00:00I think that's true. The ISM data just came out, although it hasn't been, you know, in the last 25 quarters, ISM hasn't been above 50 except for twice.
00:07It started to go up and then we got the tariffs and increased uncertainty.
00:10So I think uncertainty rather than interest rates is driving all that stuff.
00:15And I was just in a, I was just with a couple hundred franchisees who interact every day with these mechanics, individuals, I'd call them the grassroots economy.
00:25And those people are still troubled by uncertainty.
00:28You know, and what's what's curious about them is their base business is good.
00:33Vehicle repair is good. Vehicle repair spending is up double digits year over year.
00:38So they're in a good situation. But they're saying, gee, so many things are happening.
00:43I'm not sure where I'm going. So I'm going to hold back.
00:45They're they're part of the people who are, I think, given the customer sentiment down eight percent since July and, you know, not spending as much as opposed to the people of a little more means that are out there spending because.
00:58And the difference is the people at the at my end, the grassroots level, are worried that it's singularity in economics.
01:05They won't be able to survive because they don't have enough cushion.
01:08You get up another notch or so, people say, well, you know, I can get over such a thing.
01:13And that's what's happening at the individual level.
01:15I wonder if, you know, the change that we've seen in in regulation, not just here in the U.S., but in Europe as well, away from, you know, more EVs to maintaining our gas engine cars is helpful to those businesses or not.
01:32Nick, and I think about, you know, the fact that if I were to buy a new Porsche Taycan, I wouldn't really need to take it to the shop as much as if I keep my nine nine seven where I have to do the IMS bearing and put in the Nikosil sleeves and get a bore scope and all that stuff that, you know, you sell tools for.
01:50Is that is that better for those businesses in the future?
01:53The question is, which would you rather drive, Matt?
01:56The one that you need, the bore scope?
01:58You know, I think you'd rather have that one.
01:59Look, I think I think the OK.
02:02Over time, EVs and particularly plug in hybrids, we're going to drive our business more.
02:08But there wasn't you know, there's not enough to shake a stick at in the marketplace right now.
02:12So they weren't really influencing our business very much.
02:14It was just a potential.
02:15So that potential will be somewhat attenuated.
02:18I think that's the situation there.
02:20I, you know, if you talk about the economy in general, though, we also sell the small and large manufacturers.
02:26And I was with the National Association of Manufacturers in in Washington a couple of weeks ago.
02:31And they're an interesting play because the large guys are kind of OK, except they're not expanding because they're waiting for the other shoes to drop in terms of tariffs.
02:41You know, the tariffs are if you're a manufacturer, Canada, Mexico, China, still uncertain.
02:46So you're not going to do anything because you don't want to tell your board, I did this and tomorrow say, never mind.
02:52You know, you don't want to be embarrassed like that.
02:53So people are very reticent to expand.
02:56It's why you're not seeing the tariffs have any effect there.
02:59But the place we should worry about, I think, is the small businesses, small manufacturers.
03:06Ninety three percent of manufacturers are less than one hundred.
03:09Seventy five percent are less than 20.
03:11And they're they are in a difficult situation because there's several things.
03:16One is the tariffs are costing them money and in a lot of different ways.
03:21And they don't have a lot of degrees of freedom because when you have a small business, you don't have a lot of deployable intellect on top of which.
03:27And I don't think much has been said about this.
03:29The tariffs are a nightmare to comply with.
03:31There's there's different tariffs by country, by industry, by product.
03:36And it's bearing down with cost.
03:39It costs us some money, but small businesses are already paying a lot of money to regulation.
03:43Fifty thousand dollars per employee per per year.
03:46So they're being borne down at the same time, which is a real big conundrum.
03:51They can't hire four and ten thousand manufacturers, four and ten thousand manufacturing jobs have gone on field.
03:57And they're principally in the low, you know, the small end.
04:01And so it's a difficulty.
04:02They're kind of small business and you can see it play out in the numbers that the NOM, the National Association of Manufacturers, has published.
04:10The outlook index for small business went down by 12 percent sequentially from the third quarter.
04:18That's a big drop.
04:19Hey, Nick, what about for small businesses?
04:21If I can jump in, just access to credit.
04:23We've seen stress in specifically subprime auto.
04:26But for that sector, have banks started to tighten their willingness to lend to the industry?
04:32Actually, if you go from my world to the financial world, the effect of interest rates or credit is a legend in the mind of the financial people, I think.
04:42You don't really see it as much.
04:44And I'm sure it works out over time.
04:46But I don't hear anybody say that.
04:49What you hear is, is that you have the small businesses trapped between the scilla of the tariffs and the charybdis of not being able to hire.
04:59So I do think something's going to have to be done about them because I don't see the tariffs resolving themselves very quickly.
05:06And so there needs to be something to help them find skilled workers.
05:10A company like Snap-on, we can train our own.
05:13We find people and we bring them in and we train them.
05:15Any big company can do that.
05:17But small companies cannot.
05:19And it's a big portion of our economy.
05:21You know, it's the driver of what I consider to be the backbone of Americana, which is making and fixing things.
05:28And it is the outlet for entrepreneurs in a lot of situations.
05:32So I think we have to do that.
05:33This applies to more than manufacturers.
05:35Skilled labor is just hard to see, hard to find.
05:37I mean, I think that's one of the things Snap-on, I believe, that the upskilling in the American workforce, because part of the reasons why they can't hire is they can't find people with the skills and they can't train them.
05:48So the upskilling in the American workforce is a seminal issue of our time.
05:52Nick, another thing that I hear a lot of people complain about is it's so hard to get these F-80 or F-70 roundhead ratchets.
06:00You know, people thought that was like peak Snap-on ratchet feel.
06:03The metallurgy was different.
06:05The mechanism was different.
06:06Could you release maybe retro editions?
06:10I guess we could.
06:11That's a good idea.
06:12I'll look into that.
06:13I don't know.
06:14That is a good idea.
06:15Only you could think that up, Matt, I think.
06:17But actually, it isn't a bad idea.
06:20I will say, though, that just what I've been saying, if I come back to the individual customers in our particular sector, and it lays out the real situation, people are buying hand tools.
06:31They're buying the latest version of the best ratchets.
06:36They're just not buying the big ticket items like this box behind me.
06:40You know, that's a $10,000 box, and it gets financed over time, and some people are buying them, but a lot fewer are buying it now because they're reticent to get themselves tied to three years of payments.
06:55The people of work are much more savvy about managing their financials, and I think people give them credit.
07:01It's fair.
07:02It's fair.
07:03I only get the hand tools once in a while, and I don't yet have a big box, but I want one.
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