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Thread: Harbor Freight business model may collapse?

  1. #1
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    Harbor Freight business model may collapse?

    I have seen a lot of new Harbor Freight stores being built. They do not do franchises. The son recently tool over and took out big loans to expand. Will he be able to keep paying off those loans? China tarriffs may force higher prices on almost everything in the store. If he can no longer compete on price will they try to compete on quality? I have seen a few things made in Russia, India, and Italy.
    Bill D

    https://www.bloomberg.com/graphics/2...d=fixed-income
    Last edited by Bill Dufour; 12-21-2018 at 1:38 PM.

  2. #2
    They've already started. There have been several recent higher priced, hopefully higher quality, tools introduced. Tool storage, wrench sets, battery tools, etc. All under new names.

  3. #3
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    Even with the new tariffs, Chinese merchandise is still far cheaper than European or US made equipment.
    Last edited by Art Mann; 12-21-2018 at 3:49 PM.

  4. #4
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    Recently my wife wanted her own hand truck. We didn't like the 'quality' (for lack there of) HF had on hand. While out on her own a few days later she found one at the big orange or big blue that was better for less.

    There really isn't much at HF to entice me into accepting lower quality for a lower price unless my purpose is to purchase something for a one time use.

    jtk
    "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."
    - Sir Winston Churchill (1874-1965)

  5. #5
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    Quote Originally Posted by Jim Koepke View Post
    ................................
    There really isn't much at HF to entice me into accepting lower quality for a lower price unless my purpose is to purchase something for a one time use.

    jtk
    There are a lot of homeowners that would find Harbor Freight hand tools perfectly adequate to assemble their latest KD cabinet or 'furniture' acquisition and are not inclined to spend large $$ for tools used 30 minutes per year. That customer probably doesn't know the difference between a Wera and Pittsburgh screwdriver and as long as they can get their half dozen screws tight don't really care.
    Last edited by Curt Harms; 12-22-2018 at 7:31 AM.

  6. #6
    Quote Originally Posted by Ken Combs View Post
    There have been several recent higher priced, hopefully higher quality, tools introduced.
    And in that may lie the end of their successful model, one that was built on being lower priced "adequate" tools and products. It is/was the place to go for bargains, knowing that they weren't high end, but remained affordable. Unless they do this change *very* well, the stigma of reduced quality will likely cause them to be taken less seriously as higher end sellers/brands. I'd personally expect a rebranding or spinoff of some sort to get away from the history some.

  7. #7
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    Quote Originally Posted by Roy Petersen View Post
    And in that may lie the end of their successful model, one that was built on being lower priced "adequate" tools and products. It is/was the place to go for bargains, knowing that they weren't high end, but remained affordable. Unless they do this change *very* well, the stigma of reduced quality will likely cause them to be taken less seriously as higher end sellers/brands. I'd personally expect a rebranding or spinoff of some sort to get away from the history some.
    I am not sure I agree that any "store level" rebranding is needed. Youtube creators are extremely good marketers for HF. You can find solid comparisons and reviews on most of the newer "brands" HF has brought in and a lot of them (at least price considered) acquit themselves quite well.

    In my view the "acceptability" of owning HF "gems" has only been growing.
    Of all the laws Brandolini's may be the most universally true.

    Deep thought for the day:

    Your bandsaw weighs more when you leave the spring compressed instead of relieving the tension.

  8. #8
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    I wonder the extent the tariffs are going to hurt since many of the comparable brands that compete with HF are made in China as well. Those items will be subject to the same tariffs.
    It also depends on if HF passes the all, some or none of the extra costs along to the consumer. Contrary to what is taken and reiterated as an economic truth not all costs are passed on to the consumer.

  9. #9
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    Quote Originally Posted by John Goodin View Post
    It also depends on if HF passes the all, some or none of the extra costs along to the consumer.
    The more HF is willing to hold the line vs, as you point out, their mostly tariff impacted competition they may be able to keep or increase their bottom line with increased volume.
    Of all the laws Brandolini's may be the most universally true.

    Deep thought for the day:

    Your bandsaw weighs more when you leave the spring compressed instead of relieving the tension.

  10. #10
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    Quote Originally Posted by Van Huskey View Post
    I am not sure I agree that any "store level" rebranding is needed. Youtube creators are extremely good marketers for HF. You can find solid comparisons and reviews on most of the newer "brands" HF has brought in and a lot of them (at least price considered) acquit themselves quite well.

    In my view the "acceptability" of owning HF "gems" has only been growing.

    Van is so right here. Since my knee went south, I've become more of an expert @ what can be found on YouTube (sadly) than woodworking.

    There are more than a few very smart folks out there sorting out for us how these different brands/tools match up. I personally love the one w the bear, and the professional welder gives presentations that I like.

    Now, a certain Canadian-the self-styled "smartest idiot on YouTube" does tool deconstruction and very technical analyses, and colorful language that even my wife enjoys on occasion.

    That said, it been I guess a couple years since I been in HF. Northern sold me a hydraulic lift table year or two ago.
    David
    Confidence: That feeling you get before fully understanding a situation (Anonymous)

  11. #11
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    To me HF seems to just be slapping a new name on the same old products. Seems like they use a new name until word gets around that it is the same old junk. Then they slap a different name on it for the next go round. Brands last a little under two years. They aslo switch plastic colors along with the labels.
    Bil lD.

  12. #12
    I don't personally believe HF's growth can be sustained and the bottom seems likely to fall out. Guess we'll see.

    Regarding the Bloomberg article...... sigh. Yup, the greedy ones are setting us up for the next recession or worse. I've done some homework. It looks to me like almost every big financial crisis the USA has experienced since the mid-1800s was caused by one or more peoples' attempt to make a ton of money - often on Wall Street but not always. For me, the non-stop greed has gotten very old. (But then, I think the Enron crowd should have gone to "real" prisons instead of country club jails.)

    Fred
    "All that is necessary for the triumph of evil is that good men do nothing."
    - Sir Edmund Burke

  13. #13
    I guess they will fold at some point. Everything does, but they have a long way to go. There are many things there that
    work just fine. I didn't hear anyone saying HF would make tool rental places go under,but it happened . While some of their
    stuff isn't the best you do get all the pieces! That was not happening at the rental stores. HF has had good one family
    management and I'm guessing that many said they would fail. The prognosticators are taking another stab at it!

  14. #14
    A good percentage of the stuff I have is Harbor Freight and I've been pretty happy with them.

    But, my skills and needs are way below what many here have.

  15. #15
    When it comes to some tools, Harbor Freight simply can't be beat. Others, I would not buy on a bet. One thing overlooked by some in the financial business, is that a place like Harbor Freight depends on volume. Certain consumables sell constantly. I go to HF about 2x a month. Sometimes just to wander and see what is new. I am there enough to recognize some other customers. I see some buying hundreds of dollars worth of stuff every visit. I probably spend $400 to $500 a year there. Can't beat the goat skin gloves for $5.99 a pair. I go through five or six pair a year with farm work. sand paper, tools chip brushes, paint sprayers. ( I have to admit, I stopped trying to clean them, I just buy another $20 one when I have to paint again.) I go through several cut off wheels a year on my angle grinder. (That cheap $9 angle grinder has lasted me 15 years and countless hours of use. I keep expecting it to die and it keeps on surprising me. ) I have three tractors, a baler and a back hoe, each with their own set of tools. The more extensive set in the barn and another set in the truck, and one in the wood shop. I needed a giant allen wrench. Darn thing was $24.00 at sears. got a set of three allen sockets at HF for $17. I sometimes need a really big wrench or socket for the machinery. If it is a thing I need once, why buy Craftsman or Husky?

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