Able Tool Corporation - Case Study Example

Since its incorporation the company’s mission statement is that of a genuine commitment to on-time delivery, quality pricing, excellent service and reliability. The company is dedicated to give its customers the best price and timely delivery. In 1987, the company relocated to Ohio. In 1990, Able Tool Company bought the Gilman Company of Ohio in order to broaden its capabilities. The ability of the firm to serve a wide variety of customers is what has seen this company through this volatile industry and a un- predictable market.

The PEPT (Portable Electric Power Tools) Industry that able corporation operates is collectively affected by economic variables like general taxation interest rates as well as inflationary variables. General economic indicators such as interest, foreign exchange and inflation rates have always affected the power tool market since these variables greatly affect disposable income that is a very crucial determining factor for the construction and or renovation of houses or residential estates.Due to high interest rates in the United States, the housing market has continued to decline since 2004, this has greatly affected the power tool market as well as the general cost of houses rising by about 2.

8% annually. Apart from the interest rates, foreign exchange rates also affect the operations of the companies in this industry including companies like Milwaukee Electricity Company. Exchange rates affect the sales of the industry since a substantial proportion of these companies sales are in overseas markets.The explicit and underlying costs of housing starts are very crucial to the advancement of this industry. Currently due to high interest rates compounded by high costs of mortgages for the last four years, the demand for portable electric power tools has been on the decline.

To compound this situation due to increasing inflation the industry has had to increase moderately the price of their products. According to market analysts, this has led to the increased cost of setting up residential and commercial properties. This in turn has shied of prospective investors in the industry. This in turn has caused some of the industry players to relocate their firms especially in Asia where the cost of production is cheap. By doing this these firms have been able to import back the same products into the American market at a more cheap price.

The increased cost of environmental protection, especially through the sale of pollution rights, has led to increased operational costs within the industry that have further caused them to increase their commodity prices. Concerns of air pollution, water pollution and land contamination have been highly emphasized by western countries to a point that many industry players have been forced to relocate to India and china, where environmental protection policies have not been highly emphasized. Incases where the parent company does not relocate, most commonly the firms have relocated production plants either to Asia or Latin America.

CONCLUSION:The portable electric power tools industry has been faced with many challenges. However, due to a booming world economy buoyed by among others a more than 5% economic growth rate in many newly industrialized countries, the industry has been able to source new markets especially in china.REFERENCES:www.abletool.comwww.free-press-release.com/news/200704/1177416298.html www.ibisworld.com.au/industry/default.aspx www.strategis.ic.gc.ca/epic/internet/inimr-ri3.nsf/en/gr-92637e.html