Wednesday, December 16, 2009

A Chat With Patrick Jackson Of Lie-Nielsen Toolworks...

A few days ago I received a shock when I found out the Woodcraft stores were no longer going to carry Lie-Nielsen products. I made an incorrect assumption that it was done by the former and not the latter. And then I was struck by a bolt of common sense and decided to query both parties to find out what was going on instead of jumping to what turned out to be incorrect conclusions.

(I would like to take a second here to apologize to Woodcraft for making said assumption.)

I sent a very simple inquiry to both Woodcraft and Lie-Nielsen, indicating I'd heard Lie-Nielsen tools were no longer going to be available at Woodcraft and that I was looking for more information on the matter.

Both responses came fairly promptly, but I'd gone out of town on business for two days and was unable to do anything with them until today. The response from Woodcraft was plain and straight-forward. They simply said, "Thank you for your inquiry. Lie-Nielsen decided to pull their product line from Woodcraft." I found that to be an appropriate and sound response, given the circumstances. The response from Patrick Jackson at Lie-Nielsen was even shorter! It said, "Hi Ethan, Please give me a call..."

So this morning I called Patrick - and a very pleasant conversation ensued. I didn't get his job title, but it was quite obvious his job duties focused on marketing and sales. Patrick explained that when Lie-Nielsen first teamed up with Woodcraft several years ago, it wasn't a business franchise - it was just one store. Lie-Nielsen could easily supply them with however many tools they needed and still sell their number one product - Quality.

Over the years, however, Woodcraft turned into a franchise and grew to the count of 80 stores. Supply issues started cropping up. It became harder and harder for Lie-Nielsen to provide them with a high quality product and, more importantly, good customer service. Lie-Nielsen believed the sales people at each Woodcraft store should have instruction in the use and care of Lie-Nielsen products (having worked in the SCUBA industry for several years, I know where he is coming from), but didn't have the staff to train so many people effectively. The demand for tools at all the Woodcraft stores started turning Lie-Nielsen into a production line that manufactured tools instead of a small business that made woodworking tools by hand. They finally made the decision to pull their products from the Woodcraft stores.

Patrick spoke to me in a language I could understand. Lie-Nielsen was trying to avoid one of the biggest pitfalls almost every small successful business makes - growing too big too fast and losing touch with why they went into the business in the first place. Working at a software company that has added almost 300 employees in under eight years, this is something I have experienced on a personal level, as well.

He further explained that by pulling back their distribution in the U.S., they were able to return a focus back on priorities - coming up with creative ideas, designing new tools, developing a new and better website (due to be launched in a few weeks), and making sure they provide a quality product and good customer service. At that point, we did discuss the one drawback to pulling their line from Woodcraft. One of the best ways to sell a quality hand tool is to put it in the customer's hand! They have now reduced the number of places we can actually pick up and hold a Lie-Nielsen tool by 80.

Patrick agreed that was a problem and a concern of the sales and marketing department at Lie-Nielsen. He said their goal over the next year or two is to sponsor or participate in tool demonstrations in at least 100 cities across the United States every year. I told him it sounded like a great idea and suggested he add St. Louis to the list (which he then did). He also said they are looking into working with a few select stores that still want to carry their products and hope to have that worked out in the near future.

At that point, I'd been on the phone with him for 15 minutes and needed to get back to work, so we said our goodbyes. While I lament the idea that I can no longer jump in my truck and drive 10 minutes to Woodcraft to spend my hard-earned money on a Lie-Nielsen chisel or saw, I now have a much better understanding of why Lie-Nielsen did what they did. What's more, I can't fault them their decision - I'd like to think it is the same thing I would have done, given similar circumstances.

I learned a long time ago that you get what you pay for. I also learned that sometimes patience is a virtue. With both of those thoughts in mind, I guess I'm not so put out by the fact that any future Lie-Nielsen purchases will have to include a week-long delay while my purchase is being shipped. It seems like a small price to pay to continue patronizing a small American business that provides me with quality woodworking tools.

13 comments:

The Village Carpenter said...

Ah, makes total sense. Thanks for making the inquiry. Those hand tool events are excellent and I hope more will pop up in addition to L-N's. They're the best way to see which tools feel best to a woodworker.

Ethan said...

I'm glad I looked into it a bit more, too, Kari. I'm a bit ashamed of myself for not doing that in the first place. Ah, well I know better for the future. Don't mind making mistakes, as long as I learn from them.

Those events are more common in your neck of the woods, Kari. I wish there were some in this area I could go to!

I did forget to mention one thing... Patrick asked me if I would be their St. Louis contact to help organize the event in our area. I already have a place picked out! I'm looking forward to being a part of putting it together!

TheWoodWhisperer said...

Thanks for getting the info on this situation Ethan. I too heard the rumors having to do with the new Wood River planes and made some incorrect assumptions as well. But this really adds an interesting element to the story. I often wonder why so many companies are so eager to grow at any expense, including quality. Its actually refreshing to see a company take a step back in an effort to hold true to their existing standards.

Matt and I will be mentioning your article tonight on Wood Talk Online.

Bill Satko said...

Ethan,

I found your post to be very interesting, but had a totally different reaction to it than Kari. It did not make sense to me.

Maybe it is the cynic in me, but tightly controlling the distribution means you also tightly control the pricing. In the past, you sometimes were able to purchase Lie Nielsen products from Woodcraft at a discount. Something that Lie Nielsen probably was not able to control completely. For many people the possibility of a potential sale makes them delay their purchase. Some delayed sales become no sales. Could this also be some motivation for Lie Nielsen's decision?

I really don't have a problem with Lie Nielsen deciding to tightly control the retail aspect of their business, especially if it makes them stronger in the future. I like their products and have demonstrated this in significantly contributing to their bottom line, while diminishing my own. I will still buy them if they continue to fit that balance between quality and pricing.

I would like to see people more savvy than me in retail economics weigh in on this issue.

Anonymous said...

It is 80 miles to the nearest Woodcraft in Rochester, NY. Over the years the number of tools in the Lie Nielsen case has slowly decreased each time I get there. Conversely the number of router bits and "gadgets" has increased dramtically. Bottom line, I don't think a lot of the people going through the door are interested in tools of L-N quality. There was even a L-N tool event in town this year.
PGOster

Tom Buhl said...

Thanks for making the contact and followup. Conjecture can be fun, but not of much service to others. Good post. BTW used Marc Spagnuolo's FB link to find your story. Good work!

Matt Berger said...

Great report Ethan. We hosted one of the L-N hand tool events at our office last year and I can tell you it was a really cool way to shop for hand tools, and hard to leave without dropping a small fortune. Thanks for getting to the bottom of this.

Ethan said...

Marc - Thanks for the mention! Maybe I'll start wearing my fedora when I blog...

Bill - I don't think L-N is following the standard business path - but in this case that's a good thing! Their #1 drive is to maintain the quality of their products. I certainly can't disagree with that direction.

PGOster - I agree. The people who already buy L-N products aren't going to be dissuaded by this change; it's the new converts, er customers, that will take a little more effort now. Hopefully the demos will help out in that area!

Tom - I'm humbled that Marc has my blog entry on his list of "What I'm Reading Now". Thanks for the kind words!

Matt - You guys don't write bad stuff, either! ;) I'm really looking forward to working with L-N to organize something here in St. Louis - I guess I'll have to start saving up for it!

Auguste Gusteau said...

I do not live in the United States, so I'm not very interested in the relationship between LN and WC, but the explanations of Patrick Jackson do not convince me a lot.
Perhaps you should better investigate the matter, maybe doing some more mischievous or shrewd questions.
In my life I have never heard of a company that does not want to grow up.
High quality of products and good customer service can be achived even when the company grows up. It is enough to raise the space, machinery and workers. High quality and mass production can coexist if the management want it.
Like Bill Satko, I'm more cynical.
I think that quarrels between LN and WC arise only by a matter of money and control of the selling price.
WC discounts decrease too much LN direct sales and so gains.
It would be interesting to know the percentage discount LN applied to WC. Ask this to Patrick Jackson next time you hear him. I think they're around 30%.
I would also add a couple of considerations about LN.
I like LN tools (well, is there anyone who does not like them?) but I think they should rethink their marketing pricing strategies.
I think that now they base their pricing policy on "competition-based pricing" or "Premium pricing" or "profit maximisation" strategies, but it would be better for everyone if they return to dear old cost-plus pricing strategie.
Ask this too to Patrick Jackson next time.
Another thing they should do is to sell fully functional seconds. They say they do not sell seconds, because they re-use all as raw material, but what about the human and machine time lost? Another question for your next chat with Patrick Jackson.
I apologize for the length of the comment and since English is not my mother tongue, I hope you will forgive my mistakes.
Greetings and Merry Christmas from Auguste.

Anonymous said...

Just a quick reaction to Auguste's comment: I own a company that has made essentially the same decision LN evidently made. Last year, we opted to terminate a reseller agreement with a distributor because they were asking for deeper wholesale discounts, which, though our volume would have increased, our overall costs for manufacturing and supporting our products would have made the business less profitable. We decided that volume without profit is like eating soup with a fork ... you stay busy, but you are still hungry!

Anonymous said...

With a bunch of time with a higher-end bicycle shop, I totally understand LN's training point. If you're going to provide a retail discount to a vendor, they'd better work to sell your product.

I have dealt with several top-end bicycle manufacturers, for instance Serotta, that simply will not allow you to sell their product if the staff is not trained to the manufacturer's expectation.

The other end is pricing to the end user...

My local Woodcraft sold a few LN tools. Most if the LN tools purchased by myself and local woodworkers have come either directly from LN or from web vendors.

Woodcraft's sales usually only equated to the sales tax they had to charge, making the sale price equal to the direct price or web vendors. So, if you wanted a tool when the sale happened, you bought it at Woodcraft. If you wanted it now, and there was no sale, you ordered it in. Since there are Woodcraft stores in my state, Woodcraft.com charges sales tax for web orders.

For the most part, Woodcraft rarely had items I wanted to purchase directly from them, so I went to my preferred vendors, or directly to LN.

Anonymous said...

Thanks Ethan,

I like the direction L-N is taking. Maybe more businesses should be run by the makers or growers and not the bean counters. They would only produce and/or grow what they could and would be satisfied with the living they made. Heck, we could even save our money and pay cash for the items we really wanted or needed. Wow.

Anonymous said...

While I really appreciate your efforts to gain some clarity in this question, I'm not sure you received a truly forthright answer. Not that I doubt what the LN spokeman said, there had to be more to the issue than what he revealed. LN is not obligated to share secrets of their business with us in spite of the tremendous loyalty of us...their customers. If you look at the events of the last eighteen months or so, you can see a change in direction by LN in marketing their product,; ie, direct sales in regional venues by carefully trained and chosen factory personal. This was accompanied by curtailing of any off-price selling (including by LN themselves) and reported reducing of the reseller's discount. The windup of the story is the same, although people were left to draw their own conclusions and that set the rumor mill spinning. Not the tidiest way to handle that kind of news.