Saturday, December 06, 2008
Thursday, August 07, 2008
The trend of pencil industry consolidation continues and this time it’s a notable first from my perspective.
German pencil manufacturer Johann Froescheis Lyra Bleistift Fabrik GmbH (LYRA), a company remaining independently owned for just over 200 years has sold to the Italian Based FILA Group several generations younger at just around 80 years. While I could not find any posts yet on either company’s website I have posted an excerpt from the supplier announcement letter received today from Lyra on the Indutry News page of our Pencils.com site. A phone call to FILA owners today confirms the transaction closed on July 27, 2008.
This is the first major German pencil company that I know of to sell it’s German based pencil business to a foreign owned company. This is a separate phenomenon in my mind to German pencil companies that had established foreign subsidiaries or joint ventures in the U.S. or elsewhere many years ago some of which have since been sold off to non-German owners.
LYRA is headquartered in Nürnburg, Germany, the epicenter of German pencil industry and has a rich history dating back to 1806 having just celebrated their bicentennial two years ago. LYRA products represent a leading brand in the school market in Germany with strong market presence in Austria, the Scandinavian countries, Eastern Europe and also sales companies in Singapore and China to serve the Asia market. Some LYRA products are exported to North America, but the brand does not have a big presence here. The products have a very high quality image and are characterized by some specialized shapes and sizes. Lyra was one of the early companies to actively promote triangular shaped pencils of different sizes for their ergonomic benefits particularly to children as learning pencils. They still produce most of their high end product in ther Nürnburg facility, but many more basic coloring and writing pencils are purchased from Indonesia (see prior post “170 years of Made in Germany”).
Wednesday, May 07, 2008
Note that there is no intent to disparage Staedtler's reputation here just to use this post to point out a seeming global disparity in country of origin marking regulations. In Mexico the rule is different than both European Union and in the US and reliyes on % of value added content in Mexico, while US's rule is based on theory of substantial transformation.
Wednesday, April 30, 2008
- graphite pencils for office, school & home use
- color pencils for school, home or artist use
- carpenter pencils
- cosmetic make-up pencils
Of these the last two groups are relatively small segments on a unit volume basis. Based on my knowledge of the industry I've estimated these two segments would not be much more than 5-7% of the annual unit volume of pencils sold in the US. Although with a higher average sales value per unit than graphite or color pencils it may be perhaps 8-10% of the wholesale sales value. Virtually none of these pencils are painted yellow though some proportion of carpenter pencils may be yellow the most comon colors are white, red, blue and orange. So a conservative estimate removes 5% of all US pencil consumption from being painted yellow.
The next challenge is to break out color vs. graphite pencils. Historically there has been an approximate ratio of 20% color pencils to 80% graphite writing pencils. I conducted a reasonably thorough review for 2005 of US production sources and import sources of pencils. By dividing each country of origin and US producer out into known and/or my best estimate figures for color vs. graphite pencils I calculated a weighted average of 28.7% for color pencils for 2005. Of particular interest is that only a very small small portion of US pencil production is color pencils. My estimate is just 5%. With about 1/3 of today's pencils being produced domestically in the US and a full 2/3 imported from overseas this means that about 39% of the imported pencils are color pencils.
This data supports the growth of color pencil consumption in the US over the past 15 years or so. This has been driven initially by the entry of Crayola into marketing color wood cased pencils in the early 1990s. These pencils are all produced in Brazil or Costa Rica by Faber-Castell. Following the lead of Crayola many other. Of particular interest is that in Europe the ratio of color to graphite pencil consumption is more or less reversed from the US trend as historically color pencils have been the vast majority of pencils produced and sold inthe European market where pens are more frequently used for writing purposes.
Given that color pencils are usually painted the color of the core for each color in general color pencils have a very low proportion of yellow painted pencils. We could either simply discount this group entirely (as non-graphite pencils) or assume that about 1/12 of these pencils on average are painted a yellowish hue given that yellow is a primary color and as pencils are generally sold in multiples of dozen packs this proportion should hold about true as the color pallet expands for 24, 36, 72 and 100+ count boxes of color pencils. Thus at best 2 to 3% of US pencils are color pencils that are painted some form of yellowish hue.
- advertising specialty pencils for custom imprint purposes (hexagonal and round shapes)
- golf pencils (hexagonal and round)
- designer theme pencils (includes licensed character/sports pencils, holiday themes, and other decorative themes ( generally round)
- artist quality graphite drawing and sketching pencils
- standard branded writing pencils (mostly all hexagonal shaped painted a single color)
It is really just this last group of more standard branded writing pencils that have traditionally had a very high proportion of yellow painted pencils. And frankly it's likely this last group of pencils that the average person is probably thinking about when saying 75% of US pencils are painted yellow. Certainly it may be historically true that 75% of branded hexagonal graphite pencils in the US were painted yellow and it may even still be true today of this sub-segment. However as with the growth in the color pencil market the advertising specialty, golf pencil and designer theme pencils have been the key growth sub-categories of the graphite pencil market over the past 10+ years. My quick estimate is that something in the range of 50 to 70% of graphite pencils would fall within this last group in the current market and if 75% of those are painted yellow then at the upper end we are looking at just 35% (= 67% graphite x 70% to 75%) graphite yellow painted pencils as a proportion of the total US pencil market. This is a far cry from 75% and even if significantly more than 75% are painted yellow would not get much higher than 40% of all US pencil consumption . Thus it's probably not even technically correct any longer to say that the majority of pencils sold in the US are yellow painted pencils.
In fact within the pencil industry the historical intent of painting a pencil yellow as a reflection of high quality is considered out of date and yellow pencils are increasingly viewed as a low value commodity segment. Certainly some important high quality brands such as Dixon's Ticonderoga , the Mirado (originally the Eagle Mirado now Sanford's Papermate Mirado), to some extent the Mongol (though now discontinued in the US by Sanford) and a few other minor brands have a good quality reputation and retain yellow as the primary lacquer color. Some of these have offered additional paint color options within their brand range. The reality is that today the vast majority of yellow pencils sold in the US are imported low priced pencils. Many of these are private label pencils for the major office supply chains. The Papermate American brand remains one higher volume yellow hex pencil that is still US produced to a large extent, but the quality has been reduced considerably to compete with the imported pencils. Alternate species woods have reduced sharpenability performance, lower standards on lacquer finish reduce the look and feel of the pencil, ferule and eraser quality reductions and graphite smoothness inconsistency, are today unfortunately often the case with common yellow pencils.
While all this means more affordable pencils for general writing needs it's also changed the perception of the yellow pencil over time. Today's standard commodity yellow pencils cost about $0.10 per pencil at retail which is surprisingly the same as the price of a Ticonderoga, a Mirado and other high end brands 40, 50, 60 and even 70 years ago now. When you consider the value of the dollar today vs. it's value over those time periods you'll see common yellow pencils are effectively much cheaper in real dollar terms than they ever were. I'm not sure what milk, gasoline and many other common consumer goods cost that long ago relative to today's prices, but I'm guessing the relative value retention for the yellow pencil has been quite good although the qualtiy on average is just not what it once was and may or may not compare favorably with quality performance of other common goods that have had relatively more infalated values over time on a real dollar basis.
Thursday, April 17, 2008
I do find Brian William's intro statments like "You can't see the forest, because they're gone!" coupled with the use of images of recent clearcuts rather misleading relative to the actual reality of responsible forestry practice in the Pacific Northwest. Collins is clearly a leader in committing all their timber operations to FSC certification process and in the manner in which they run their operations. I applaud them and am happy to be collaborating with them in bringing sustainable wood products to market. However, they are just one example of numerous companies with good sustainable forestry practices.
Sunday, March 30, 2008
If you haven’t yet experienced the smooth ride, then come and visit these two sets of group pages and I hope this will get you restless as a wild Palomino to jump up in that saddle too.
Saturday, March 29, 2008
The new Pencils.com site builds upon the past purpose of the site as an educational resource regarding pencils, Incense-cedar, renewable resources and forestry management but adds to it a broad range of new features designed to help celebrate and share the role of the pencil in our world. If you are a pencil enthusiast, artist, writer, teacher, parent or student the new site has something for you. I hope you will check it out and join what I think will become an active and growing community. In particular we have initiated a Palomino Riders group page which allows you to share and post artwork created with your Palomino pencils or to form other groups and discussion forums on a wide variety of topics related to education, art, writing and even pencil collecting.
In addition to expanded educational content and a host of social networking and related tools on the Pencils.com site one of the key new features will be our Pencils.com Store. This store will supplement our existing Pencil World Creativity Store @ eBay and ForestChoice.com and offers a much more flexible on line shopping tool with quantity discounting, pencil points discounts that you earn through participation in the Pencils.com community as well as other features. We’ve already added an expanded range of new California Republic items not on eBay as well as new items from another pencil manufacturer with more to follow. Over time we’ll be expanding the product range available on the Pencils.com Store, supporting and promoting products produced by our slat customers that supplement and complement our own product range.
A number of readers continue to request more of my in depth posts on industry issues and there have been plenty of issues to write about, although I’ve just been too busy with other business matters in the last year or so and more recently in developing the Pencils.com site for this launch. Looking forward I plan to return to providing somewhat more frequent posts about issues related to Pencil Industry here on Timberlines which will also have a feed to a dedicated Timberlines page at the Pencils.com site. However, posts more focused on news related to our California Republic Stationers product developments and the Pencils.com store offerings will be moved to my WoodChuck blog on the Pencils.com home page. Thus the Pencils.com site will be updating much more frequently than Timberlines going forward.