Harbor Freight Tools

Harbor Freight Tools is a privately held discount tool and equipment retailer, headquartered in Calabasas, California, which operates a chain of retail stores, as well as a mail-order and e-commerce business. The company employs over 20,000 people in the United States[2] and has 1,000 locations in 48 states. On August 14, 2019, they opened their 1,000th store in Louisville, Kentucky.[3][4]

Harbor Freight Tools
TypePrivate
IndustryRetail
Founded1977 (1977)
Los Angeles, California, U.S.
FounderEric Smidt 
HeadquartersCalabasas, California, U.S.
Number of locations
1000+
Area served
United States
Key people
Eric Smidt (CEO)
ProductsTools
Revenue $5 billion (2018)[1]
Number of employees
20,000
Websitewww.harborfreight.com

History

In 1977,[5] Eric Smidt and his father, Allan Smidt, started Harbor Freight and Salvage in a small building in North Hollywood, California. The company began as a mail-order tool business that dealt with liquidated and returned merchandise. As the business grew, its name was changed to Harbor Freight Tools. In 1985, Eric Smidt was named president of the company at age 25; he served under that title until 1999, when he became chief executive officer.[6] From the mid-1980s to 2010 Harbor Freight was headquartered in nearby Camarillo, California.

Mail order

The company subsequently acquired US General Supply Company in 1991. Based in Plainview, New York, US General Supply Company was another mail-order tool and equipment seller, which at one time had 40 retail stores before they were closed following bankruptcy. Vestiges of the old US General can be seen with the branding of the toolboxes that Harbor Freight Tools sells. At first, the company mailed promotions in standard #10 business envelopes. In the early 1980s, when company relocated to Camarillo, it acquired the former headquarters of Unity, another large mail-order company, and launched its first mail-order catalog in the mid-1980s.

Retail stores
First Harbor Freight Tools store at new location, Lexington, Kentucky

In 1980, Harbor Freight Tools opened its first retail store in Lexington, Kentucky, to sell returned merchandise from its mail order business. The original location was at 1387 East New Circle Road. It later moved to 1301 Winchester Road, Suite 213. The venture proved successful, and Harbor Freight Tools began to open stores across the United States. As of August 2019, Harbor Freight Tools operates over 1,000 retail stores in 48 states.[4]

Exclusive brands

Harbor Freight sells many tools under in-house brands, sourced directly from manufacturers.[7]

Quality assurance

Harbor Freight tests their tools in their own quality assurance facility located in Calabasas, California,[8] which opened in 2010.

Website

Harbor Freight's Web site went online in 1997.[9] It had a modest catalog of products, a brief "About Us" section and an order form for the printed catalog. There were also links to a customer service page with delivery times and return policies. In all, the original site had 10 landing pages. The current Harbor Freight Tools site has over 37,000 indexed pages.[10] It had over 43 million unique visitors in 2012, mostly within the United States, according to compete.com.[11]

Corporate affairs
Harbor Freight Tools Corporate Office

Harbor Freight Tools is headquartered in Calabasas, California. The company expanded marketing, merchandising, and other support systems when it relocated to a 90,000-square-foot (8,400 m2) facility in September 2010.[12] Harbor Freight has distribution space in Camarillo, California, Moreno Valley, California and Dillon, South Carolina. It closed a distribution facility in Oxnard, California, in early 2013.

On April 4, 2013, Harbor Freight Tools announced a $75 million expansion project for the Dillon distribution center, which opened on November 22, 2015, adding 1 million square feet to the facility and 200 new jobs.[13][14]

Investor relations

In 2012, Harbor Freight, through Credit Suisse, secured a $750 million loan to refinance existing debt and fund a dividend for the company's private shareholders.[15]

Philanthropy

On January 9, 2013, CEO Smidt, through Harbor Freight Tools, donated $1.4 million of tools and equipment to the Los Angeles Unified School District's (LAUSD) Career Technical Education.[16] The donation was presented to LAUSD Board President Monica Garcia and Executive Director Michael Romero at the East Los Angeles Skills Center and Occupational Center in front of an assembly.[17]

Later in the same year, Harbor Freight Tools expanded its Tools for Schools program by donating a $100,000 gift of tools and equipment to South Carolina schools.[18]

In February 2018, Cedars-Sinai announced a $50 million gift from Eric and Susan Smidt and The Smidt Foundation to create the Smidt Heart Institute. So far, the gift is the largest donation in Cedars-Sinai's 116-year history.[19]

Criticism

Harbor Freight Tools was sued by a group of its store employees in 2012, who alleged that they were misclassified as "exempt" from overtime payments as "managers", under the Fair Labor Standards Act. Harbor Freight Tools won a declassification of the class action; that is, the court found that all the individual situations were not similar enough to be judged as a single class, and that their claims would require an individual-by-individual inquiry, so the case could not be handled on a class basis.[20]

In 2015, a class action lawsuit was filed against the company by customers, claiming that the tool company falsely advertised "normal" prices for products that were higher than an advertised "sale" price, when the item had never been offered at the original, higher price. Consumers claimed that this practice misled them into thinking that the item was on sale and they were getting a deal. The company settled, paying consumers up to $33,000,000.[21][22]

References
  1. Harbor Freight Moody's Report
  2. Harbor Freight Tools LinkedIn Profile
  3. Company Overview of Harbor Freight Tools USA, Inc Bloomberg Business
  4. Harbor Freight Tools Store Locator
  5. About Us
  6. Eric Smidt Bio, HarborFreight.com
  7. How Does Harbor Freight Sell Great Quality Tools At The Lowest Prices?
  8. At Harbor Freight, Quality Is Our Obsession
  9. Harbor Freight Tools archive website
  10. Google site search results, 2019-10-17
  11. Google
  12. Harbor Freight Tools Moving Jobs to Calabasas
  13. Harbor Freight Tools announces 200 new Dillon County jobs
  14. http://www.dillonheraldonline.com/2015/11/22/harbor-freight-celebrates-grand-opening-of-distribution-center/
  15. RLPC: Harbor Freight Sweetens Terms on TL
  16. LAUSD Thanks Harbor Freight Tools
  17. Harbor Freight LAUSD Donation Press Release
  18. Harbor Freight South Carolina Donation Press Release
  19. Harbor Freight Tools Owner and His Foundation Give $50M to Create Smidt Heart Institute
  20. District Court Decertifies FLSA Class of Retail Managers
  21. http://www.nationalsalepricesettlement.com/
  22. https://topclassactions.com/lawsuit-settlements/lawsuit-news/846170-harbor-freight-fake-sale-class-action-settlement-checks-mailed/
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