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