Faber-Castell
An eight-generation family firm shows how innovation need never stop
Sep 16th 2010 | Nuremberg

ULYSSES GRANT, an American general, jotted down battle plans with one. Otto von Bismarck, a Prussian chancellor, used his to tamp down the tobacco in his pipe. Vincent van Gogh used one to “draw a woman sewing” and found they “produce a marvellous black and are very agreeable to work with.”
Craftsmen have made pencils in Stein, near Nuremberg, for nearly four centuries. Faber-Castell, the world’s biggest branded pencil manufacturer, has done so since 1761. Its task is daunting: to improve a product that pencil-lovers insist has been perfect for well over a century. Among these is Count Anton Wolfgang von Faber-Castell, a dapper former investment banker and the eighth member of his family to run the firm. “At my home I have a Faber-Castell pencil I bought from an antique dealer that must be from 1890 or 1895,” he says. “It writes perfectly, even after all these years. That’s the fantastic thing with a pencil.”
Many people thought that pencils would become obsolete in the computer age, yet sales continue to grow. Perhaps 15 billion-20 billion are made each year, roughly half of them in China. Faber-Castell produces about 2.2 billion. They are cheap, sturdy and popular in schools, especially in poor countries. As countries grow richer, children’s pencil cases grow fatter, though only up to a point. Sales of pencils in most European countries are growing only slowly, if at all.
Faber-Castell, however, has kept growing despite the recession. In its past financial year sales increased by almost 6%. The firm does well in emerging markets with vast numbers of bright-eyed schoolchildren. It is also grabbing market share in the rich world by making its pencils better. This is nothing new for Faber-Castell. Lothar von Faber, the great-grandson of the company’s founder, took over in 1839 and invented the hexagonal pencil. By cutting the edges off a cylindrical one, he stopped it from rolling off a table.
Faber-Castell’s second big innovation was stolen. In 1875 America’s Supreme Court ruled that Faber was entitled to put rubber erasers onto the back of its pencils, although another inventor had already patented the idea. The court felt that the idea was too obvious to patent.
Since then, years of research have gone into making leads firmer and finding the type of wood that best protects them from breaking when dropped. But for scribblers, three ideas stand out. First, Faber-Castell started using water-based, environmentally friendly paints in the 1990s. Teachers and parents, who used to worry that children would swallow toxins while chewing their pencils, would have preferred plain wooden ones. But children love bright colours. So Count Faber-Castell reworked his entire process to accommodate new paints without harmful chemicals. Teachers in Europe now urge parents to buy them by name.
The count’s second innovation was to introduce an ergonomic triangular shape that is popular with children. His third was to add rubbery dots that keep the pencils from slipping out of sweaty little hands.
As for the future, Count Faber-Castell still sees scope for further refinement. Pencils could perhaps be made tougher, or easier on the eye. But the basic design—graphite encased in wood—is unlikely to change much in the next ten to 15 years, he says. Asked about the next 100, he laughs. That may be for another generation to decide.
Business
Latest chapter written on pencils
By Paul Tyrrell
Published: August 26 2010 23:42 | Last updated: August 26 2010 23:42
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Pencil push: Feber-Castell’s base in Stein, Germany |
On a cloudless summer day in Stein, Germany, the headquarters of Faber-Castell, the world’s biggest pencil manufacturer, is baking in the 30˚C heat. Yet in one building in particular, the air is even hotter. Here, thousands of triangular pencils are having a special finish applied: rows of tiny dots designed to improve grip.
The dots feel like rubber, but they are actually a water-based paint. “At first we couldn’t get the paint to stick to the surface of the pencils reliably,” says our guide, “but through trial and error we solved this problem by raising the temperature of the production line.”
Launched in 2000, the innovation scooped four international design awards in its first year.
It is an encouraging tale for any manufacturer: even if your product is ubiquitous, and has not changed much in centuries, it can still be improved.
Count Anton-Wolfgang von Faber-Castell, the eighth member of his family to run the company, has a long history of innovations to live up to. Founded in 1761 by Kaspar Faber, a cabinet-maker who made pencils on the side, the aim was to create the first “quality pencil” in Germany.
Faber’s descendants improved the production process – for example, by milling graphite more finely than rivals, to create leads that were highly resistant to breakage. And they diversified into all sorts of other products, such as coloured pencils for artists, and cosmetic products, such as eye liner.
Count Anton-Wolfgang initiated a key process innovation in the 1980s when he bought about 10,000 hectares of savannah in south-east Brazil and sowed it with fast-growing Caribbean pine trees. This enabled the company to become self-sufficient in timber.
The company produces about 2bn pencils a year at 15 facilities worldwide.
The difficult question for Count Anton-Wolfgang is: what next? “There’s not much room for big leaps of innovation in our industry any more,” he admits, though “the design of the pencil can still be optimised.”
The company stimulates incremental innovation by giving regional managers the freedom to respond to specific local demands and cultural preferences, and by listening to focus groups – the R&D team meets groups of artists twice a year, for example, to assess how its range of art pencils might be improved. “We give people in different regions the space to think about subjects that would never occur to us at the HQ in Stein,” he says.
However, it’s the “new luxury” phenomenon that has proven a more significant source of growth for Faber-Castell in recent years. As US consultants Michael Silverstein and Neil Fiske pointed out in their 2003 book Trading Up, consumers are now willing to pay a premium for things that are “demonstrably superior and pleasingly different”.
Coffee chain Starbucks proved the point by turning coffee-drinking into a gourmet experience for many consumers. Callaway, the golf equipment maker, found that by styling its equipment so that players “feel rich”, as well as concentrating on technical superiority, it could charge 13 times more than the average for a set of clubs.
Count Anton-Wolfgang’s equivalent initiative is the Graf von Faber-Castell range of luxury writing instruments. Launched in 1996, its flagship product, the “Perfect Pencil”, has a barrel made of Californian cedar, replaceable erasers, a sharpener integrated into the platinum-plated cap and a price tag in the UK of £185 ($250 in the US). The range has grown in popularity, and in Europe, it now accounts for a “double-digit percentage” of the company’s turnover, and has concessions at several big department stores – the latest, at London’s Fortnum & Mason, opened in July.
Faber-Castell has always made a point of distinguishing its premium status. In 1855, its then-owner, Lothar von Faber, wrote to his mother that he was the only pencil maker who recognised the “value of tradition”. However, cautions Count Anton-Wolfgang, clever marketing is never enough: “A unique past will only help your brand if you have credible performance today.”
Copyright The Financial Times Limited 2010.
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