Eberhard Faber-Castell (1)

1985 was a difficult year for Eberhard Faber, Inc. Despite an overall increase in sales of nearly 7%, several factors negatively impacted their bottom line, including: increased marketing expenses, price-cutting by the competition, a substantial reduction in inventories, as well as delays in getting new products to market. Despite their losses, the company felt its expenditures laid the foundations for another ten years of increasing earnings, just as it had enjoyed between 1971-1981 after having suffered similar difficulties in 1970.

But for nine consecutive years, there had been a downward-trend in gross profits for sales of wood-cased pencils. By 1985 wood-cased pencils accounted for 20% of business sales, but only 10.5% of the gross profit. In contrast, the company’s line of markers had the highest profit at 37% though they accounted for only 25% of business sales. Unless a dramatic remedy could be found, Eberhard Faber, Inc. considered dropping their core pencil business altogether.

In February, the company announced they were moving its pencil-assembly operations to Nogales, Mexico. By moving its complicated processes off-site, Eberhard Faber, Inc. projected savings of more than one million dollars in manufacturing costs, though most of that recovery wouldn’t be realized until 1987. The move would also mean sending approximately 100 of 250 hourly-wage jobs to Mexico—something that employees, the workers’ union, and local newspapers found disagreeable, to say the least.

The news wasn’t all bad: sales for licensees of Eberhard Faber, Inc. were encouraging, even with significant political and economic upheaval occurring in some of the countries in which they did business. Licensees included AMSPEC in the Philippines, FACELA in El Salvador, LAYCONSA in Peru, Fabrica Argentina de Lapices in Argentina, Izumya Co., Inc. in Japan, Squirell & Cia in Chile, and Escritura Dominicana S.A.

But success for 1986 would depend largely on the move to Mexico; one that would take place in an atmosphere of increased labor-management hostility, and in the midst of a downward-trend in sales of wood-cased pencils.

This entry was posted in Pencils and tagged , . Bookmark the permalink.

One Response to Eberhard Faber-Castell (1)

  1. Matthias says:

    Thank you for shedding more light on this important period of change for Eberhard Faber!
    I think AMPSEC is making Mongols in the Philippines to this day, but despite several efforts over the years I never managed to get my hands on an AMSPEC Mongol (unlike the easy to get Venezuelan version).

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s