VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Illinois Tool Works Inc.
ITW · New York Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Illinois Tool Works Inc. is a diversified industrial manufacturer with seven reporting segments spanning equipment, consumables, and engineered components. A recurring theme is ITW's operating system (80/20, customer-back innovation, and decentralization) aimed at sustaining high margins and resilience. Several segments have equipment-plus-consumables dynamics (notably Welding, Test & Measurement and Electronics, and Specialty Products), which supports recurring revenue and switching friction. Brand-led franchises (e.g., Hobart, Miller, Rain-X, Paslode) and select patent-protected niches add pricing support, though many end markets remain competitive and cyclical.
Primary segment
Automotive OEM
Market structure
Competitive
Market share
—
HHI: —
Coverage
7 segments · 6 tags
Updated 2025-12-31
Segments
Automotive OEM
Automotive OEM engineered components and fasteners
Revenue
20%
Structure
Competitive
Pricing
moderate
Share
—
Peers
Food Equipment
Commercial food equipment plus service/parts
Revenue
16.6%
Structure
Oligopoly
Pricing
strong
Share
—
Peers
Test & Measurement and Electronics
Test & measurement instruments and electronics production/MRO equipment and consumables
Revenue
17.7%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Welding
Arc welding equipment and specialty welding consumables
Revenue
11.6%
Structure
Oligopoly
Pricing
strong
Share
—
Peers
Polymers & Fluids
Engineered adhesives/sealants and industrial fluids; automotive aftermarket chemicals
Revenue
11.1%
Structure
Competitive
Pricing
moderate
Share
—
Peers
Construction Products
Engineered fastening systems and solutions for construction
Revenue
12%
Structure
Competitive
Pricing
moderate
Share
—
Peers
Specialty Products
Beverage packaging equipment/consumables; coding/marking equipment/consumables; appliance components/fasteners
Revenue
10.9%
Structure
Oligopoly
Pricing
strong
Share
—
Peers
Moat Claims
Automotive OEM
Automotive OEM engineered components and fasteners
FY2024 segment operating revenue $3,188M; operating income $625M.
Design In Qualification
Demand
Design In Qualification
Strength
Durability
Confidence
Evidence
Vehicle-platform components are typically qualified into OEM programs; switching suppliers mid-cycle is costly (re-validation, tooling, production risk).
Erosion risks
- OEM dual-sourcing / price-downs
- Platform redesign cycles reset incumbency
Leading indicators
- New platform wins
- Segment margin vs peers
Counterarguments
- Many fasteners/components are re-biddable and price-driven
- OEM purchasing power can cap supplier returns
Operational Excellence
Supply
Operational Excellence
Strength
Durability
Confidence
Evidence
ITW Business Model (80/20 + customer-back innovation + decentralization) is applied across divisions to reduce complexity and sustain margin/quality advantages.
Counterarguments
- Operational playbooks can be copied by well-run industrial peers
- Decentralization can create uneven execution across divisions
Food Equipment
Commercial food equipment plus service/parts
FY2024 segment operating revenue $2,647M; operating income $719M.
Brand Trust
Demand
Brand Trust
Strength
Durability
Confidence
Evidence
Branded equipment franchises and reputation for reliability support spec-in and pricing; service capability reinforces trust.
Erosion risks
- Trade-down to value brands in downturns
- Feature parity/commoditization in core categories
Leading indicators
- Price vs volume in segment results
- Aftermarket/service mix trend
Counterarguments
- Large chains can standardize on competing suppliers
- Service/parts can be sourced via third parties
Service Field Network
Supply
Service Field Network
Strength
Durability
Confidence
Evidence
Integrated service offerings increase uptime for operators and can raise switching costs and parts attachment.
Counterarguments
- Independent service organizations can compete effectively
- Service is rarely exclusive
Test & Measurement and Electronics
Test & measurement instruments and electronics production/MRO equipment and consumables
FY2024 segment operating revenue $2,818M; operating income $703M.
Installed Base Consumables
Demand
Installed Base Consumables
Strength
Durability
Confidence
Evidence
Installed base of equipment supports recurring consumables/spares and service-like needs; can stabilize revenue vs pure capex cycles.
Erosion risks
- Third-party compatible consumables
- Customer platform switches at refresh cycles
Leading indicators
- Consumables growth vs equipment placements
- Gross margin stability
Counterarguments
- Consumables can be multi-sourced in many applications
- Refresh cycles can reset supplier share
Switching Costs General
Demand
Switching Costs General
Strength
Durability
Confidence
Evidence
Qualification of test methods, calibration routines, and workflow/software integrations can make vendor changes disruptive.
Counterarguments
- Specs and price can outweigh switching costs for many buyers
- Data and workflows may be portable enough to switch suppliers
Welding
Arc welding equipment and specialty welding consumables
FY2024 segment operating revenue $1,851M; operating income $597M.
Installed Base Consumables
Demand
Installed Base Consumables
Strength
Durability
Confidence
Evidence
Equipment placements drive repeat consumables/accessories demand; productivity and quality considerations make consumable switching non-trivial.
Erosion risks
- Cross-compatible consumables and price competition
- Automation reducing manual consumable intensity
Leading indicators
- Consumables mix trend
- Price/cost spread in segment results
Counterarguments
- Consumables can be commoditized in many use cases
- Large rivals have comparable scale and brands
Brand Trust
Demand
Brand Trust
Strength
Durability
Confidence
Evidence
Brand preference and technology leadership support premium positioning with distributors and end users (e.g., Miller).
Counterarguments
- Brand advantages can erode if competitors leapfrog on features
- Distributors can shift share via incentives
Polymers & Fluids
Engineered adhesives/sealants and industrial fluids; automotive aftermarket chemicals
FY2024 segment operating revenue $1,764M; operating income $484M.
Formulation and application engineering know-how
Demand
Formulation and application engineering know-how
Strength
Durability
Confidence
Evidence
Differentiated chemistries and application expertise, often tailored to customer processes, create performance-based switching friction and value-based pricing.
Niche, value-added engineered products can embed into customer processes even in competitive chemical markets.
Erosion risks
- Formula substitution/commoditization
- Regulatory-driven reformulations
Leading indicators
- Price/cost spread stability
- New formulation qualification wins
Counterarguments
- Large chemical players can replicate offerings and scale
- Procurement can force periodic re-bids
Brand Trust
Demand
Brand Trust
Strength
Durability
Confidence
Evidence
Auto aftermarket brands (e.g., Rain-X, Permatex) can sustain shelf space and premium pricing.
Counterarguments
- Retailers and private label can pressure pricing
- Price transparency online can weaken brand premium
Construction Products
Engineered fastening systems and solutions for construction
FY2024 segment operating revenue $1,909M; operating income $559M.
Brand Trust
Demand
Brand Trust
Strength
Durability
Confidence
Evidence
Trusted brands (e.g., Paslode) matter where tool/fastener reliability affects jobsite productivity.
Erosion risks
- Low-cost substitution in commoditized fasteners
- Construction downturns increasing price sensitivity
Leading indicators
- Channel/distributor share signals
- Price vs volume trend
Counterarguments
- Fasteners can be highly price-driven and substitutable
- Contractors often multi-source across brands
Design In Qualification
Demand
Design In Qualification
Strength
Durability
Confidence
Evidence
Tool + fastener ecosystems and preferred specs can create workflow friction to switch, especially for pro users and distributors.
Counterarguments
- Interoperability/standards can reduce ecosystem lock-in
- Competitors can buy share via rebates and promotions
Specialty Products
Beverage packaging equipment/consumables; coding/marking equipment/consumables; appliance components/fasteners
FY2024 segment operating revenue $1,743M; operating income $528M.
Installed Base Consumables
Demand
Installed Base Consumables
Strength
Durability
Confidence
Evidence
Packaging and marking equipment placements can drive recurring consumables/parts; reliability needs can favor matched consumables.
Erosion risks
- Third-party compatible consumables
- Refresh cycles resetting supplier position
Leading indicators
- Consumables mix trend
- Gross margin stability in consumables lines
Counterarguments
- Consumables can be commoditized and multi-sourced
- Customers can qualify alternative suppliers over time
IP Choke Point
Legal
IP Choke Point
Strength
Durability
Confidence
Evidence
Niche products with patent protection can deter direct copying and preserve pricing in specialized applications.
Counterarguments
- Patents may not block functional substitutes
- Competitors can design around or wait for expiry
Evidence
Automotive OEM segment is described as a niche supplier to top-tier OEMs providing automotive components/fasteners; OEM programs generally involve qualification and long program lives.
Risks & Indicators
Erosion risks
- OEM dual-sourcing / price-downs
- Platform redesign cycles reset incumbency
- Trade-down to value brands in downturns
- Feature parity/commoditization in core categories
- Third-party compatible consumables
- Customer platform switches at refresh cycles
Leading indicators
- New platform wins
- Segment margin vs peers
- Price vs volume in segment results
- Aftermarket/service mix trend
- Consumables growth vs equipment placements
- Gross margin stability
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
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