Abstract: A method of making an adjustable tool holder includes providing a tool holder body portion having a spindle-end portion and a shoulder portion and a neck portion and a bore. A collar having a plurality of threaded apertures is provided to engage the neck portion in a heat shrink relationship. The collar is heated to a predetermined temperature and placed over the neck portion at a predetermined location. The collar is allowed to cool on the neck portion, and threaded members having a length sufficient to engage the shoulder are installed in the threaded apertures of the collar.