Snap-on Incorporated'was incorporated under the laws of the state of Wisconsin
in 1920 and reincorporated under the laws of the state of Delaware in 1930. Snap-on
is a leading global innovator, manufacturer and marketer of high-quality tool,
diagnostic and equipment solutions for professional tool and equipment users.
Product lines include a broad range of hand and power tools, tool storage, saws
and cutting tools, pruning tools, vehicle service diagnostics equipment, vehicle
service equipment, including wheel service, safety testing and collision repair
equipment, vehicle service information, business management systems, equipment
repair services, and other tool and equipment solutions. Snap-on's customers include
automotive technicians, vehicle service centers, manufacturers, industrial tool
and equipment users and those involved in commercial applications such as construction,
electrical and agriculture.
Snap-on markets its products and brands through multiple distribution sales
channels in more than 100 countries. Snap-on's largest geographic markets include
the United States, Australia, Canada, France, Germany, Italy, Japan, the Netherlands,
Spain, Sweden and the United Kingdom. The originator of the mobile dealer van
tool distribution channel in the automotive repair segment, Snap-on also reaches
its customers through company direct, distributor and Internet channels.
Snap-on's business segments are based on the organization structure used by
management for making operating and investment decisions and for assessing performance.
Snap-on's reportable business segments include: (1) the Snap-on Dealer Group,
(2) the Commercial and Industrial Group, and (3) the Diagnostics and Information
Group. The Snap-on Dealer Group consists of Snap-on's business operations serving
the worldwide franchised dealer van channel. The Commercial and Industrial Group
consists of the business operations providing tools and equipment products to
a broad range of industrial and commercial customers worldwide through direct,
distributor and other non-franchised distribution channels. The Diagnostics
and Information Group consists of the business operations providing diagnostics
equipment, vehicle service information, business management systems, equipment
repair services and other solutions for customers in the worldwide vehicle service
and repair marketplace.
Vehicle Service and Repair Sector
The vehicle service and repair sector has three main customer groups: professional
technicians who purchase tools and equipment for themselves; vehicle service
and repair shop owners and managers ' including independent shops, national
chains and automotive dealerships ' who purchase equipment for use by multiple
technicians within a service or repair facility; and vehicle manufacturers.
Snap-on provides innovative tool and equipment solutions, as well as technical
sales support and training, to meet technicians' evolving needs. Snap-on's franchised
dealer van distribution system offers technicians the convenience of purchasing
quality tools with minimal disruption of their work routine. Snap-on also provides
owners and managers of shops, where technicians work, with tools, diagnostics
equipment, repair and service information, and shop management products. Snap-on
provides vehicle manufacturers with products and services including tools, consulting
services and facilitation services. Snap-on's facilitation services include
product procurement, distribution and administrative support to customers for
their dealership equipment programs.
Major challenges for Snap-on and the vehicle service and repair sector include
the increasing rate of technological change within motor vehicles and the resulting
impact on the businesses of both our suppliers and customers that is necessitated
by such change. Snap-on believes it is a meaningful participant in the market
sector for vehicle service and repair.
Industrial Sector
Snap-on markets its products to a wide variety of industrial customers including
industrial maintenance and repair operations; manufacturing and assembly facilities;
government facilities; schools; and original equipment manufacturers that require
instrumentation or service tools and equipment for their products.
Major challenges in the industrial sector include a highly competitive, cost-conscious
environment, and a trend toward customers making all of their tool purchases
through one integrated supplier. Snap-on believes it is a meaningful participant
in the market sector for industrial tools and equipment.
Distribution Channels
Snap-on serves customers primarily through three channels of distribution:
the mobile dealer van channel ('dealers'), including the company's technical
representatives ('tech rep') organization, company direct sales and distributors.
The following discussion represents Snap-on's general approach in each channel,
and is not intended to be all-inclusive.
Dealers and Technical Representatives
In the United States, the majority of sales to the vehicle service and repair
sector are conducted through Snap-on's dealers and its tech rep organization.
Snap-on's dealers primarily cover vehicle service technicians and vehicle service
shop owners, providing weekly contact at the customer's place of business. Dealers'
sales are concentrated in hand and power tools, tool storage units and small
diagnostic and shop equipment, which can easily be transported in a van and
demonstrated during a brief sales call. Dealers purchase Snap-on's products
at a discount from suggested retail prices and resell them at prices established
by the dealer. Although some dealers have sales areas defined by other methods,
most U.S. dealers are provided a list of places of business that serves as the
basis of the dealer's sales route.
Company Direct Sales
In the United States, a growing proportion of shop equipment sales under the
Sun, John Bean, Wheeltronic, White and Blackhawk brands and information products
under the Mitchell1 brand are made by direct sales force that has responsibility
for national accounts. As the vehicle service and repair sector consolidates
(with more business conducted by national chains, automotive dealerships and
franchised service centers), these larger organizations can be serviced most
effectively by sales people who can demonstrate and sell the full line of equipment
and diagnostic products and services. Snap-on also sells these products and
services directly to vehicle manufacturers.
Snap-on brand tools and equipment are marketed to industrial and governmental
customers in the United States through both industrial sales representatives,
who are employees, and independent industrial distributors. In most markets
outside the United States, industrial sales are conducted through independent
distributors. The sales representatives focus on industrial customers whose
main purchase criteria are quality and service. At the end of 2003, Snap-on
had industrial sales representatives in the United States, Australia, Canada,
Japan, Mexico, Puerto Rico and some European countries, with the United States
representing the majority of Snap-on's total industrial sales.
Distributors
Sales of certain tools and equipment are made through independent vehicle service
and industrial distributors who purchase the items from Snap-on and resell them
to the end users. Products supplied by Bahco, under the Bahco, Fish and Hook
(design), Belzer, Pradines and Lindstrom brands and trade names, for example,
are sold through distributors in Europe, North and South America, Asia and certain
other parts of the world. Wheel service and other vehicle service equipment
are sold through distributors primarily under brands including Hofmann, and
Kansas Jack. Hand tools under the Irimo, Palmera and Acesa brands and power
tools under the Sioux brand, are differentiated from those products sold through
the dealer, tech rep and direct sales channels. Sun-branded equipment is marketed
through distributors in South America and Asia, and through both a direct sales
force and distributors in Europe.'
E-commerce
Snap-on's e-commerce development initiatives allow Snap-on to combine the capabilities
of the Internet with Snap-on's existing brand sales and distribution strengths
and to reach new and under-served customer segments. Snap-on began selling Snap-on
brand products through the Internet in 2000 as part of its 'Store Without Walls'
vision, which offers both current and prospective customers online, around-the-clock
access to purchase Snap-on and Blue-Point products through its public Website
at www.snapon.com. The site features an online catalog containing nearly 14,000
products, including Snap-on hand tools, power tools, tool storage units and
diagnostic equipment available to consumers and professionals in the United
States, the United Kingdom, Canada and Australia. At the end of 2003, Snap-on
had more than 165,000 registered users, including approximately 19,000 industrial
accounts. In addition to its public Website, Snap-on began to host individual
dealer Websites in 2002 to help franchised dealers extend their industry-leading
service. These initiatives, as well as other system enhancement initiatives
that are currently under development, are designed to further leverage the one-on-one
relationships and service Snap-on has with its current and prospective customers.
Through the development of its business-to-business and business-to-consumer
capabilities, Snap-on and its dealers are enhancing communications with customers
on a real-time, 24-hour, 7-days a week basis.
Competition
Snap-on competes on the basis of its product quality and performance, service,
brand awareness and technological innovation. While no single company competes
with Snap-on across all of its product lines and distribution channels, various
companies compete in one or more product categories and/or distribution channels.
Snap-on believes that it is a leading manufacturer and distributor of professional
tools and equipment, offering the broadest line of these products to the vehicle
service industry. The major competitors selling to professional technicians
in the vehicle service and repair sector through the mobile van channel include
MAC Tools (The Stanley Works) and Matco (Danaher Corporation). Snap-on also
competes with companies that sell through non-mobile van distributors including
Facom (Fimalac), Sears, Roebuck and Co. and The Stanley Works. Within the power
tools category, Snap-on's major competitors include Atlas Copco, Ingersoll-Rand,
Cooper Industries, Inc., Black & Decker Corporation, Bosch, and Makita Corporation.
In the industrial sector, major competitors include Armstrong (Danaher Corporation),
Cooper Industries, Inc. and Proto (The Stanley Works). The major competitors
selling diagnostics and shop equipment to shop owners and managers in the vehicle
service and repair sector include Corghi S.p.A., Facom (Fimalac), Hennessy (Danaher
Corporation), Hunter Engineering, OTC and Robinair (SPX Corporation), and Rotary
and Chief Automotive (Dover Corporation).