Saturday, December 06, 2008

And Then There Were Three??

Recently Newell-Rubbermaid (a.ka. Sanford Brands when it comes to writing instruments) announced the planned closure of it's Lewisburg, TN pencil manufacturing facility. This was part of a general restructuring involving at least 4 of Sanford's US manufacturing facilities in Tennessee including also the towns of Shelbyville, Manchester and Maryville. Thier announcement to suppliers states:

"Manchester will become our global center of excellence for ink manufacturing. We started construction in October on this state-of-the-art facility, which will be the largest writing ink plant in the world."

"We will move manufacturing operations from Shelbyville to Maryville by the end of 2009. Maryville will become the center of manufacturing excellence for markers, highlighters and dry erase products under the Sharpie®, Expo® and other brands. Additionally, we will construct a new specialty packaging facility adjacent to our Shelbyville distribution center. This packaging center of excellence will incorporate best in class packaging processes that will allow us to better meet and exceed customer requirements."

and ...

"We will close our Lewisburg facility by the end of Q3 2009. Production will be moved to other Newell Rubbermaid facilities, including Maryville."

However, it has not been formally announced what their specific plans are for wood-cased pencil manufacturing. There is some speculation all wood cased pencil production will move to other Newell (Sanford) facilities outside of the US, specifically Mexicali, Mexico (graphite) and to Bogota, Columbia where color pencils are now produced for the Latin America market. Perhaps reserving just packaging operations for US facilities. So there is a chance this development would leave the US with just three remaining wood-cased pencil manufacturing facilities serving the traditional writing and art pencil market: General Pencil Co. (Jersey City, NJ) , Musgrave Pencil Co. (Shelbyville, TN) and MegaBrand's RoseMoon facility (formerly RoseArt and Moon Pencil/Products in Lewisburg, TN). Currently Megabrands Stationery and Activity business which includes the RoseMoon facility is on the market so who knows what teh future holds for this facility.

Note that my definitition of wood-cased manufacturers specifically excludes promotional or advertising pencil operations or other "finishing" operations where the milling of the slats into pencil is not performed. There are still a number of these finishers who take either raw or painted blanks and complete assembly, finishing and packaging. My definitition also excludes cosmetic pencil manufacturing of which there is one remaining facility, Cosmolab also located in Lewisburg, TN.

With the shuttering of the Shelbyville & Lewisburg facilities Newell brings down the closing curtain on two more factory sites of historical importance to the US Pencil industry. The Shelbyville facility (located formerly on Pencil St. and now renamed Sharpie Way) was the site of the Empire-Berol facility which resulted from the consolidation of these two companies in the 1980s. Mirado and Prismacolor brands were produced at this facility before relocating to Lewisberg soon after Newell's acquisition of Berol in the mid 1990s. The Lewisburg plant, part of Newells acquisition of Faber-Castell USA (which excluded the Faber-Castell brand name rights) just a year before the Berol purchase, had a long history of swallowing up production of newly acquired pencil competitors regardless of the owner of this facility. An appropriate discussion of the Lewisburg facilities production and brand range history alone would require a separate post though I have posted on this topic before, see Mongolized. Perhaps I'll work on a more thorough history of the Lewisburg facility for a futre post timed with the actual plant closure next year.

Adding the former Empire Pencil plastic extruded pencil facility in Shelbyville this brings to a total of three the number of US pencil factories shuttered by Newell over a 15 year period in the name of building global centers of manufacturing excellence. All the while thier wood/plastic cased pencil prodction in the US has declined by about 2/3 vs total production of those facilities at the time of each acquisition. This has been accompanied by the elimination of a corresponding proportion of pencil brand names. Whether these new centers of excellence in the US will really include wood cased pencil production remains to be seen. Newell and Sanford's slogan these days is "Brands that Matter" and clearly they have been deciding for some time that most of the pencil brands they acquired just don't matter. Other than Prismacolor and now Papermate which both include a whole host of other similarly "umbrella" branded complementary products there has really been no specific marketing support to Sanford's pencil brands here in the USA.

Perhaps all this is simply a natural progression of the pencil industry where there are over 200 pencil factories in China alone battling it out and more and more US and European production is being relocated or outsourced. Pencil industry margins are very thin due to this commodity efffect and Newell's focus is clearly on higher margin businesses. It's clear Lewisburg as a stand alone pencil factory in the US produced a majority of mass market and commodity oriented products that could no longer afford the overhead of this large older and inneficient facility. Perhaps co-locating a smaller wood-cased pencil operation in a modern facility with other products in the Sanford family will result in "excellence" if they do indeed go this route vs. moving off-shore. A stronger long term commitment to creatively marketing and developing new innovative products in wood-cased pencils may have made an impact on this trend. Who knows? Though a comparison to an industry innovator such as Faber-Castell who have indeed made such a commitment does give some clue. Will Sanford now decide their remaining wood-cased pencils products are indeed Brands that Matter?

8 comments:

Slywy said...

Disappointing but not surprising. The Black Warrior was once my favorite pencil but now I won't even use the ones supplied at work.

WoodChuck said...

I have just received confirmation that all Lewsiburg production will all move to Mexicali. It's uncertain if they will laso move the lead manufacturing or outsource lead prodution. So this does mean we are down to three US facilities as of end of 3rd Quarter 2009.

jw said...

May I simply thank you for such detailed reportage on an underreported business segment. My appreciation for pencils doesn't usually require that I get dirty with "business," but this kind of thing is important, I think. So, thanks.

Stephen said...

Quite a milestone in the industry.

Thanks for the report.

Blog Trotter said...

That's a real shame. I still use and like the Mirado Black Warrior. I never got to use the Mirado Black Warrior when they were being made in the Sanford factory.

However, I've never had a problem with the Papermate version. The ones that I've bought and used have always been good quality, and I've used a lot of other pencils. I'd like to try the Sanford versions, if I could find some. I'll have to go to the store and buy some more before the USA made ones disappear. I fear the quality will go down the drain once they move the factory to Mexico.

Blog Trotter said...

...So this means that Sanford's Ebony, and Design pencils will also be made in China/Mexico now. I really like those Ebony pencils too. I apparently need to go stock up on all these pencils, before they completely disappear. Their replacements are going to stink. RIP.

Anonymous said...

Just a reminder for you to use spell check. You have a tendency to spell their, thier.

Rickie Fortune said...

you gonna start making palominos and forest choice in the us? seriously:-)