Snap-On CEO Nick Pinchuk on Ford, Tools & His Life Around Autos | Bloomberg Hot Pursuit!

Sure. You unleashed me when you said the word Snap-on. You know, I could talk for an hour, but look, here's the thing. The Snap-On brand is the most powerful brand in America. Now, I'm sure right now racing through your mind is here's another CEO that has an aberrated view of the importance of his company. But let me tell you, it is today the outward sign of pride and dignity that working men and women take in their profession. They buy our tools because it makes a statement. It goes all the way back to the beginning in 1920. 1920 Snap-on was founded and you know there were 7 and a half million vehicles on the road and nobody knew what skills a mechanic would really have to have and more than that what tools they would use. So they had a dog's breakfast worth of tools. Comes an engineer from Milwaukee, Wisconsin. And he walks around in the garages and he sees the mechanic's work. He observes that work and he comes up with a tool, five handles of different configurations like a T, an ellipse, a crank, and puts them together with 10 sockets of different dimensions and fashions them so they'll snap on interchangeably. He said, 'These five handles do the work of 50 tools.' And so they did. They revolutionized tool sets all over the country. He did two other things which were as important. He made the tools of the highest quality steel and you pick them up and if you transport yourself back into 1920, you kind of say these things are built like a brick structure. You know, they are very very strong and you can imagine they're great. But here's something that he did was even more important. He bypassed the normal way to sell tools, that is to go through distributors. And he told his salesman to go into the garage and lay those tools, the five handles and 10 sockets out on green felt as if they were as precious as surgeons knives. Implying that if a mechanic used these tools, he would declare to the world he was doing something as special as a surgeon. And that is the underpinning of our brand today. Snap-on is the outward sign of pride and dignity for working men and women. And we have people buy our jackets. I got on a van downtown Chicago. Get on these vans all the time. We have like 3,500 of them in the United States. So I get on this van downtown Chicago.

We did. The vans sell the tools through our franchise vans who sell the tools directly to the mechanics, not to the garages. So, if you think about it, there's another factor about Snap-on is we're integrated from the raw steel that comes in back at the factory. We work on it, you know, fairly difficult processes and then ship it all the way to the hand of the end user. And we call on 1 million technicians every week.

So these guys ride around in routes where they call, you know, if you have near your house a Chevrolet dealership, there's probably at 4:00 this afternoon, there's probably a Snap-On truck going to go in there and sell some tools. And he'll be there next week at four o'clock on Wednesday. See? So that's the way we do these kinds of things. But I get on his van. So I get on his van and this guy's got a varsity jacket. You know the kinds of things people wear in varsity and it's got snap-on here and I says how expensive is jacket? He says 90 bucks. Corduroy jacket 90 bucks. He says they're selling well. He says yeah they're selling well. And so I asked him well how many did you sell? And he said well I only been selling for two weeks. When you hear this and you're a guy like me you think now the bad news is coming. He says, 'I sold 80.' So, he sold 80 in two weeks. He only has 250 customers. I have people send me pictures of their weddings in front of Snap-On boxes or in front of Snap-On trucks. I have people send me pictures of their newborn babies in which they have put their Snap-on wrench in their hand because the family believes whatever the baby touches first will influence their life forever. That's why we don't let amateurs use our tools easily. If there's any commandment in Snap-on, among them is thou shalt not sell to do-it-yourself people.

We did start in Milwaukee. Well, yeah, we have 36 factories around the world. 15 are in the United States. So, we make in Asia for what's in Asia. We export some stuff, but we tend to export, Matt, about as much as we import. We're really about making in the markets because we want to shorten that intellectual line between observing the work and then doing the engineering and then manufacturing.

It ain't so easy. It isn't that easy. You know, a lot of it has to do with proprietary metallurgy. A lot of it has to do with the process. You know, I'm an electrical engineer. I worked on the Viking probe that landed on Mars in 1976. So, at one point in another life, I was kind of an aerospace engineer. But I can tell you this, if I have a computer, it's a lot easier to copy than a hand tool. And the reason is the mere possession of the hand tool allows me to analyze the product as it is now, but it doesn't tell me how it was made. It doesn't tell me about the heat treating and the grinding and the annealing and the plating and all those things. And so that's why it's not so easy to copy this stuff.

Well, remember we make in the markets where we sell. So, but not exclusively. Okay. So, let's say you got these vans. The van has 40,000 SKUs on it and then it's got a catalog with 4,000 and 40,000 in the catalog and so we make 80% of it in the United States. So we're not tariff immune but we are tariff resistant. It's kind of a difficult environment because of the changing tariffs, right? You have constant changes and people are always wondering why haven't people brought back product to the United States? Why haven't they moved it back here? That's because it's not like the financial community. You know, in finance, you can just decide to move out of a stock and it happens overnight. Everything is about the decision, not about the execution. Well, if you want to move a factory, you can decide to do it, but it'll take you there's a lot of different factors. You know, how do you know you have the knowledge? And so, a lot of people have spit up blood all over moving factories. And then if you overlay on top of that, okay, I'm going to move a factory because the tariffs are 170% from China and then the next day or two months later from the White House comes, never mind, it's now 45%. And now it'll be 10% or whatever it is. You don't like going back to your board. It's a moving target. That's what makes it challenging. So therefore you keep your powder dry in some situations. Now for us we don't have that problem really. We're not being exposed to this. I do if I come back to our manufacturing though I believe that what we do is the future of manufacturing in the United States because you know I will tell you if you put the American worker with the right skills they will compete. A lot of people say American worker is the question. American worker is the answer and if but you have to give them the right skills and dealing with a complex product line requires skilled workers. The average Snap-on guy stays here 15 years which means that they're here 30 years you know all things being equal. So I believe that's the kind of future of America. Customization allows people to charge for the value they bring because the value is tremendous as this is in the realm of the professional. You asked about consumer you know about the idea why don't people buy cheaper. That is a question. I think professionals don't want to buy cheaper, particularly in critical tasks because they don't want to have to stop and redo the process. And if it's around repair, Matt, you can't predict the tools you're going to use. It's another thing if you're on the assembly line and you're doing the same thing over and over, perhaps you can buy five copies of a cheap one and if it breaks, you still go back in. In repair, you can't afford to have five copies. You have to be able to address so many different a mechanic has to know 2,000 procedures.

No, I grew up in the auto industry. I started with Ford as an engineer in 1969. I don't have any particular but I 428 Mustang. You could sit 50 feet on Woodward Avenue, 1969, 8:00. You could sit 50 feet behind those bathtub motors products called Roadrunners and you could blow them off in a 428 Mustang in their face, you know, and I always So I remember I had one and you know, my friend, we were working on a little bit, but...

Yeah. Yeah. It wouldn't idle, you know. You know what I mean? So, the thing about this is a great car, but the one you wanted in those days, I think, was the 429 Boss.

So, I love that car. So, if I was going to have a car, I'd try to get one of those 429.

But you don't really have the time, you know. You can't really appreciate it. Maybe in another life I'll do that. I mean, I wouldn't mind having a 992 Turbo, you know, Turbo S.

Was it great?

Yeah. Yeah. You know, but the 996s are kind of nostalgic. You know, I didn't like the fried egg.

No, I don't think that's acceptable. And by the way, I should say at the time I liked those headlights. I don't appreciate them now. I often wonder how did Porsche get away with for so long having the IMS bearing problem and then having the bore scoring issue that they had into the 997 until the M91 engine. I don't get how they got away with that.

Okay. EVs. We had a few people buy them by the way. I think they're, you know, dog food cars. But in any case the EVs we had people buy EVs here. I remember one woman a friend of mine she bought a Tesla and it stopped three times once she drove into a puddle and it stopped. So she had had it towed three times. She said best car I ever had.

Yeah, but if I had to take one car, I would take the Mustang.

It's hard to compare now cuz things have changed so much. You know, I think it's But Ford, the Ford Motor Company had people who were bigger than life. You saw leadership that was bigger than life and their tremendous loyalty among the people. GM had gray people at the top. You know, they were indistinct. I think GM leadership was indistinct till maybe they got to Wagner or maybe Mary Barra today, you know, something like that. But...

Are you kidding? Did you see Ford versus Ferrari?

Okay. We have the wrench that Ken Miles threw at in the movie Ken Miles, the guy who played was it? Christian Bale threw at Matt Damon. You know, Carol Shelby was a 316. I think it was a open-ended combo wrench. We have it in our museum. It was a snap-on wrench, of course. Otherwise, it wouldn't But Iacocca in that movie was characterized as too much milk toast. He would have eaten BB alive. My opinion. My opinion. Now, I didn't know him that well because I was carrying bags and pouring drinks at that time, you know, and doing engineering. But in reality, think of it this way. In every car, art was preeminent over science. They say in the auto industry that there are guys with the car design gene. Iacocca was one. Sperlich who worked for them was another. and they could look at a car and say it will sell or not. I remember one situation where he looked at the car and he says this ain't going to sell six weeks from production and they had to redo the dimensions. It was pretty bad. And so he was a superior guy from that perspective I think. So he was the right guy to lead an organization and he proved it when he went to Chrysler actually even though he had other urgencies around Chrysler. So he did that and it was also a very emotional culture. The deuce, you know, Henry Ford II fired Iacocca and when I came out of there, he said some things that I'm not sure were true or not, but he said he told me he didn't like my face and I think some of that was true and other people thought that maybe he couldn't stand standing next to Iacocca. So power struggle. So he wanted a lower profile executive.

Ford broke out with the what 1981 Thunderbird. They changed styles to they brought an English designer. He had the car design gene. He built this Thunderbird which didn't sell in the first six months and all of a sudden it took off and that created the balance we see today between Ford and General Motors.

First of all, that's wrong. I don't believe they're more. They're terrible cars. You ever ride in the backseat of an EV, it's like riding in a buck. If you sit in the front seat, the pillars are too big. There's no visibility. If you think about that. And who said touchscreens are better than palpable dials? I don't think so. I mean, the point is they're starting to know now. You reach down, you don't have to look away from the road?

That's my point. That's my point is I don't think they're so well optimized now. They're brand new. You know, this runs through everything. I've been around a while and I've run through the Carter inflation and our inflation, you know, the current and in the technical environment, I've never seen a singularity. In other words, that some technology or something changed everything like overnight. It hasn't happened ever. So, I didn't expect EVs to be able to do that. EVs may eventually be the way we go, but it's going to take years to evolve in the technology. It's very very very difficult to displace a technology like the internal combustion engine that has been worked over and over and over and has behind it all that learning curve. Now if you come back to art versus science, I think fuel economy you know you can have your view about where it should be and how we should approach it and but difficult fuel economy targets have tended to create a similar silhouette for most cars. I think today the art of a car tends to be they've spent for better or worse they put much more energy into the features and the options and perhaps the drivability but not in terms of the appearance.

One of my cars is a 2011 Jaguar.

A Jag. I think it's what is it? XJR.

I went to Castle Bromwich because I knew the president of the Indian president of Jaguar at that time and I had them build the car for me there while I watched.

It's got the Leaper on it. You know, you can't get the Leaper these days. So, I love it. I drive it in the summer. And to this day, people like it. So, I think it is why I bought Jaguars is not because anything except that they had different lines than the other cars.

Wow.

No way. Yeah. You don't go into the garage to look at that M5, right? You wouldn't sit in your garage open.