SIC 3952
LEAD PENCILS, CRAYONS AND ARTISTS' MATERIALS



This category includes establishments primarily engaged in manufacturing lead pencils, pencil leads, and crayons, and materials and equipment for artwork, such as airbrushes, drawing tables and boards, palettes, sketch boxes, pantographs, artists colors and waxes, pyrography goods, drawing inks, and drafting materials. Establishments primarily engaged in manufacturing mechanical pencils are classified in SIC 3951: Pens, Mechanical Pencils, and Parts, and those manufacturing drafting instruments are classified in SIC 3829: Measuring and Controlling Devices, Not Elsewhere Classified.

NAICS Code(s)

337127 (Institutional Furniture Manufacturing)

325998 (All Other Miscellaneous Chemical Product Manufacturing)

339942 (Lead Pencil and Art Good Manufacturing)

Industry Snapshot

According to the U.S. Census Bureau, there were 172 establishments primarily producing pencils and art supplies in the latter part of the 1990s. A work force of 6,543 generated the industry's $1.23 billion in shipments in 2000. General-use pencils, in particular, serve a mature and possibly declining market as computers and other electronic devices continue to serve such traditional school and office functions as test taking and mathematical calculation.

The majority of the industry's sales, about 57 percent in the late 1990s, came from blackboards. Lead pencils and art goods made up an additional 19 percent, artists' equipment made up 14 percent, and the remaining 10 percent of sales came from miscellaneous related goods.

Background and Development

The Smithsonian Institution estimated that America's 100 billionth pencil was produced in 1976, and by the early 1990s, U.S. companies produced the seven-inch-long, two-for-a-quarter writing utensils at the rate of 2.5 billion per year.

The image of pencils was tarnished in 1971, when a child who chewed pencils was found to have lead poisoning, and the media blamed the pencil "lead." Even though pencils were made with graphite, not lead, the story pushed the industry to start a product certification program open to any pencil manufacturer.

In 1988, Congress passed the Labeling of Hazardous Art Materials Act, which required that all art materials be reviewed to determine the potential for causing a chronic hazard and that appropriate warning labels be placed on those materials. The artists' materials law was finalized in 1992 with the U.S. Consumer Product Safety Commission's issuance of definitions of chronic toxicity and the codification of ASTM D-4238 as a mandatory regulation.

When the lead in crayons became an issue in the industry in 1994, the problem was easily solved. Hazardous amounts of lead were found in the yellow and orange color crayons imported from China by Concord Enterprises. In 1994, when the U.S. Consumer Product Safety Commission and Concord Enterprises announced the recall of the crayons, parents were instructed to buy only crayons and children's art materials labeled with "Conforms to ASTM D-4236," indicating that the materials had been approved by a toxicologist and labeled appropriately.

A recall of a different sort occurred in August 1991, when two importers, the Brandy Trading Corp. and Mirage Imports, announced they would no longer sell novelty pencils that resembled hypodermic syringes. The Taiwan-made "Gold Doctor" pencils were sending the wrong message to schoolchildren, parents and teachers complained.

Current Conditions

Industry shipments declined during the late 1990s, from $1.31 billion in 1999 to $1.23 billion in 2000. The industry's 5,094 production workers earned an average hourly wage of $10.57.

The industry trade association, formerly known as the Pencil Makers Association (PMA), merged with the Writing Instruments Manufacturers Association (WIMA) in 1994. WIMA represents pencil manufacturers and makers of markers, mechanical pencils, and pens. By January 2000, WIMA was comprised of just over 140 member companies, including 30 in the pen and pencil industry; its membership produced the majority of U.S. pencil shipments.

Industry Leaders

The largest U.S. concern in this industry is Newell Co., a diversified manufacturer of home and office products. In the early and mid-1990s, Newell acquired three top U.S. pencil and art goods companies: Sanford Corporation, Faber-Castell Corporation, and Empire-Berol Corporation. All three were integrated into Newell's Sanford division, which also includes the art materials brand M. Grumbacher. In 1996 Newell's combined office products sales, which include products outside of this industry, reached $742 million. In 1998, the company purchased the Rotring Group, a manufacturer and supplier of writing instruments, drawing instruments, art materials, and color cosmetic products in Germany. The writing and drawing instruments division of Rotring operates as part of the company's Sanford International division. The art materials division of Rotring operates as part of the company's Sanford North America division. Newell Co. completed a merger with Rubbermaid Incorporated in 1999, and Rubbermaid became a wholly owned subsidiary of Newell. With the merger, Newell changed its name to Newell Rubbermaid Inc. Net sales for Newell and all its subsidiaries for the nine months ending September 30, 1999, totaled $4.7 billion.

Another leading firm in the late 1990s was Binney & Smith of Easton, Pennsylvania, the maker of Crayola crayons and a subsidiary of Hallmark Cards, with estimated sales of $300 million.

America and the World

The United States imported $156.0 million in pencils, crayons, and artists supplies in 1995 and $1.1 billion in 1997, compared to exports of only $62 million and $887 million respectively. Major trading partners include Thailand and China, which are both sources of lowpriced imports in this category. Imports of pencils from these two nations have grown substantially since the 1980s. The U.S. industry has not competed well against the imports, which has led to the shutdown of several domestic manufacturers.

Research and Technology

Responding to rising environmental consciousness on the part of the pencil consumer, Faber-Castell Corporation introduced a pencil made of recycled materials in 1992. Instead of the traditional wood casing, Faber-Castell said its American EcoWriter would offer a pencil shaft made from reprocessed newspapers and cardboard boxes. The project involved developing a material that could be sharpened as easily as a wood pencil. Faber developed the material with Lydall Inc., the company that reprocesses the paper into slats used by Faber in manufacturing. The EcoWriter was Faber-Castell's second environmental contribution, following the American Natural, which was introduced to highlight Faber's use of "sustained yield" cedar supplies (which meant that no more wood would be harvested for Faber products than could be replaced by new planting).

Further Reading

"Amid Furor, Importers Drop Syringe Pencil." New York Times , 11 August, 1991.

FreeEdgarOnline. Newell Company Filings, 1999. Available from www.freeedgar.com .

Newell Co. Annual Report. Freeport, IL: Newell Co., 1997.

United States Census Bureau. 1995 Annual Survey of Manufactures. Washington, DC: GPO, 1997.

——. Lead Pencil and Art Goods Manufacturing . Washington, DC: GPO, 1999.

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

WIMA. "Industry Statistical Info." WIMA—Writing Instrument Manufacturers Association, 2000. Available from http://www.wima.org .

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