SIC 3421
CUTLERY



This category includes establishments primarily engaged in the manufacture of items such as pocket knives, safety razors, razor blades, straight razors, table cutlery, scissors, shears, manicure tools, kitchen and butcher knives, and artisan's knives. Establishments primarily engaged in manufacturing precious metal cutlery and table cutlery with handles of metal are classified SIC 3914: Silverware, Plated Ware, and Stainless Steel Ware; those manufacturing electric razors, knives, or scissors are classified in SIC 3634: Electric Housewares and Fans; those manufacturing hair clippers for human use are classified in SIC 3999: Manufacturing Industries, Not Elsewhere Classified; those manufacturing them for animal use in SIC 3523: Farm Machinery and Equipment; and those manufacturing power hedge shears and trimmers are classified in SIC 3524: Lawn and Garden Tractors and Home Lawn and Garden Equipment.

NAICS Code(s)

332211 (Cutlery and Flatware (except Precious) Manufacturing)

Industry Snapshot

Rated in 1872 by J.B. Hyde as one of America's "great industries," cutlery manufacturing has witnessed significant change during the twentieth century. Instead of small craft shops producing innovative but simple utensils, modern cutlery firms are more likely to be mass producers of one or two extremely simple products that can be sold anywhere in the world. However, sales of the various cutlery products showed steady growth throughout the century, increasing from $37,002 in 1921 to $1.1 billion in 1987. The value of shipments in the industry began to decline in the late 1990s, however, falling from $2.08 billion in 1998 to $1.92 billion in 2000.

Organization and Structure

The industry can be divided into two main components: kitchen and table cutlery, and nonelectric razors and razor blades. Shears and scissors comprise a third—but proportionately tiny—segment of the industry. Of the $2.16 billion in industry shipments, kitchen and table cutlery and shears and scissors accounted for $870 million; nonelectric razors and razor blades accounted for $1.18 billion.

There were 162 establishments manufacturing cutlery in 1997, according to the U.S. Census Bureau's Economic Census. , an increase from 104 in 1995. In 1997, 55 of these companies were larger establishments—with 20 or more employees. New York had the largest number of cutlery companies, with 20, followed by California with 16, and Ohio and Pennsylvania with 12 each.

Most cutlery products are sold by retail chain stores, warehouse clubs, specialty stores, or catalogue operations. Manufacturers supported retail sales with national advertising campaigns, promotional offers, and sales training programs.

In 1998, mass merchandisers like Wal-Mart, Kmart, Target and Bradlees accounted for 34 percent of all kitchen and table cutlery sales, according to a 1999 Weekly Home Furnishings Newspaper article. Department stores accounted for 33 percent of sales in this category, especially in higher-end products.

Background and Development

The production of quality cutting tools required skilled artisans, most of whom worked in the communities of Sheffield, England and Solingen, Germany. Because the cost to transport the finished product was small, early American efforts could not compete with the quality or price of imported products. The American industry was helped by a 20 percent ad valorem tax imposed in 1792 and an innovative machine-forged knife introduced in 1844. The U.S. industry continued to push for even higher tariffs in the 1890s with some success, but its greatest victory came during World War I.

Between 1914 and 1919, all German products disappeared from the Americas along with most British manufactures. Tariff increases in 1922 solidified the industry gain, ensuring both prosperity for the industry and high consumer prices, although the 1930s saw a shift in demand to lower-priced products.

One of the biggest problems for the industry was the quality of steel available. Sheffield set the standard with its invention of crucible steel in 1740. That process took imported Swedish "blister" steel, known for its consistent quality, and melted it in clay crucibles along with precise amounts of manganese, carbon, and other materials. The result was a steel well-suited for knives and other blades. American firms imported this steel, thereby increasing production costs, until late in the nineteenth century. At the time, American crucible steel proved unreliable and experiments with cold and hot rolled carbon steel produced an inferior product. In 1910 stainless steel in the form of an alloy of cobalt, chromium, and steel made its debut as the "rustless steel," but the lack of accurate measuring instruments, like pyrometers and thermometers, along with the scarcity of skilled annealers to judge the preparation of the metal, often resulted in brittle knives or soft edges.

However, technology and demand continued to evolve, and by 1930 a consistent material became available and competition prompted its almost universal use in many product lines. Half of all cutlery produced during the early 1930s used the new stainless steel mixtures of steel, chromium, and cobalt, molybdenum, silicon, vanadium, or magnesium. Electric smelting furnaces provided the control necessary to produce high-quality steel consistently.

Meanwhile, the American mass production system made inroads into the cutlery plant, displacing expensive, hard-to-find craftsmen like grinders with automated machinery that required no special skills to operate. Generally, firms specialized in a narrow range of products like butchers' knives or ax heads, but with excess manufacturing capacity available, especially just after World War I, many new firms entered the industry and produced cheaper knock-offs of the original products. The competition forced established firms to expand product lines and reduce inventory stock. At the same time, new product designs came and went as technology helped the product evolve.

The industry fought competition and falling prices with manufacturers' associations like the American Cutlers Association, which was founded in 1870 in Greenfield, Connecticut. It established uniform pricing, discount rates, and a method of absorbing freight costs into the price structure. The result was the continued dominance of East Coast firms as the market expanded westward. After fading for a few years, the association reappeared during World War II as a government lobbying group.

Trade unionism began to flourish in the early 1880s as a depression in the industry prompted manufacturers to attempt to reduce wages. In 1884, workers began to strike, although no official union backed the labor action at that time. Unofficially, the Knights of Labor Assembly was commonly accused of inflaming the workers. Despite intense labor organization and decades of strikes, the cutlery manufacturers associations managed to resist unionization and its demands by standardizing wages and hiring policies throughout the industry. The final blow to skilled labor came with industry-wide use of the grinding machine, which made the specialized artisans' skills obsolete.

The post-World War II period saw an influx of inexpensive Japanese and Chinese cutlery, along with a gradual reduction of import tariffs in the 1950s. The traditional centers of skilled trade for the industry gradually eroded as mass production techniques flooded the world markets. In the United States before tariff reductions, 50 domestic manufacturers supplied almost the entire country's demand for shears and scissors. By 1993, only six firms operated in the United States. Traditionally, cutlery manufacturers operated small plants in established rural communities, drawing on a base of family artisans.

In 1933, more than half of all cutlery produced in the United States came from cities of less than 500,000 people; most of those communities had fewer than 2,500 people. However, new industrial strategies gave the advantage to large cities with sizable pools of unskilled labor. Even so, some older firms like those in the Connecticut Valley retained a large portion of the market for certain specialty knives and other quality cutlery.

During the latter part of the twentieth century, small firms continued to join or be absorbed by large, diversified corporations. By 1987, only 61 establishments in the cutlery industry listed any form of cutlery as their primary product, according to the Census of Manufactures. The other 80 produced cutlery as a secondary or even tertiary product line.

The industry saw signs of an upturn during the 1980s, however, as a newly favored domestic lifestyle promised increased demand for products like cutlery, particularly high-tech innovative products that emphasized increased convenience. "Never-sharpen" knife sets with a $50 to $100 price range set the pace, but consumers quickly showed a predilection for mid-range products. For instance, good-quality stainless steel flatware became the preferred alternative to silverware. At the same time, consumers insisted on brand-name products, but refused to pay high-end prices.

The industry reacted by consolidating production with universal products and reducing product lines to specialty, high-value, high-tech merchandise. In 1994, Gillette Company, the largest American razor manufacturer, announced it would reorganize its production arrangements by laying off 2,000 workers, or 6 percent of its work force, while hiring an equivalent number to increase production at other plants around the world. This strategy eliminated multiproduct facilities, dedicating each plant to a specific product. Gillette's chairman and chief executive, Alfred Zeien, claimed the move was a continuation of his efforts to position the company as a global enterprise by producing universally accepted products that could be produced in large numbers and sold worldwide.

Other American cutlery firms became aware of the need to consider their global position with the introduction of ISO 9000 standards. Developed by the International Organization for Standardization, which was formed in Switzerland in 1946, the guidelines sought to reach across political boundaries and homogenize such industrial procedures as design, manufacturing, inspection, packaging, marketing, quality control, and measurement. European industry quickly moved to adopt ISO 9000 as the new international standard, but acceptance was slower in the United States.

Current Conditions

The kitchen and table cutlery sector was considered mature by many industry analysts by the late 1990s, although sales did continue growing, fueled by a renewed interest in gourmet cooking. The number of cooking television shows had risen dramatically during the decade, and buoyed by the booming economy of the late 1990s, consumers bought the brands they saw their favorite television chefs use. Kitchen and cutlery sales also increased as entertaining at home gained popularity in the final years of the decade.

Sales in the U.S. razor market advanced in the late 1990s as well, due to product innovation. Gillette's introduction of the Mach 3 men's razor was the most important development in this sector in the late 1990s, as the triple-bladed razor—comprised of a nondisposable handle and disposable blades—quickly became the best-selling brand in the category. Another key growth area consisted of razors specifically designed for—and marketed to—women.

Cutlery shipments began to wane at the turn of twenty-first century, falling to $1.92 billion in 2000, a level below the 1997 figure of $2.01 billion. The total number of industry employees declined steadily throughout the late 1990s, from 10,301 workers in 1997 to 9,760 workers in 1999. By 2000, employment had fallen to 9,640. The cost of payroll, however, increased from $331 million in 1997 to $332 million in 2000.

Industry Leaders

Most companies in this category were relatively small operations, with larger firms usually producing items in addition to cutlery. Some of the larger firms in the industry group include Gillette Company, BIC and American Safety Razor for the razor segment, Fiskars' Gerber Legendary Blades and Buck Knives for knife manufacturing, and Fiskars Inc. for scissors.

Gillette Company, the largest in the cutlery industry, commanded about 65 percent share of the razor market. Based in Boston, the firm began operations in 1901. Gillette employed 43,100 workers for total sales of $10 billion in 1998. The second largest company in the industry was Scott Fetzer Co. of Westlake, Ohio, with sales revenues of $935 million and 14,500 employees. Alcas Corp. ranked third with sales revenues of $551 million and 600 employees, while Oneida Ltd. was fourth with 1998 sales of $465.9 million and 5,010 employees.

Ranking fifth, BIC Corp of Milford, Connecticut, employed 2,500 workers and rang up sales of $439.3 million in 1998, compared to the $409.2 million in sales its next-biggest competitor, Viskase Companies Inc., reported that year. Nashua, New Hampshire-based Ekco was the seventh-largest company in this industry, with sales of $330 million and 1,070 employees, followed by Mirro Co. with 2,000 employees and sales of $300 million.

Workforce

Employment in the cutlery industry declined from 13,400 in 1972, to 11,200 in 1995, and 9,640 in 1997. Of this total, 7,747 people were production workers in 2000, earning an average wage of $14.57 per hour. The work-week of production workers averaged approximately 37 hours. With 1,965 employees, New York was home to the greatest number in the industry, followed by California with 718 and Pennsylvania with 553.

America and the World

The nature of the typical cutlery firm changed dramatically by the 1990s. The small shop still existed, but was rare. Despite complaints of unfair competition and "dumping" from the traditional centers of the industry, accompanied by demands for ever-higher tariff protection, mass marketing firms in countries like China, Japan, Brazil, and Korea made steady inroads and forced the old firms to reassess their operations.

Many failed, but some, like Westall Richardson of Britain, succeeded. Westall Richardson became Europe's largest producer of kitchen knives by 1987 and captured 33 percent of the British market. Most of its 400 employees were unskilled laborers; the company concentrated its expertise in engineering and marketing.

By the late 1980s, Sheffield, the mecca of the industry, could only support a small number of specialized firms as well as an equally small collection of master cutlers, known as "little Masters." In the late 1980s, one of the few remaining cutlery factories in Sheffield, the Globe Works, received a $1.5 million historic restoration grant. Because the center was built as an integrated factory in 1825, it included facilities for every part of the cutlery manufacturing process, from charcoal-burning furnaces to grinding and finishing workshops.

The grant was used to restore the workshops and manager's residence destroyed in a fire in 1970. The restored works provided a site where the vanishing skills of the little masters could be passed on to later generations of crafters. Plans call for the complex to become a showplace for the industry and a training facility for the British Cutlery and Silverware Association.

Certainly the concept of specialization was a boon for the Swiss firm, Victorinox. The makers of the internationally renowned Swiss Army knife produced at least 4 million of their distinctive pocketknives annually as of 1984. Actual sales figures are a closely guarded secret. In addition to pocketknives, Victorinox makes kitchen and butcher's knives. Even Victorinox, however, felt threatened by foreign competition from mass-production factories.

Cheap knock-offs of the original Swiss pocket knife appeared routinely in Taiwan and Japan; the Far East, West Germany, Austria, and the United States were just as likely to have firms copying and marketing look-alike products. Even the Swiss Helvetia Cross appeared on the copies. Such copyright infringement invariably brought diplomatic protests, but the company found its only effective protection was to clearly brand "Victorinox, Switzerland, Stainless, and Rostfrie" on every knife it made.

Such careful branding, which also included date and place of manufacture, helped create the hobby of pocket knife collecting, which became one of the hottest new crazes in American antique collecting in the 1990s. With each knife clearly identified, value and collectability could be determined and agreed upon easily.

Research and Technology

The twentieth century began with the introduction of stainless steel as the preferred metal in cutlery manufacturing. That led to mass production machinery and plant specialization as the old skills of the trade, geared to old metals, became increasingly obsolete. By the end of the century, stainless steel also faced the possibility of obsolescence as the industry sought high-tech replacement materials for increasingly rare and expensive natural resources like iron and aluminum. The new, computer-designed substances offered the advantages of being stronger, lighter, more durable, and easier to work with, which reduced the skill-level needed to form the finished product.

As Robert Newnham, professor of solid-state science at Pennsylvania State University, told Time magazine, "At one time, we had to settle for whatever Mother Nature gave us. Now if we're not satisfied we can go out and create our own materials." These materials were beginning to appear in 1990 in such products as ceramic scissors that never rusted and never got dull. The United States led the world in materials research for much of the century, but by the last decade the Japanese were forging ahead. While the American preoccupation with military and aerospace applications restricted research for industrial and consumer applications, the Japanese targeted those areas specifically.

Further Reading

Darnay, Arsen J., ed. Manufacturing USA. 5th ed. Detroit: Gale Research, 1996.

Lloyd, Simon. "Gillette's Mach 3 is Brought Back to Earth." Business Review Weekly , 27 August 1999.

Thau, Barbara. "Cutting Edge: Cutlery Gets a Makeover." HFN The Weekly Newspaper for the Home Furnishing Network , 5 July 1999.

United States Census Bureau. "Cutlery and Flatware Manufacturing," October 1999. Available from http://www.census.gov/prod .

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

Werner, Holly M. "Cutlery Brands vs. Private Label." HFN The Weekly Newspaper for the Home Furnishing Network , 4 November 1996.

——. "Regent Sheffield Cutting Loose; Hones Campaign to AddShare, Widen Markets." HFN The Weekly Newspaper for the Home Furnishing Network , 22 July 1996.



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