Lead Pencils and Art Goods

SIC 3952

Industry report:

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.

According to the U.S. Census Bureau, 135 establishments primarily produced lead pencils and art supplies in the late 2000s. A workforce of 4,800 generated the industry's $1.6 billion in shipments. General-use pencils, in particular, served a mature market as computers and other electronic devices continued to take over such traditional school and office functions as test taking and mathematical calculation. In foreign trade, imports outweighed exports in the industry. According to Supplier Relations US LLC, the United States imported $486.9 million worth of lead pencils and art goods in 2009, whereas U.S. exports in this industry were worth $65.2 million.

In the late 1990s and early 2000s, the majority of the industry's sales--about 57 percent--came from chalkboards. 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. In the mid-2000s, 46 percent of the total amount spent on writing instruments was spent on pencils, of which wood-encased pencils were the largest category.

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. Parents and teachers complained that the Taiwan-made "Gold Doctor" pencils were sending the wrong message to schoolchildren.

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

In 2008, U.S. consumers spent $1.14 billion on 4.8 billion pencils, according to WIMA. Of this total, about 3.6 billion were wood-encased pencils, 670 million were colored pencils, and 540 million were mechanical pencils. Sales for each category were $360 million, $140 million, and $630 million, respectively.

The largest U.S. concern in this industry in 2010 was Atlanta, Georgia-based Newell Rubbermaid, a diversified manufacturer of home and office products. In the 1990s, Newell Rubbermaid 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 included the art materials brand M. Grumbacher. 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 company underwent a major restructuring in 2006. In 2009, with 19,500 employees, sales for Newell Rubbermaid and all its subsidiaries totaled $5.5 billion.

The leading crayon maker changed its name in 2007 from Binney & Smith to Crayola LLC. The company, located in Easton, Pennsylvania, remained a subsidiary of Hallmark Cards, which purchased Binney & Smith in 1984. Crayola LLC had estimated annual sales of $62.5 million in the mid-2000s.

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