Smith's Key 1816
I recently read something by a maker who said they make most of the stuff they sell. Given that they design the products they sell, but they outsource the manufacturing, my perspective is a little different. There is nothing wrong with this kind of outsourcing. Most companies these days to a lot of it. We outsource stuff ourselves. We have products we make from start to finish - and by "make ourselves," I mean we have machines and people who shape metal into something salable. But we also have products that are made for us by other people or companies in whole or part.
There's nothing wrong or unethical about any of this. Outsourcing gives you access to equipment and machines that you wouldn't have elsewhere. Rebranding, in which you stick your name and label on a product designed and produced by someone else, is the least interesting route. There's a lot of that going around too. I'm pretty sure the mustard we got at Trader Joe's is the same actual mustard made in the same factory as some other mustard that we used to get.
In the nineteenth century and a good part of the twentieth centuries, this was how tools were made. The actual tool makers were independent "little mesters." Sometimes the craftsmen worked on their own premises, but more likely they rented a wheel, a forge, or a workbench from a larger firm. Even at big companies like Mathieson, the people who made the tools were individual "consultants" - gig workers in the modern sense. Even craftsmen working in a factory owned by a the large company were considered independent workers. They were paid on piecework; they bought their materials and rented shop space from the company; and then they sold their production back to the company. An independent maker for a particular type of tool would routinely make tools for many larger entities. Ray Iles once told me that as a kid he was tasked with bringing bundles of paring chisel forgings to the one person in Sheffield who ground paring chisels for all the edge tool companies. The guy had piles of tools each tagged for a different company and had maker stamps for for all of them.
The fundamental problem then, and the fundamental problem now, is the same. If you can outsource, you don't need to invest capital - and you take no risk for your long-term future. The big English tool companies therefore never felt the need to invest capital in machines and innovation. And the little mesters who actually did the work didn't have any capital. So in the 1860s and 1870s, when manufacturers in the US were investing capital and building giant factories to make tools (among other things), the English industry sector was caught flatfooted. For example, in order to make a Stanley 750 you need a very large factory with a very large press that can forge a whole socket hole accurately in a piece of hot steel in one shot. You can be as good a blacksmith as you want, but unless you have that press, you can't make a socketed chisel at a price that competes to one made in an industrial factory. By 1900, the number of American tools listed in English catalogs had become colossal. And one of the reasons Stanley planes were able to be manufactured in the first place was the capital that was invested in producing machines and assembly line to make them. The English equivalent, the infill plane, was a handmade operation and much more expensive. Guess who survived in the long run.
When Joseph Smith printed a catalog in 1816 of all the different tools made in Sheffield (Smith's Explaination or Key to the Various Manufactories of Sheffield), he didn't include prices -- or identify manufacturers. Manufacturers then bought copies of this catalog and just added their own price list: everyone sold the same thing. In the close of the nineteenth century, Charles Nurse & Co, a London retailer, made their own planes (or had close control of the actual makers), and also carried lots of well known English makers and imported many tools from the US. The chances that the chisels in the picture, which are branded "Nurse," were actually made in London by Nurse are nearly zero. They most probably were the house brand, actually from makers in Sheffield.
When I worked at Black & Decker, which at the time was a huge manufacturer, the policy was to prohibit the purchase any equipment that would not pay for itself in increased productivity in two years. In one example I remember, our gear cutting making machinery basically worked, so we could not get new gear cutting machines. We were therefore unable to make certain gear ratios or cut accurate gears that ran quietly. This limited our innovation and quality.
Modern American companies, because they don't spend money being efficient and develop their own manufacturing resources in the United States, ended up instead outsourcing to Asia, especially to China. Unsurprisingly, one day these Chinese companies wondered why were they selling to a middleman in America when they could sell direct? So right now 63% of 3rd party sellers on Amazon are Chinese companies selling direct. And American companies simply cannot keep up. So many American companies cannot make their own stuff, and cannot understandably convince the American public that paying for a Chinese product with an American name is worth the premium. We have lost our infrastructure and a lot of the critical mass needed for consumer manufacturer.
I should close by saying that the good news is that a lot of the premium American tool companies do manufacture in the US (like us) even if they outsource a lot of the process to other American companies.
Excellent commentary. I am conflicted over the death of the middleman/salesman. As a maker, I have a hard time with people making money who offer little to the supply chain. I do however really enjoy bespoke buying experiences for a suit, fragrance or other items where the experience and professionalism of the salesperson adds a lot to the process.
Another wonderful thoughtful article. In my business we do all those things; relabel the products of others, have products made specifically for us by others, and make products in our own shop. All those methods work well in their places and they all contribute to enabling us to offer a more complete range of tools and hardware for a specialized craft than we would be able to otherwise. So, for us, all are good, valid means to an end.
11/02/2023 John Fink
Fascinating, and informative post. Thanks for writing it. I found the info about the little mesters especially interesting.
11/02/2023 Joe Proctor
One thing we can do as consumers, makers, and VOTERS is tell our congress to close the loophole that China is exploiting.
There was a law passed in 1920s that made it so purchases below $800 didn't require import duties, taxes, or other fees to be paid. This was to not burden travelers and tourists with import restrictions. This was fine law until the internet and modern shipping speeds made it possible to sell direct from China to consumers.
So now that 63% being imported by China is almost entirely tax free. The US tax payer is paying for the Navy to secure shipping lanes, ports to be built and manned, satellites to navigate the ships, etc, etc and China is exploiting a law that is 100 years old to not pay a dime!
Temu, Wish.com and other Chinese companies are stealing patented tool designs, and then selling them at a price that no one can match.
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There was a law passed in 1920s that made it so purchases below $800 didn't require import duties, taxes, or other fees to be paid. This was to not burden travelers and tourists with import restrictions. This was fine law until the internet and modern shipping speeds made it possible to sell direct from China to consumers.
So now that 63% being imported by China is almost entirely tax free. The US tax payer is paying for the Navy to secure shipping lanes, ports to be built and manned, satellites to navigate the ships, etc, etc and China is exploiting a law that is 100 years old to not pay a dime!
Temu, Wish.com and other Chinese companies are stealing patented tool designs, and then selling them at a price that no one can match.