You are using Excel 2007 so you can use a Table. It will automatically expand as you add to it. In the attached example I have created a table containing a list of tools. In H4 I have used data validation to create a dropdown list. If you add a new tool to the list (C9, then C10 etc) you will see that it automatically gets added into the dropdown list.
For reference, in versions prior to Excel 2007 you could use a List (Excel 2003 only) or a dynamic named range.
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