CompanyGraph
Illinois Tool Works Inc.
ITW · NYSE Arca · United States
Owns 80 separate businesses — including Miller Electric welding, Hobart food equipment, Instron testing machines, and Paslode fasteners — each built so deeply into customers' operations that switching is costly.
Illinois Tool Works owns 80 separate business units — Miller Electric welding systems, Instron testing machines, Hobart food equipment, Paslode fasteners, and the rest — each run by its own engineering team and embedded so deeply into its customers' operations that replacing it triggers a compliance or infrastructure event rather than just a purchasing decision. A commercial kitchen switching away from Hobart, for example, must physically reroute ventilation connections and pass a fresh code inspection before a rival brand can legally operate in the same space; a lab replacing an Instron machine must re-run its entire testing protocol before regulators will accept the results again. That friction is real only because each unit keeps the specialized engineers who understand their specific domain — the arc-welding application logic at Miller Electric cannot be redeployed to calibrate Instron load cells, so each of the 80 units must independently hire and hold scarce domain specialists. If a unit loses that engineering team through a downturn or turnover wave, the certification expertise that makes switching painful disappears with them, and the lock-in unravels without any competitor having to do anything at all.
How does this company make money?
The company earns money each time it sells a piece of equipment — a Paslode fastening tool, a Miller Electric welder, an Instron testing machine, or a Hobart dishwasher or oven. After the equipment is installed, it keeps earning from aftermarket parts sold to keep Hobart and Instron installations running. It also sells consumables — welding electrodes for Miller Electric systems and testing accessories for Instron equipment — to the same customers on a recurring basis as long as the equipment stays in use.
What makes this company hard to replace?
A commercial customer using Miller Electric welding systems would have to pay to recertify its entire workforce on any replacement equipment. A testing laboratory using Instron machines would have to re-run and re-validate its full testing protocol before its results would be accepted by regulators or clients again. A commercial kitchen built around Hobart equipment would need to change its ventilation and utility connections and pass a fresh code inspection before a different brand could legally operate in the same space.
What limits this company?
Each of the 80 units needs its own pool of specialists: arc-welding control engineers for Miller Electric, load-cell calibration experts for Instron, FDA materials specialists for Hobart. That knowledge cannot be shared across units. If Miller Electric is short-staffed, Hobart engineers cannot fill in. So the company cannot grow any one unit faster than it can hire and keep the specific experts that unit requires.
What does this company depend on?
The company cannot run without steel and aluminum feedstock for Paslode and Tapcon fastener manufacturing, electronic components for Miller Electric welding controls, specialized sensors for Instron testing equipment, FDA-compliant materials for Hobart food service equipment, and explosive actuators for Paslode pneumatic fastening systems.
Who depends on this company?
Construction contractors using Paslode and Tapcon fastening systems would face project delays if compatible fasteners were unavailable. Automotive assembly lines built around proprietary fastening systems would need costly retooling. Materials testing laboratories using Instron equipment would lose the ability to run legally defensible tests until they completed full recertification on replacement machines. Commercial kitchens using Hobart dishwashers and ovens would face direct disruption to food service operations.
How does this company scale?
Manufacturing processes and engineering methodologies can be copied from one unit to another as a template, which makes adding a new product line within an existing unit relatively straightforward. What does not scale is the customer relationship itself: the welding application knowledge Miller Electric has built for aerospace customers is completely separate from what Hobart needs for restaurant chains, so each unit must maintain its own dedicated engineering team and cannot borrow capacity from the others as it grows.
What external forces can significantly affect this company?
When the construction industry slows down, demand for Paslode and Tapcon fasteners drops with it. If the FDA changes its materials or safety requirements, Hobart must redesign equipment to stay compliant. As the automotive industry shifts toward electric vehicles, the internal combustion engine assembly work that has historically used traditional fastening and welding applications is shrinking, which puts pressure on those parts of the business.
Where is this company structurally vulnerable?
If a business unit loses the engineers who understand its specific product domain — through a wave of departures, a poorly managed downturn, or simply being outbid for scarce specialists — it can no longer keep its products up to date or support customers through compliance renewals. Once customers can no longer trust that unit to help them stay certified or get service, the switching friction disappears. The lock-in does not require a competitor to attack; it just quietly dissolves.