Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Well, amid all of the optimism about a pro business
Speaker 2: Trump administration taking over in late January, there's a lot
Speaker 2: of uncertainty when it comes to corporate America, and you
Speaker 2: have tools tightened. Snap On, which mainly services professional mechanics,
Speaker 2: of course, calls on nearly a million vehicle mechanics every
Speaker 2: week and periodically calls about three hundred thousand businesses and
Speaker 2: as such has a pretty unique view into the grassroots economy.
Speaker 2: So let's get to that now with CEO Nick Pinchuck,
Speaker 2: who joins us. Nick, first of all, happy new year,
Speaker 2: it's great to speak to.
Speaker 1: You again, and happy new year. Katie.
Speaker 2: Let's talk about this uncertainty because in your notes that
Speaker 2: you sent over to us, you talk about smaller mechanics
Speaker 2: and factory workers. Amid all this optimism, there's still a
Speaker 2: lot of question marks heading into twenty twenty five. Walk
Speaker 2: us through some of the main points there.
Speaker 3: Wow, Look, I think the thing is that you know
Speaker 3: that I always said there was the financial and physical economy.
Speaker 3: The physical economies like manufacturers and the people who work
Speaker 3: in those places, and that's even mixing now if you
Speaker 3: talk to the individual technicians, the mechanics, the guys in
Speaker 3: the factory, the guys who twirl the wrenches and push
Speaker 3: the keys and stuff like that on diagnostic units. They're
Speaker 3: still pretty uncertain because their economy has been fairly positive
Speaker 3: all along, and so they recognize that.
Speaker 1: But what they are affected by.
Speaker 3: Mores by their feelings of the general environment. The two
Speaker 3: wars that keep continuing, the Southern border, which is, you know,
Speaker 3: kind of in chaosity.
Speaker 1: They got a little better now, but it's still a problem.
Speaker 3: The idea that tit for tat for China, the closing
Speaker 3: of the Red Sea that could lead to inflation, the
Speaker 3: idea that okay, I'm looking at the prices and milk
Speaker 3: is still four bucks over four bucks, that's up thirty
Speaker 3: percent versus pre pandemic levels, and gases up eighteen percent,
Speaker 3: not year over year, but versus pre pandemic, and so
Speaker 3: and then the election. I don't think anybody knows what
Speaker 3: the president elect's going to do.
Speaker 1: At their level, they keep seeing it.
Speaker 3: I think it's like I said one time, welcome to
Speaker 3: the Manhatter's tea party. This is more like a roller coaster,
Speaker 3: and you're in the front seat and you're blindfolded, you
Speaker 3: don't know where you're going. And so I mean he's
Speaker 3: mentioned things like Greenlands, this is the hits just keep
Speaker 3: on coming. And so for that group, they are still uncertain,
Speaker 3: got to buy it in.
Speaker 1: So there's not much change.
Speaker 3: If you look at if you look at the more
Speaker 3: organized people, the managers of the garages, the manufacturers, they're
Speaker 3: more positive. They've moved The National Association of Manufacturer's outlook
Speaker 3: has moved upwards. It moved down in the third quarter
Speaker 3: around the election time. Now it's moved upwards.
Speaker 1: And I think it's because they think.
Speaker 3: That there's a hope that this administration would be positive
Speaker 3: toward business.
Speaker 4: Hey, I want to ask about your sales specifically, Nick.
Speaker 4: We were talking about teslaw because they delivered fewer vehicles
Speaker 4: in twenty four than they did in twenty three, and
Speaker 4: I was just thinking about tool sales. Do you do
Speaker 4: better automatically when more vehicles are sold outright, or do
Speaker 4: you do better when fewer vehicles are sold because we're
Speaker 4: working more to keep the used vehicles on the road.
Speaker 4: How does your revenue relationship work with the auto industry.
Speaker 3: Actually, it's like this matt Our revenue is driven by
Speaker 3: the cars on the road. So to put it in perspective,
Speaker 3: this year, the American auto industry is going to be
Speaker 3: about sixteen million cars sold. The cars on the road's
Speaker 3: almost two hundred and ninety million. So the effect of
Speaker 3: the cars sold in any one year is a knit
Speaker 3: in our business. It can't affect other pieces of our business,
Speaker 3: you know, because in some cases we sell to the
Speaker 3: OEMs directly associated with launches of cars, and if they're
Speaker 3: more successful, then it works a little bit more for us.
Speaker 3: But the main business sell into that one million mechanics.
Speaker 1: It won't make any difference over the long term.
Speaker 3: Of course, it'll make some difference, and so that's the effect.
Speaker 3: But Tesla's view is whatever Tesla does doesn't really make
Speaker 3: much difference.
Speaker 1: Would make a difference.
Speaker 3: If I think I've seen some of the analysis that
Speaker 3: I think some of this is true, is that there's
Speaker 3: a rise in the popularity of plug in hybrids over
Speaker 3: electric vehicles.
Speaker 1: Even in China.
Speaker 3: The Chinese are starting to make hay with those vehicles
Speaker 3: because they're not dependent on a charging infrastructure, and so
Speaker 3: therefore they move up over the long term. That introduces
Speaker 3: two different platforms into the cars on the road is
Speaker 3: you have electric vehicles and plug in hybrids, which are
Speaker 3: both internal combustion.
Speaker 1: And electric vehicles.
Speaker 3: So eventually that drives our business upwards because the changing
Speaker 3: of the vehicles is what makes our business go because
Speaker 3: every time they change, people new new tools, and that's
Speaker 3: music to our ears.
Speaker 5: I want to also talk about what the sentiment looks
Speaker 5: like under the hood for smaller and mid size companies,
Speaker 5: because you're seeing this exuberant of course among the largest
Speaker 5: of companies on a lot of levels, the comeback of
Speaker 5: m and A, the idea of lighter regulations. But if
Speaker 5: you're a small to mid size company and you're maybe
Speaker 5: concerned about labor or about inflation on average, do you
Speaker 5: think that the mood is better or worse?
Speaker 3: Wellcenale, look, I think the mood is clearly somewhat better.
Speaker 3: Remember I said mixed, and you can see this in
Speaker 3: the National Association Manufacturers indexes.
Speaker 1: They're moving upwards. It's a situation like this.
Speaker 3: They look at the administration as having focused on positive
Speaker 3: things for America. You know, if you're a CEO, small
Speaker 3: or large, you like to see emphasis.
Speaker 1: On your strengths.
Speaker 3: What you want to do is build your strengths, not
Speaker 3: necessarily worry too much about your weaknesses or your flaws.
Speaker 3: And so you could say, look, what is the administration
Speaker 3: talking about writ large, It is talking about reducing the
Speaker 3: weight of government on businesses, small and large manufacturers, and
Speaker 3: even small manufacturers because small manufacturers are paying a bigger penalty.
Speaker 3: The National Association Manufacturers again says that the average manufacturing
Speaker 3: group pays twenty five thousand dollars per employee per year
Speaker 3: year on a regulation. Now you can believe that number
Speaker 3: or not. I think it's pretty accurate, but small ones
Speaker 3: pay fifty thousand. So they like to hear that. They
Speaker 3: like to hear the idea that they manufacture, that the
Speaker 3: administration might make the most of a great American strength,
Speaker 3: that is the American worker and emphasize manufacturing. They like
Speaker 3: to hear the idea, believe it or not, that they
Speaker 3: restore the strength that immigration has always been, or restore
Speaker 3: immigration as a strength for our common power. They like
Speaker 3: that because they use those workers a lot. What they
Speaker 3: worry about, though, is things like the detail. There's tremendous
Speaker 3: windage in this. For example, you have the idea of, well,
Speaker 3: how are you going to actually promote manufacturing? Are you
Speaker 3: going to be able to do the tax what's going
Speaker 3: to happen in the tax cuts as the taxes expire.
Speaker 3: Now there's a talk about corporate rates, So me personally,
Speaker 3: I don't think they need to lower to corporate rates
Speaker 3: very fine right now where they are, they're about equal
Speaker 3: to other places for big companies. But small companies, which
Speaker 3: ninety three percent of manufacture are under one hundred people
Speaker 3: and so there are a lot of them are passed throughs.
Speaker 1: So you raise.
Speaker 3: The individual rates, that goes up. And if you eliminate
Speaker 3: the one ninety nine a deduction twenty percent reduction on
Speaker 3: the e on there even then that's a big impact
Speaker 3: for them.
Speaker 1: So they worry about that.
Speaker 3: They worry about the idea, well, how are we going
Speaker 3: to what's going to happen with TIFFs? Right?
Speaker 1: Tariffs are a big question, right, huge question. So you
Speaker 1: can do it two ways.
Speaker 3: You can you can have a tariff program which reacts
Speaker 3: to other countries which do bad things, you know, subsidize
Speaker 3: and promote their state owned industries, or you can do
Speaker 3: blanket tariffs. I think the former is the positive one.
Speaker 1: But they worry about the blanket tariffs.
Speaker 4: Yep kind and they kind of trade war that may
Speaker 4: kick off, and then the turn to China that you
Speaker 4: can see. We've been talking about that in this program
Speaker 4: the last couple of days. Nick. It's never enough time
Speaker 4: with you. I hope we can get you in the
Speaker 4: studio next time you're in New York City. Snap On
Speaker 4: CEO Nick Pinchuk talking to us.
Speaker 1: Happy New Year to you,