Cutlery

SIC 3421

Companies in this industry

Industry report:

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 in 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 hair clippers for animal use are classified 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.

Industry Snapshot

Rated in 1872 by J.B. Hyde as one of the "great industries" of the United States, cutlery manufacturing has experienced significant changes. Instead of small craft shops producing innovative but simple utensils, cutlery firms in the twenty-first century are more likely to mass produce one or two extremely simple products that can be sold anywhere in the world. Sales of various cutlery products showed steady growth throughout the twentieth century and the first decade of the 2000s, increasing from $37,002 in 1921 to $1.9 billion in 2005 and $2.1 billion in 2009, according to the U.S. Census Bureau.

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

Background and Development

The production of quality cutting tools in the eighteenth and nineteenth centuries 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 U.S. efforts could not compete with the quality or price of imported products. The U.S. 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 had some success as it continued to push for even higher tariffs in the 1890s, but its greatest victory came during World War I.

Between 1914 and 1919, all German and most British products disappeared from the Americas. 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 melted imported Swedish "blister" steel, known for its consistent quality, in clay crucibles along with precise amounts of manganese, carbon, and other materials. The result was steel that was well suited for knives and other blades. U.S. firms imported this steel, which increased production costs, until late in the nineteenth century. At the time, U.S. 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. 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 and chromium, plus cobalt, molybdenum, silicon, vanadium, or magnesium. Electric smelting furnaces provided the control necessary to produce high-quality steel consistently.

Meanwhile, the U.S. 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 inexpensive replicas of the original products. The competition forced established firms to expand product lines and reduce inventory while technology helped the product evolve into designs that came and went.

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 unions 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. Before tariff reductions, 50 U.S. manufacturers supplied almost the entire country's demand for shears and scissors, but 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 U.S. cutlery was produced in cities with populations of less than 500,000, and 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 late 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. 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 U.S. razor manufacturer, announced it would reorganize production with the layoff of 2,000 employees, or 6 percent of its workforce, while hiring an equivalent number to increase production at other plants around the world. This strategy eliminated multi-product facilities, dedicating each plant to a specific product. Gillette's Chairman and Chief Executive Officer 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 U.S. 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 attempted to reach across political boundaries and homogenize industrial procedures such as design, manufacturing, inspection, packaging, marketing, quality control, and measurement. The European industry quickly moved to adopt ISO 9000 as the new international standard, but acceptance was slower in the United States.

The kitchen and table cutlery sector was considered mature by the late 1990s by many industry analysts, although sales continued to grow, fueled by a renewed interest in gourmet cooking. The number of television cooking shows rose 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.

Cutlery shipments began to diminish at the start of twenty-first century, falling to $1.92 billion in 2000, below the 1997 figure of $2.01 billion. This total fluctuated very little through the early 2000s, reaching almost $1.93 billion in 2005. Mass merchandisers were the most popular place to buy various cutlery items. Specialty and quality items, almost regardless of brand name, topped sales in individual categories, and consumers most often bought products because of need, either by type or by performance.

The three most commonly owned knives in the mid-2000s were carving knives, bread knives, and paring knives. Continuing the late 1990s and early 2000s trends of cooking shows, manufacturers in this sector of the industry increasingly turned to celebrity chefs to endorse products. As HFN reported, the endorsements offered "a new twist in an industry where the product hasn't changed much in more than 3,000 years."

Sales in the U.S. razor market advanced due to product innovation. Gillette's introduction of the Mach 3 men's razor was the most important development in this sector, as the triple-blade razor, which was comprised of a non-disposable handle and disposable blades, quickly became the best-selling brand in the category, earning $9 billion by 2004.

Another piece of good news for cutlery manufacturers in the late 2000s was the falling price of steel in 2009, averaging roughly $502 per metric ton, compared to $854 per metric ton in 2008. Steel prices would continue to trend downward, averaging about $485 per metric ton in 2010.

Current Conditions

According to industry statistics from Dun & Bradstreet, an estimated 773 establishments manufactured cutlery in 2010. Together these firms generated $457.2 million in sales and employed 5,826 workers. Texas had the most establishments in the industry, with 83; California had 71, Florida 53, and Ohio 36. In terms of revenues for cutlery manufacturing sales, New York was number one, with $107.2 million, followed by Oregon with $64.3 million and Connecticut with $63.5 million.

In 2010. 141 establishments claimed cutlery as their main product, with a total of $198.9 million in sales and 1,884 employees. Based on market share, manufacturers of knives, including butcher, hunting, and pocket, and makers of knife blades and blanks were the second largest category, accounting for a total of $88.6 million in sales. Scissors made up the third largest category, where sales totaled $70.6 million. Smaller categories in terms of revenues included manufacturers of swords, razor blades and razors, hand shears, and table cutlery.

Industry Leaders

Most companies in this category were relatively small operations, with larger firms usually producing other items besides cutlery. In the late twentieth and early twenty-first century, Gillette Company was a leader in the razor portion of the market, commanding about 65 percent of the razor market. Based in Boston, the firm began operations in 1901. Gillette was acquired by Cincinnati-based giant Procter & Gamble in 2005. As the owner of several billion-dollar brands, including Mach3 and Gillette, Proctor & Gamble reported sales of $82.5 billion in 2010 with 129,000 employees. The much smaller and privately held Oneida Ltd., of Oneida, New York, which emerged from bankruptcy in 2006, was a top maker of flatware and tabletop items with operations in four countries other than the United States, including Canada, Mexico, Australia, and the UK.

Workforce

According to the U.S. Census Bureau, employment in the cutlery industry, including kitchen utensil, pot, and pan manufacturing, declined from 13,083 in 2002 to 7,250 in 2005. By 2009 this figure had dropped to 6,885. Of this total, 74 percent were production workers earning an average wage of $20.13 per hour. According to Dun & Bradstreet, Massachusetts was home to the most employees in the cutlery industry in 2010, followed by New York and Pennsylvania.

America and the World

The nature of the typical cutlery firm experienced dramatic changes. In the early twenty-first century, the small shop still existed, but it was rare. Despite complaints of unfair competition and "dumping" from the traditional centers of the industry, which were accompanied by demands for ever-higher tariff protection, mass production firms in countries like China, Japan, Brazil, and Korea made steady inroads and forced the old firms to reassess their operations.

Many firms 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 support only a small number of specialized firms and 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 small masters could be passed on to later generations of crafters.

Certainly, the concept of specialization was a boon for Victorinox in Switzerland. 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 also 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, and 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 pocketknife collecting. 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 level of skill needed to form the finished product.

The United States led the world in materials research for much of the century, but by the 1990s the Japanese were pulling ahead. While the U.S. preoccupation with military and aerospace applications restricted research for industrial and consumer applications, the Japanese specifically targeted those areas.

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