By April of 1987 the assembly plant in Mexico was running at about 50% for pencil production, causing shipments to lag some 24% behind company projections. The top two priorities then for Eberhard Faber, Inc., were to bring the Mexican operation up to speed, and to bolster sales. Further, new programs were being implemented to manage inventory: private label and specialty items were identified and cut.
Meanwhile, personnel from the Mountaintop plant were sent to Nogales on special assignments. Upon returning, there were reports of “operating inadequacies” and a lack of proper direction from the Nogales management. In response, the company began interviewing for management positions and sent temporary, supplemental crew to expedite training and to help bring production up to company forecasts.
But the pressure of competitive pricing continued unabated. Without having moved the company’s Mountaintop costs to Mexico, it would likely have been impossible for Eberhard Faber, Inc., to remain in business.
Another concern about the move to Nogales was one of public perception. Consumers might think, erroneously, that Eberhard Faber products were now being made in Mexico—when they were only being assembled there. Even so, “U.S.A.” could no longer be stamped on their products. The parts supplied by Eberhard Faber were as high in quality as they had ever been, but the perception of their pencils as being “made in Mexico” could (and perhaps did) impact consumer confidence.
2 Blackwing pencils, one with “U.S.A.” (top) and one without.
By June 1st the Mexican plant was running smoothly in the marker area but pencil production was still below par, resulting in a bottom-line loss for the first four months of 1987. While conditions began to steadily improve, the continued failure in Mexico weighed heavily on morale. A major technical issue developed, involving the running and maintenance of their two Zuber machines for pencil production—one of which was in need of a substantial overhaul. While the production issues, related to varnishing and finishing, were relatively minor, quality control standards were not being met.
To make up for the loss in production, Eberhard Faber, Inc., negotiated with other pencil manufacturers to supply some popular pencil lines that were heavily backordered, such as the Marigold. While this served as a stop-gap, the additional costs cancelled-out any savings the Mexican operation was providing. Further, by the end of the year the Mountaintop plant would cease manufacturing leads for their Venezuelan vendor; the company prepared to sell its shares of Eberhard Faber de Venezuela.
The tipping point had come.
A collection of trademarks from Eberhard Faber’s Colombian licensee.