Automobile Production At General Motors Co.'s Vauxhall Plant
An employee uses a Stanley Black & Decker Inc. tool to attach a part onto the chassis of a truck at the Vauxhall plant in Luton, U.K. Photograph by Simon Dawson — Getty Images

Here’s Why Stanley Black & Decker Is Building a New U.S. Plant.

Jan 05, 2017

Stanley Black & Decker (swk) is opening a new $35 million manufacturing plant in the United States to help it rebuild, and perhaps more importantly "re-Americanize," the Craftsman tool brand it just bought from Sears Holdings (shld).

While the extra capacity should help get a once-iconic $2 billion a year line back on its feet, the move also potentially offers Stanley Black & Decker another benefit: shielding it from a potential surge in economic nationalism under President-elect Donald Trump.

Though Stanley Black & Decker chief executive James Loree did not mention Trump by name in his comments to Wall Street analysts and investors on Thursday morning, it was clear that the incoming president's threats to levy a border tax on U.S. companies that manufacture items abroad that they intend to sell to the U.S. market were a consideration.

Loree, whose company is paying Sears about $900 million for Craftsman, said expanding Stanley Black & Decker's U.S. manufacturing capacity made "business sense" and was close to his company's philosophy "to make where we sell whenever possible." He also claimed his customers preferred to buy items bought in the U.S.

"It’s going to be advisable to have more manufacturing in the U.S," Loree said. The CEO also touted the deal as "socially responsible" and touted the environmental benefits of not having to ship items to the U.S. as well as the reduced foreign exchange risk. About a half century ago, Craftsman tools were primarily made in America. Today they're mostly produced abroad, Loree said. "We believe this is an excellent opportunity to re-Americanize and revitalize this legendary brand," he added.

Stanley Black & Decker already operates some 30 manufacturing plants in the United States, and said in a presentation to investors that it has added 1,200 jobs stateside in the last three years, bringing the total to 3,000 workers. The location of the new plant is to be determined.

It is clear many CEOs want to avoid finding themselves in the crosshairs of Trump and his Twitter account. Carmaker General Motors (gm) this week faced a veiled threat from Trump it would face a "big border tax" when he claimed GM was making the Chevy Cruze in Mexico and shipping it to the U.S. tax-free. GM said it made all Cruze sedans sold in the U.S. in Ohio. Trump has threatened to impose a 35% tariff on products built in another country and shipped back to the U.S.

As for Sears Holdings, the deal was part of a series of moves in the last ten days that helped it line up $2 billion in desperately needed funding as it faces worsening sales declined. The retailer is also closing 150 Sears and Kmart stores in the latest round of shutterings.

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