Snap-On bullish on growth prospects in Asia
BMW recently rolled out its ‘Made in India’ cars from its manufacturing facility in Chennai. The cars are 30-40 per cent cheaper than what they would cost if imported from Europe. So now can you call it a cheaply engineered product? Snap-On is doing exactly that. Bring European technology and adapt it to suit the Asian market without compromising on the quality and standards.
To know more about the company’s global business and its focus on Asia, I recently met Mr. Anup R. Banerjee, Vice President - Human Resources (Commercial and Industrial Group), Snap-On Incorporated, and Mr. RSSN. Raju, Managing Director and CEO, Snap-On Tools Pvt. Ltd.Mr. Banerjee said that founded in 1920, today the Snap-On Incorporated is a leading global developer, manufacturer and supplier of tools and equipment solutions for professional users.
The company sells its products and services in more than 150 countries around the world.Snap-On’s products include hand tools, power tools, tool storages, cutting tools, and equipments. Snap-On and Bahco tools are market leaders among aviation, automotive and industrial segments. Johnbean and Hofmann provide high-quality, affordable, expert under-car equipment, including wheel aligners, wheel balancers, tyre changers and vehicle lifts. Snap-on is a $2.7 billion company employing approximately 13,000 people worldwide.
The company markets its products and brands through multiple distribution sales channels in more than 125 countries. Globally it has 27 factories, each unit specialising in a particular product line. Mr. Banerjee said: “With an 86-year of experience, Snap-on entered the Asian market some 3½ years back. The company set up a factory with well-trained engineers and workers in China.
The world-class products produced are not only for the Chinese market, but for the entire Asian region, barring Japan and Australia. The company prepared a strategy to enter the Asian market and decided that products sold in Asia will be manufactured in the region itself.” With this in mind, the company built a factory in China at an investment of $10 million at a greefield site in Kunshan near Shanghai. Snap-On manufactures power tools and automotive service equipments at this facility. The idea is to take European technology and adapt it to suit the ASEAN market without compromising on the quality and standards.
The factory in China is a 100 per cent subsidiary of the global company and manufactures products as per Snap-On quality systems and guidelines.The factory in China caters to the tools equipment business for the domestic market and also to other ASEAN markets like India, Thailand, Taipei, etc. The company also exports tools from China back to the US. It employs close to 280 people in China. Manufacturing in China gives Snap-On a significant cost advantage.
Although most of the critical computer and electronic components are imported from the US and Europe, some parts like metal sheets are sourced locally in China. There could be a price advantage of roughly 25 to 30 per cent. The company’s major saving is on transportation cost. Earlier the company was importing equipments from Europe and the US.Snap-On has transferred this price advantage to its customers in the Asian region.
Typically a set of wheel balancer, aligner and tyre changer imported from the Europe would cost around Rs. 15 lakhs in India. Thanks to its facility in China, Snap-On is now able to offer similar products at almost 50 per cent of the cost, Mr. Banerjee added.Investments have been made at a global level to support advanced technology products and to establish an operating presence in emerging growth markets such as China, India and Eastern Europe.
As a result, Snap-on is seeing improved levels of customer service, market penetration and profitability. Sales from the Asian region four years back was just around $7 million. The company’s sales target in the Asian region this year would be $100 million.Mr. Raju observed:“Snap-On sees huge growth opportunity in Asia, and more particularly in markets like China and India.
In India Snap-On set up a 100 per cent subsidiary company Snap-On Tools Private Ltd. The company has been in the business for just around two years, and has already garnered close to six per cent market share in terms of the value of the automotive service equipment business”.
In India, the business for automotive service equipments is estimated to be in the range of Rs. 120 crores. Currently Snap-On sells the JBC and Hoffmann range of wheel balancers, aligners and tyre changers and lifts. In India, the company initially entered the aftermarket business and is also working quite closely with OEMs.
The company’s ambition is to become a top player in India in the next couple of years, he added Mr. Raju further observed that the company is exploring the market for selling paint booths. The long-term strategy is for it to become a workshop advisor. Snap-On is also working on ways to enable cost-effective finance made available to this segment.Currently, the Indian office of Snap-On employs 30 people. This will be expanded to 42 by the year end and to 100 in three years.
The Indian office also handles Nepal, Bangaldesh, Sri Lanka and Pakistan. The company has 14 distributors and has four regional sales offices with two service engineers stationed in each region. It is currently aggressive in the tyre segment of the business and has started working with vehicle service garages.Globally, Snap-On helps design an entire garage.
The company has the entire product range, including brake testers, lifts, test lanes, and collision repair systems, apart from wheel aligners, balancers and tyre changers. In India the company will soon be launching its brake testers and suspension testing equipments. It is now working with ARAI and SIAM to see if these safety systems can be made mandatory. Snap-On is already working with a few OEMs, and brake testers have already been installed with two car manufacturers at their manufacturing units.
Snap-On will start selling these products to dealerships and service centers shortly.The company has also introduced the concept of ‘Wheel Expert’, an exclusive tyre center which would provide better experience to vehicle owners when the repair work is in progress. Currently the company has two such centers in India and it plans to have one such center in each and every major city in the country.
Snap-On is also in the process of establishing a training centre in India which would be located at Gurgaon, and the Wheel Expert outlets will also act as a training centers in the respective cities.Global businessThe equipment product category includes solutions for the diagnosis and service of automotive and industrial equipment.
The products include engine analyzers, air-conditioning service equipment, brake service equipment, fluid exchange equipment, wheel balancing and alignment equipment, transmission trouble-shooting equipment, safety testing equipment, battery chargers, lifts and hoists, diagnostics equipment, and service and collision repair equipment.
This category also includes service and repair information products, diagnostic services, electronic parts catalogs, business management systems, point-of-sale systems, integrated systems for vehicle service shops, equipment repair services, purchasing facilitation services, and warranty management systems and analytics. Snap-on supports the sale of its diagnostics and vehicle service shop equipment by offering training programs for its customers, primarily focusing on the technologies and the application of specific products developed and marketed by it.
Tools and equipment are marketed under a number of brand names and trademarks, including Snap-on, Acesa, ATI, BAHCO, Blackhawk, Blue-Point, Cartec, CDI, Equipment Solutions, Fish and Hook, Hofmann, Irimo, John Bean, Kansas Jack and Lindstrom. The company markets and distributes its products and related services principally to professional tool and equipment users around the world.
It also provides owners and managers of shops, where technicians work, with tools, diagnostics equipment, repair and service information, including electronic parts catalogs, and shop management products. Through its equipment solutions business, Snap-on provides original equipment manufacturers (OEMs) with products and services, including tools, consulting services and facilitation services.
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 vehicle service to customers in the worldwide vehicle service and repair marketplace.
