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Stanley Black & Decker, Inc. (SWK) Company Profile, News, Rankings | Fortune

legacy

Stanley Black & Decker

stanley black & decker

Jonathan Vanian

A Computer Designed Stanley Black & Decker’s New Tool

/2017/06/21/stanley-black-decker-autodesk-tool/

Jeff Bukhari

Stanley Black & Decker Stock Jumps After Strong Earnings Report

/2017/04/21/stanley-black-and-decker-stock-jumps-strong-earnings/

Reuters

Stanley Black & Decker Is Buying Newell’s Tool Business

/2016/10/12/stanley-black-decker-newell-tool/

CEO Jim Loree highlights the digital transformation of his company beginning from 2015.

Stanley Black & Decker CEO discusses company's A.I. journey 

Conferences

to start off jim I just want to ask you to kind of walk us through the ai journey, a family black and decker When you came into the ceo job and that was 2016 uh where would you say the company was as far as ai machine learning and you know, where did you hope to go? You know, I would start when I'm just starting with the digital transformation, if you think back to 2015, you know the world was talking about like every manufacturing company, you know, every non tech company was starting to understand that this was going to happen and we were either going to be conversant and proficient or we were going to be left in the dust and that's we felt that way about IOT, about aI machine learning and you know these things kind of came out so fast and became much more central to the mission, you know, and the sustainability of the company. So we kind of tackle digital as one big series of sub topics if you will, and Created a center of excellence with about 50 200 people at different times down in Atlanta and we had a segment for IOT and one for machine learning and data and analytics and that kind of grew over over the years and now we have hundreds of people working in these different areas, incorporating them into business models, but it's it's been a very progressive methodical effort over the last five or six years um and talk about some of you know what you have been tackling with, you know the ai that you were using machine learning, like what were some of the parts of the business that you were directing that towards? Well we we came upon 2017 and then 18 and 19 and we had some really significant headwinds from a business point of view that we're exogenous in nature, but we had tariffs, we had foreign exchange dollar strengthening and some early signs of inflation and those three things added up to a billion dollars Of margin impact, you know, in that in that time frame and we were going up against like 300 and 400 million a year of this, of this kind of headwind. And we were thinking well we've done all the traditional things from a value creation and the cost take out that we would normally have done over the years. And we got the idea that let's harness the energy of this digital transformation center and directed at all the value pools of the company and we said let's go find a billion dollars, you know, maybe like 100 250 a year to offset some of these things. And so we had a lot of practice during that time frame. And it turns out that those use cases and some of the applications that we developed would really, really successful in terms of making us more resilient, making our performance more resilient during that time frame, Nice timing for that to be happening in the in the run up to the pandemic definitely was a warm up for the for the big one, yep. Um and and the cash you you came on board last year um as the first ever chief Ai executive at the company. Um what was it that appealed to you about that opportunity? So basically I had a great conversation with Jim and with other executed leaders of the company and the amount of commitment that they displayed and understanding of AI and what it could do to transform the business was with them. And that basically clinched the deal for me. And you know, to that point, I guess how did the two of you work together? Like what's the relationship, like what level of detail are you talking about some of these, you know, technical issues with each other? Well, maybe I can start. So, you know, I think my job is largely directed at coming up with a strategy and in this case the strategy was we need to penetrate ai and advanced analytics and contemporary eyes the company if you will in that regard. Uh and so, you know, that's kind of an amorphous topic for somebody, you know, that's running a mechanical company at least what used to be a mechanical company. And so we said, look, we said to ourselves at the senior level, let's get some expertise in here and let's give them the mission to define our path, which they did. And then, you know, the of course the resources were allocated because that's another function of of my role and then, you know, the key is at that point empowerment, empower the folks that know what they're doing to go make it happen and there is where you came in. Yeah, so basically the amount of support and the empowerment that I'm getting from the execution chamber and others has been phenomenal. And basically we are taking A I data and advanced analytics and thinking about it holistically across the company and that's why it applies to every business unit and every functional unit. And that involves basically dealing with all the business leaders and there's a close involvement with all the business unit presidents as well as the functional unit leaders and then working with the students to see what is the value, How how can you financially characterized the value and how do you get to the billion dollar numbers that jim has uh set the vision for us. Um I want to open it up to questions because I see that we already have one um over here, if you could introduce yourself please. Hi, this is a bit of a gravel from Alix Partners. Great journey so far that you talked about in terms of in the last five years now that you are at a critical point, you have a chief AI officer and the team. What what is forward, what are the challenges you're expecting for this such large organization to move going forward? Well, you know, one of the things about AI and technology in general, but it is really there to augment human resources and so we started this uh and vice versa by the way And so we started this uh we refreshed our operating model at the beginning of 2020 and at the center of the operating model we had a simple concept which was people plus technology. And there was a time when I thought about this and I thought about you, maybe I'll just put AI in human resources and change the name of human resources to resources because when you think about it, you know, it really is the interaction between humans and the machine learning and so on. That is uh the key. So in the future and then you think about how how pervasive, you know, human resources and technological resources are in every facet of the organization, business models, products, functions, you know, and so we in the future we need to have the capability and the competence in this field both in the present and also as the future develops to make sure that we are leveraging it in every way possible to create value for the company. That's how I think about it. Yeah. And to add to that point where when I was hired, it was I was reporting to the chief HR officer and this is the first time I ever worked in the HR organization. Very strange. But to Jim's point, the goal is that you want a I and people to work together and now I'm out of the child organization. But I do see going in the future, this is going to be the most important thing and I would not be surprised if I'm back to their charge. Yeah, I think what they did with the people, you know, on my team, they're kind of like Jim is a little crazy putting that in HR So why don't we just take it out and not tell them?

CEO Jim Loree says inflation is one risk slowing the tool maker’s growth.  

Stanley Black & Decker CEO: “This business boom is not going away any time soon” 

James M. Loree - CEO, Stanley Black & Decker

Leadership

Stanley CEO: “This business boom is not going away” 

jim so great to see you again and thank you so much for joining us to talk about Stanley black and decker as you know, people are very familiar with your brand, everything from power tools to take measures, but one thing that they may not be aware of is that your company's business has been booming and it's kind of surprising because and this time of the pandemic, so many companies have been struggling, so tell us what's behind and driving all this growth. So what happened is the there is a D I Y boom and a home improvement boom which are somewhat related but you know you have the professionals and you had the folks working at home and folks working in their gardens and it wasn't just a north american phenomenon which you might, you know at first blush you might think it was really a global phenomenon. So latin America asia, europe all over the world, people were in their homes and they were reconnecting with their homes and their gardens and it was actually quite good for our industry and for our company. Well you've been working at Stanley black and Decker for more than 20 years and as ceo for five of them, what surprised you the most about what's been going on at your company with this room of activity, the rapid pace of change, you know the acceleration of digital, the acceleration of e commerce was with lightning speed, I think we went into advanced maybe five or you know six years in terms of the implementation of e commerce, you know in our industry and our consumer behaviors. That was a big one. I think the ability of of our people and this is not just us. I mean I see this across the board with companies but to work remotely uh and to be actually more efficient at some things. But what we've been able to accomplish working remotely almost instantaneously with the marriage of people in technology and we were ready for it and it's it's been really, really a pleasant surprise. You mentioned a moment ago that this whole home improvement boom, both by professionals and And regular folks when you look at the housing market and the commercial construction market and also just the overall American economy. Do you see these trends continuing and also the demand for your tools? We absolutely do. We expect to grow significantly in 2022 on a pretty high base. Uh and you know this, this is not going with this boom is not going away anytime soon, but it's fueled or I should say finance by rising stock prices in general and also rising home equity values and people are still spending a lot of time. They've reconnected with their homes and gardens and so forth. And I don't know if anybody's uh and your families trying to get a contractor recently, but they are really, really busy and you know, in some cases years out. So yeah, I expected to continue now what could rain on that parade? I think, you know what could rain is inflation if interest rates follow inflation and go up considerably. Uh that, you know, that could, that could be a dampener, but so far, you know, the Fed has been quite dovish and so we don't, we don't see that as a near term risk. Anyway, we'll talk to us a little bit about inflation. Uh I know that many companies have been raising their prices uh including your, your company, do you see this as a short term business issue or is it something bigger? It's definitely a 28 21 22 issue. Uh And we are raising prices and our competitors are raising prices and in some cases multiple times and you know, it's necessary to offset this pretty significant impact in our latest Inflation estimated $600 million dollars of margin impact. This is the first time in my 20 plus years that we've been able to recover 100% with price increases. And so I think that is a really favorable development for Stanley black and Decker. What about other constraints? Jim whether it's shortages of supplies or the higher prices that you're paying for the raw materials that you need. Uh how are you dealing with those kind of pain points? Well, it's all about execution and I put it into two categories, one strategic components for us, those will be batteries and chips and then secondly, the supply chain transportation routes and so forth are very clogged up right now and suppliers in our industry are also operating a capacity levels, you know, they'd never production levels versus capacity, they've never operated at before. So you have a major operational undertaking in the supply chain and we feel really good about the strategic components, the chips, the batteries. I went to Korea earlier and negotiated some deals on batteries and we're working the chip issue like everyone else, but making good progress there and then the day to day operational, uh, you know, management that's required for the supply chain is unprecedented in my, my career. But I will say that, you know, we're getting so far, we're getting the job done, but it's getting more challenging by the day. So let's talk a little bit about what's next for Stanley black and Decker. You've been making news recently on two acquisitions in the outdoor power equipment business. Why are these critical building blocks for your company? Sure. MTD one of America's great outdoor power equipment Business is $2.5 billion dollar business. And Excel industries out of Kansas, A almost a $400 million dollar revenue business that makes professional outdoor power equipment riding mower zero turn mowers, that sort of thing. We're so excited about this because it really opens the door to a new growth platform for Stanley black and Decker and it's one that has Great runway ahead could be as big as $10 billion how far off is that and why is this trend important for your company? I'd say it's important because number one, it's a revenue generator. But secondly, and maybe as importantly it is at the foundation of what we can do as a company as it relates to S. G and S. G. The phone notion of environmental, social and governance is where it's at these days. The younger generations are demanding that companies are responsible as it relates to their activities, their impact on the environment, their social impact, you know, their governance and so forth. So it's really uh you know, the opportunity to get involved with carbon greenhouse gas emission reduction in the outdoor power equipment industry is something that is really going to be a very positive impact for society. Just a little fact that not too many people are familiar with the emissions from these types of of engines are pretty significant in relation to Uh say automobile. So for instance, running a simple gas blower for an hour is the equivalent of driving a Toyota Camry for 1100 miles. So big social impact potential And we're looking forward to being a part of that. I want to ask you Jim about an article you wrote recently saying that the pandemic is accelerating stakeholder capitalism and it's an urgent imperative for business leaders to step up. And you did just that this week when you announced a $25 million dollar commitment to skill and re skill more than three million people to fill jobs in manufacturing and construction. Tell us a little bit more about why you're doing this. Well, we're keenly aware that the accelerating pace of technological change is upending lives and then the pandemic has only exacerbated that and we have so many unemployed folks and we have so many open jobs and there's this mismatch and this challenge really makes a significant dent, especially in the construction and manufacturing sectors where number one, we will benefit from more construction workers out there helping to make our markets for us. And secondly, we will have a really positive impact on society And we're very excited about that. So I understand there's something like 400,000 manufacturing construction jobs that are unfilled here in the US and 10 million globally. Do you think that this program that you're launching will help to fill the skills gap? Absolutely. I mean, we call it the global impact challenge because we think we can have a really dramatic impact. We're signing up for three million up skilled people. I think we can actually exceed that. So we're putting something on the table, It's very doable with that set. We're not the only solution, but I think this is all about corporations teaming up with governments and non profits and making it happen and millions of jobs, millions of people re skilled is going to have an impact. You know, when you look at the kinds of numbers, you were just sitting there, you know, ever since you became ceo of Stanley, black and decker back in 2015, you set out to turn the company into a purpose driven company. How has the pandemic influence a lot of the leadership decisions that you're making these days when it comes to leading with purpose? The most significant epiphany if you will during the pandemic has been the human touch. Empathy care for the people, care for their well being, the employee health and safety aspects of managing through a pandemic. And I think that's been a glue that's held this company together through the pandemic. And you know, the purpose has been our north star. It's been really, really uh you know, heartwarming to feel the impact from a human point of view that we're able to have on people and provide that support they need during the pandemic