead operated on a shoestring and he plowed much of the profit back into the company. “You cannot have big offices and fancy cars and everybody with an administrative assistant, because we are competing with China,” he said.
In 2009, LoggerHead hit pay dirt when Sears agreed to do a test sale. The product sold out, Mr. Brown said, and Sears ordered 75,000 Bionic Wrenches the next year. In exchange Mr. Brown agreed not to sell the wrench to Sears’s competitors, including Home Depot and Lowe’s.
In 2011, sales at Sears increased again, far outpacing LoggerHead’s other outlets like the QVC shopping channel and smaller hardware stores. But LoggerHead’s profit margin remained small, in part because it produced a television commercial and paid Sears to show it.
The Sears Holdings Company, which owns the Craftsman brand, declined multiple requests to comment on the Bionic Wrench or the Max Axess Wrench. The company would not answer questions about patent infringement or the volume of sales.
But in a string of e-mails provided by Mr. Brown, the buyer at Sears who had the LoggerHead account wrote, making liberal use of exclamation points, that the wrench’s holiday sales last year exceeded its target by 23 percent.
In the manufacturing world, lead time can determine price, and from the beginning cost was a particular issue for the Bionic Wrench, because of the competition from China. A 2006 article in The Wall Street Journal was headlined, “Wrench Wins Awards, but Is It Priced Too High to Be a Hit?”
According to Mr. Brown’s account of his dealings with Sears, the chain was pleased with the tool’s performance and agreed to place an order for 2012 in plenty of time to keep the cost low. Then his buyer at Sears changed and that agreement seemed to get lost in a new round of haggling. When the order for Father’s Day
finally cam
e, Mr. Brown said, it was too late to guarantee the lower price. He refused the order.
Sears responded by agreeing to the higher price. But when it came time for the Christmas holiday order, negotiations stalled once more, again pushing LoggerHead past the deadline to get the best price, according to Mr. Brown.
“We were sitting there going, ‘Why do they want Father’s Day so bad but they won’t commit for Christmas?’ ” Mr. Brown said. Now he believes that the company had already placed its order for the Craftsman version.
In late September, Mr. Brown said, his suspicions were confirmed. LoggerHead got a “customer feedback” e-mail from Mr. Craig, the tool connoisseur, describing the new Max Axess wrenches. “Sadly, they are made in China,” Mr. Craig wrote. “Can you tell me if LoggerHead has authorized these?”
Craftsman has come under fire before, accused of misleading customers into thinking that its tools are made in America and for stealing intellectual property. In one case, Sears spent two decades defending itself against a claim by Peter M. Roberts, who as a young Sears employee had, on his own time, invented a type of socket wrench.
Mr. Roberts told the court that Sears had played down the value of his invention, paid him $10,000 for the rights, and then made tens of millions of dollars. He eventually received settlements of less than $10 million, according to news reports.
In another, more recent case led by Lee Grossman, Mr. Brown’s lawyer, a judge awarded $25 million to the maker of a tool called the Rotozip who said he had disclosed trade secrets to Sears in an attempt to get the store to carry a new version of the tool.
Sears, a jury decided, took the trade secrets and had the tool made abroad for Craftsman.
“You have LoggerHead out, Dan Brown out, and dozens of American workers laid off — all in the name of profits for Sears,” Mr. Grossman said.
LoggerHead’s lawsuit, Mr. Brown said, will most likely include claims that Sears interfered with the company’s ability to do business with other stores.
“I’m in favor of free trade,” Mr. Brown said. “The person who’s out-innovated loses. But it’s destructive when someone competes but doesn’t out-innovate, they just produce it in a different market without regard to safety codes and human conditions.”
The company that makes the Max Axess wrench and other tools for Craftsman, the Apex Tool Group, is being acquired by Bain Capital, the company founded by Mitt Romney, in a $1.6 billion deal.
Throughout the presidential campaign, Bain was criticized on the grounds that it encouraged outsourcing by companies it buys at the expense of American workers. Apex makes many of its tools overseas. A company spokesman referred all questions to Sears.
Mr. Brown and his lawyer say they believe they have a solid case against Sears, but it could take years to litigate. “What happens to us in the meantime?” Mr. Brown asked.
Mr. Brown is also concerned that while he fights in court, Sears can undercut the price of his wrench.
For now at least, Sears still has some of Mr. Brown’s wrenches in its inventory. On the Sears Web site, the Craftsman and the LoggerHead wrenches are listed at the same regular price, $24.99 for the 8-inch version, and today both are on sale. But for at least a few days in recent weeks, only the Craftsman version was on sale, for $19.99.
A version of this article appeared in print on November 9, 2012, on page B1 of the New York edition with the headline: An Innovator vs. a Follower.
How New Parents Can Bring Back ‘Made in the USA’
UncategorizedFounder & Creative Director, Oliver & Adelaide
11/07/2012
As an online retailer of baby and toddler products made exclusively in the U.S., I am in a position to see an area where American manufacturing is trying to make a comeback.
Manufacturing American-Made Values
The word “manufacturing” tends to conjure images of industrial assembly lines and heavy machinery. But it’s worth remembering that the word means, at root, “to work by hand.” The vendors I work with range from a retired schoolteacher who crochets blankets to savvy, garment-industry veterans who have struck out on their own with smaller design ventures. Whatever the size of their respective enterprises, these are true businesspeople; I would not be able to work with them if they weren’t capable of delivering products on time, season in and season out.
They are also people who are operating from a system of core values — paramount among them, that “Made in the USA” still matters. It matters for a country where that label remains a source of pride. It matters for the environment, when it makes a real difference whether a product needs to be transported 200 miles versus 6,000 miles. And for parents, it matters perhaps most of all in terms of quality and safety.
What’s at Stake
My own background is in the fashion industry. I’ve lived in China, overseeing production at factories there, and seen firsthand how impersonal and indifferent that process can be. As a parent of two young children, I know that what I buy for them ends up in their hands and, inevitably, their mouths. So for every piece of clothing, each doll and toy I purchase, I want to know exactly how it was made, what it is made of and where it’s been. My experience tells me that when something comes from half a world away, you simply cannot know where it’s been sitting, and for how long, on what warehouse floor, in what cargo ship — and, to me, that’s unacceptable. When scarcely a week goes buy without a recall of a foreign-made product, that’s unacceptable, too.
What “Made in the USA” Means in a World of Choices
Being a new parent can be, let’s face it, intimidating. We are presented with an overwhelming list of products that we are told we need to buy in order to be a “good parent,” and then faced with thousands of choices from scores of brands. My company, Oliver & Adelaide, grew out of my own process of trying to separate the things a parent really needs from the marketing hype, and trying to find the very best manufacturers making these products here in the USA.
Very few parents have the time to undertake this kind of research, and fewer still have the opportunity to visit studios and factories. I have made it my business. In seeing for myself where the products are designed and made and inspecting the raw materials used to make them, I have discovered an impressive group of businesses that put a very personal degree of care and concern into every step of their manufacturing processes. And in meeting these suppliers, I have also discovered that they also bring real passion and pride to what they do.
Small businesses like Loop, which was founded in 2010 by two knit designers to create heirloom quality children’s clothes and blankets, or Zuzii, which uses the highest-quality materials and employs traditional cobbler techniques to handcraft shoes for babies and toddlers, are making outstanding products here in the United States, and doing so with love. But without the huge sales forces and marketing budgets of larger companies that outsource manufacture overseas, they face an uphill climb when it comes to connecting with parents. And because they insist on making American products with American labor and materials, they are unable to take advantage of the mass manufacturing that drives down costs for major brands.
Good for Baby, Good for the Economy
These are the kinds of manufacturers who depend on small retailers to spread word of their products. I’m proud to play a part in that. More than that, though, they depend on parents who will make it a point to buy American — even if it means buying fewer items, but of significantly higher quality. Births, aside from being a joyous experience for each family, are also tremendous drivers of the economy; much like house sales, they set in motion a cascade of purchases. If parents commit to supporting manufacturers who believe in the USA, I believe we can take a real step towards bringing jobs back to this country. In doing so, we may find that the answer to fixing the trade imbalance lies not with any particular policy — or any particular candidat — but, rather, in our own hands.
It’s an approach that could benefit all sectors of our economy. Why not start with the purchases that end up in the hands of our children?
Carhartt's Patriotic New Made-in-USA Line, Old Made-in-USA Line
UncategorizedNovember 7, 2012
But clothing brand Carhartt has been making its clothing in the US since, well, forever. And now its is working to make this fact more a part of its message.
Carhartt’s tan, swirly wave logo on its characteristically tan garments is probably familiar even to those who don’t count on the brand for work wear. But construction workers, truckers, welders, farmers, and just about anyone else in America who works outside an office have a special appreciation for the brand.
“Best for wear” and “From the mill to millions” have been a couple of the mottos the brand has used since it was founded in 1889 by its namesake, Hamilton Carhartt. The “Made in America” tags on its clothing was more or less an afterthought. But now, Carhartt has released a “Made in the USA” line featuring some of its most iconic products. The line, Carhartt says, is “stitched on American soil for any person that believes in hard work.”
“Rather than follow trends, our goal is to always design and manufacture premium work-worthy apparel at a price that respects our consumer’s hard-earned dollar,” Carhartt Vice President of Marketing, Tony Ambroza, told brandchannel when asked about the new line’s timing. When asked any Carhartt chose now to stress its “Made in America” bona-fides, Ambroza said, “Our Made in the USA line of apparel was created in response to consumer feedback; they told us they wanted to know exactly which products we make and source in the U.S. We were able to shift some product to other manufacturing facilities in order to accommodate production of these popular styles.”
But a recent study published by the Clothing and Textiles Research Journal argues that American consumers overvalue US-made apparel. From the study:
With this in mind, Ambroza hinted that the line was not yet complete, suggesting Carhartt fans “look for additional USA-made exclusives this holiday season.”