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GRAHAM FUDGER

PROFILE
After 400 years of production the lead pencil is the ultimate lowtech commodity. But far from being obsolete, some eight billion
are manufactured a year – 1.8 billion of them by German
stationery giant Faber-Castell, a family firm over 240 years old.

Deep in the history of lead
who lives between his hunting lodge in Stein
and the Hamptons. Lothar studied business in
ount Anton Wolfgang Graf von Faber- London and Paris and had a global vision for
Castell presides over the second-oldest Faber-Castell that is still being realised today.
By embossing the family name on the comindustrial company in the world – one
that has been in the same family for eight pany’s hexagonal pencils, Lothar ‘created the
generations. Now a global multinational spe- first branded good in the industry and made
cialising in lead pencils, it has annual sales of the name Faber synonymous with the pencil’,
just over #300 million but is starting to see a says the current Count. The impact of this was
gradual stagnation faced with severe competi- felt around the world, as unlike other companies with global goals at the time, the first
tion from low-cost foreign makers.
The solution is clear – to gradually move subsidiary was set up in New York rather than
into the premium-priced sector with luxury a European city. In fact the US market was so
and innovation, and tap new potential in promising that in 1841, Lothar’s brother Eberdeveloping markets. As the Count says: “Asia hard was sent there to branch out on his own,
Pacific is the market for the future of forming the Eberhard Faber company.
Lothar’s oldest granddaughter, Ottilie von
Faber-Castell.”
The company currently makes around Faber, was the Count’s way into the company.
She married his grandfa2,000 products and sales are
ther, Count Alexander
split half and half between corBy embossing
Castell. And as both famiporate and the consumer. Now
lies had it written in their
only 37 per cent of sales are the
the family
wills that their surnames
traditional wood-cased pencil
name on the
should be retained on
and the Count controls 15 per
marriage, the name Fabercent of the global marketplace, company’s hexagonal
was born.
churning out 1.8 billion pencils
pencils, Lothar created Castell
Control of the company
a year from five factories.
passed on to the Count’s
In fact Faber-Castell is the the first branded good
father, Roland, in 1928; but,
world’s largest and oldest in the industry and
echoing the origins of the
manufacturer of brand-name
company,
the
Count’s
writing instruments. It has made the name Faber
own corporate background
been making pencils in Stein, synonymous with
began in New York, where
Germany, since 1761, which
he worked for investment
also makes it the world’s sec- the pencil.
banking behemoth Credit
ond-oldest industrial company
after tableware brand Villeroy & Boch, 13 Suisse First Boston. Although he had done an
apprenticeship with Faber-Castell in 1969,
years its senior.
Famous for its pencils and dominant in the when he was 28, he had decided against stayjunior market, it has in recent years sought to ing with the company at the time. But when
change itself into a purveyor of luxury goods. his father fell sick eight years later, he felt
The Count’s strategy has been to allow chil- compelled to take on a permanent post. “I diddren’s demand to pay the bills and gradually n’t want to go back to the company because I
knew the risks,” says the Count, explaining
enter the new market.
It is a bold gamble in modern times but not that being a family member made it harder to
in the context of the company’s history. Faber- implement new ideas as it led to arguments
Castell dates back over 240 years to the times with his father.
The Count finally obtained free rein of
of Napoleon. In 1761 a cabinet-maker called
Kasper Faber founded the company in Stein Faber-Castell when his father died in 1978
after being refused permission to manufacture and his first goal was to bring the ageing compencils in nearby Nuremberg. The company pany up to scratch. “I tried to streamline and
remained a small business with a workforce of modernise the product range and become
around 70 people until Lothar, a fourth-gener- more international instead of heavily dependation Faber family member, took charge. “He ing on the German market,” he says. Faced
brought the company to fame,” says the with tough competition from Far Eastern
Count, a dashing and youthful 61-year-old manufacturers, the Count’s strategy could

By Christian Sylt in Frankfurt

C

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EUROBUSINESS NOVEMBER 2002

The Count in his castle. Count Faber-Castell looks down on his
rivals from the company’s castle in Germany.

PROFILE

have been considered heresy in his father’s and that is quality control. Each pencil is
day. “At the beginning of the 1980s I tried to examined by eye and even a slight flaw in the
move away from the black lead pencil and go paint can result in rejection.
Next the pencils are loaded by hand on to
more into colouring,” he says. This proved to
be a prudent decision and one which has racks that resemble an upside-down Bavarian
helped Faber-Castell to weather several subse- forest, and then comes the dipping. Each rack
is suspended over a lake of thick black paint
quent recessions.
The Count had a two-pronged plan to take and dipped with painstaking precision so as to
the company into new markets that were coat the very top of the pencil in a millimetre
previously unchartered territory for a pencil of black and give it an attractive rounded
company – children’s stationery and luxury finish. As a last step, the brand name and
goods. Manufacturing products for children hardness are imprinted, and the pencils are
looks after the long-term security of the com- usually sharpened ready for use.
The production plant in Stein has
pany because, as the Count says: “These are
been replicated in Costa Rica,
the adults of tomorrow and
The concept Indonesia, China and Brazil. The
Faber-Castell would like to be
facility is a showpiece
their companion for life.” This
of the pencil Brazilian
and the family’s largest, employstrategy seems to have paid off,
may be over ing 3,000 people and producing
since mentioning the name
1.5 billion wood-cased pencils a
‘Faber-Castell’ evokes memo- 400 years old but
year. In Peru, Faber has a factory
ries of schoolrooms and pencil
cases containing the company’s the Count is still not that makes markers and ballpoint pens, and in Malaysia its
green-and-gold creations.
satisfied. He says
plant near Kuala Lumpur has
The production line at the
390 employees and is the largest
main factory in Stein runs like that Faber-Castell
producer in the world of naturalclockwork. In a patented has recently been
rubber erasers, making more
process, slats of pinkish Calidiscussing
how
to
than 280 million units a year and
fornian cedar wood, cut with
even supplying most of Fabernine grooves, are drizzled with improve the leads
Castell’s competitors.
glue before graphite leads are and shape of the
The majority of the graphite
delicately deposited into each
is sourced locally to each factogroove. Next, the other half of pencil even further.
ry and the wood comes mainly
the identically grooved and
glued slat is pressed precisely over the first, from Argentina or California. But the Count is
sandwiching the leads together. A powerful eager to press the point that it is on an environpress ensures that the two are firmly bonded mentally friendly footing. The paint used on
and the leads will neither break nor fall out, the pencils contains no acetone and is waterbased, which Faber-Castell claims is a world
even if the pencil is dropped.
The next stage of the process involves a first. And up to two million saplings are plantmilling machine cutting the slats into nine ed every year to ensure a continuous supply of
pencils, either round or hexagonal. They are trees from the whole of the harvested area. In
then given six coats of paint and two of glossy this way Faber-Castell regenerates 20
varnish and between each coat the pencils are cubic metres of timber every hour for use in
piled up in mounds to dry. The entire process pencil production.
Facing the German factory is the Schloss
is almost fully automatic but there is one area
that Faber-Castell will not leave to machines Stein, the Faber-Castell ancestral castle,

The Perfect Pencil sits in the glory of its opulent pencil case.

which has always been a family home with the
exception of one interruption when it was
commandeered by the German army during
World War II. At the time pencil production
had virtually stopped – there were severe
shortages of wood and a hugely depleted
workforce. Some 242 members of the FaberCastell workforce were killed during the war.
Unsurprisingly production came to a complete standstill in 1945 when hostilities ended.
The Nuremberg war crimes tribunal was
held nearby and lawyers and foreign journalists, including John Steinbeck and Ernest
Hemingway, were put up in the castle.
When the shadow of war was removed, the
family started rebuilding the company. There
was huge demand for pencils at the time, as
the world seemed to have virtually run out and
these sales, at relatively high prices, enabled
the company to quickly recover.
Now memories of the war are long gone
and the latest fight is for global market share.
The secret weapon in that battle is the
workforce. A distinctly family feel pervades
Faber-Castell’s 5,500-strong workforce. Paternalism reigns and is extended to the overseas
plants every major global manufacturer must
now have to stay in business.
Quality is what Count Faber-Castell is all
about. He says that although the company has
the capacity to manufacture up to two billion
pencils a year, he would rather sell less volume at a better quality. “Maybe we would be
better off in 10 years only selling 1.2 billion
but adding value to the unit,” he says. Even
pencils have room for improvement and the
Count proved this for the millennium.
Although relatively small beer in sales
terms, he invested in a three-sided silver
coloured pencil called ‘Grip 2000’. Dots of
paint provide a grip zone. The bumps are
printed on in a temperature-controlled room
in the factory and details of the patented
procedure are jealously guarded. The pencils
are made in a fatter size for little hands
and are said to make handwriting easier for
beginners, which complements the other
half of the Count’s strategy to corner the
children’s market.
By reinventing the wheel the Count’s creation has hauled in five international design
awards, including Business Week’s Best New
Product, for an item that costs 75 cents. He
says: “If you had asked me 20 years ago
whether we could do this, I would have said it
was impossible,” he says rhetorically, adding:
“What can you do with a pencil?”
The Count says that in 2002, Faber-Castell
plans to sell only 200,000 units of the Grip
2000, which amounts to revenues of around
#150,000. Consumed by his passion for perfection, he claims not to be concerned with
increasing sales to the half-a-million mark but
would rather ‘focus on interesting niches’ of
developing pencils even further.
The concept of the pencil may be over 400
years old but the Count is still not satisfied.
He says that Faber-Castell has recently been
discussing how to improve the leads and the
shape of the pencil even further. And

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PROFILE
Perfect Pencil has been produced with simplicity in mind and solves the age-old problem
of a blunt pencil and no sharpener ready to
hand. It is a short wooden pencil with an
extender in sterling silver, and an inbuilt
sharpener and eraser.
An update to the Perfect Pencil was released
in 2001 to mark the company’s 240th anniversary. For #9,000 the extender was made of
18-carat white gold with three diamonds on
the cap to symbolise the third millennium. But
aside from these aesthetic embellishments, the
pencil’s principle remains the same as its standard counterpart. Only 99 of these prestigious
pencils have been produced for sale world-

company a few years ago because the
increased demands would have ‘taken time
away from developing the business’ and the
pressure to show short-term earnings per
share may have prejudiced the possibility of
‘pushing long-term strategies through, which
you can do as a privately-held company’.
These two foundations of the future of
Faber-Castell – children’s stationery and luxury goods – are as close to the Count’s heart as
a pencil is to his pocket. And while these barriers won’t disappear as long as the Count is as
committed, he doesn’t discount the possibility
of floating on the stock market at some point
within the next five years. “That’s the reason

Mentioning the name ‘Faber-Castell’ evokes memories of
schoolrooms and pencil cases containing the company’s greenand-gold creations.

following the company’s stylistic standards set by the Grip 2000, the next
generation of pencils will have as much
emphasis on fun as on functionality. “We have
some interesting ideas about creating special
effects with the leads and making the pencils
more attractive,” he says. So for Faber-Castell
at least, money does appear to grow on trees
and the sales prove this point.
Competition in the pencil industry is close.
Staedtler has been established in Germany for
well over a century. Founded in 1865, it makes
360 million pencils a year in Germany alone,
and regards itself as Europe’s largest manufacturer of blacklead and coloured pencils.
The trick up Staedtler’s sleeve was the
invention of its own method for producing
extra-thin leads used in mechanical pencils,
and it is the only manufacturer of these in
Europe. The company had sales of #272 million for 2000.
The pencil may have been around for 400
years but the Count is not complacent that it
will survive as a writing instrument forever. If
it is ever supplanted, he claims Faber-Castell
will be ready. For now, turning the pencil into
a luxury item will suffice.
The Count’s objective has been to become a
premium brand and his new eponymous Graf
von Faber Castell collection epitomises this.
A speciality pencil of 100 years’ pedigree
was the inspiration for Faber-Castell’s luxury
line. The Count kept it in his writing-desk
drawer, which he opened every day, and in
1998 he decided that Faber-Castell’s premium
products should take their lead from the
bygone age when that pencil was produced.
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But he was not content with simply taking historic models from the last century and using
them as templates for today. For this collection of pencils, pens and accessories to top off
an already esteemed brand, the materials had
to be of the highest quality.
The pocket pencil takes its lead from the
tradition of 19th century wallet pencils. It is
short enough to fit neatly into the pocket of
any suit or wallet, but by extending it with a
tubular grip it becomes long enough to write
with. Of course, Graf’s pencil-extenders are
silver-plated and the pencils are produced
from Californian cedar. They are kept with a
solid silver sharpener in a pencil case that
schoolkids could easily use to arouse envy in
their teachers.
The oblong case looks more like a luxurious vanity box with its silver-plated lid and
ribbed alderwood frame. And it’s easy to see
why Faber-Castell’s brand awareness level
exceeds 90 per cent in Germany – even
though this is a premium product, its emblem
of two knights jousting with huge pencils still
adorns the case.
Pencils may have their place in warfare at
Faber-Castell, but they say that the pen is
mightier than the sword and the Graf collection
pays homage to this. The Graf fountain pen features an 18-carat gold nib and like the Graf
roller-ball pens, it has a solid-silver cap and a
barrel finished in either ebony or pernambuco,
from which violin bows are produced.
The jewel of the collection is unabashedly
called the Perfect Pencil, and once and for all
puts paid to any critics who argue that the concept of a luxury pencil is an oxymoron. The

wide, but in case this supply runs dry,
Faber-Castell has created a stainless steel version with diamonds in a limited production
run of only 240 – one for each year of the
company’s history.
A product of this business has been the
release of a range of leather goods and pencils
and pens with sophisticated stainless steel and
woven cable shafts developed in conjunction
with Porsche Design. As the Count says:
“Faber-Castell has the image of being high
quality and expensive. A pencil is very much
influenced by the quality of the lead, its finish
and by the wood. So if you choose a FaberCastell, it has the best possible wood, six to
eight coatings of paint, a stamping which is
attractive, and the tips of its pencils are dipped
in thick black paint before being shipped.”
With a firm
grip
on
its
marketplace,
it
is perhaps a
surprise
that
Faber-Castell is
still in private
hands.
The
Count says that
he
turned
down
an
opportunity
to float the

we changed into an AG [public limited company], so I could go to the stock market at any
time,” he says.
At 61 years old, the Count may soon have to
search for a successor to take his plan to
fruition. There’s no telling where he will take
his company next. He’s succeeded in polishing up Faber-Castell’s dusty industrial image
and brought it into the new millennium.
To celebrate its 240th anniversary, he
commissioned a fashion collection from London-based designer Arkadius, and in one
creation, 6,000 pencils were hand-drilled and
sewn on to a pair of trousers.
As befits the world’s largest manufacturer
of wood-cased pencils, sitting in front of the
Faber-Castell castle is the world’s largest pencil, which measures 12 metres long and
weighs 1.2 tons. It is a giant version of the
Grip pencil and not to do anything by halves,
it actually has a genuine graphite lead centre.
Other forays for Faber-Castell include
producing cosmetic pencils, a software consulting firm, a property development concern
and a wine label. Next year the Count is even
taking the ultimate step to marry the old with
the new, as touch pens for PDAs will feature
in its range for the first time. So the days of
pencils without lead aren’t far off.
But the future of the company probably lies
in the children’s marketplace.
The Count debuted FaberCastell’s ‘Playing & Learning’
line of markers and crayons
for children in 1998. The
following year the company’s US subsidiary
purchased Creativity
for Kids, a firm that
sells design activity
kits for young
children.
The
Count now plans to
produce these items and
coloured pencils for children in developing regions like Latin America and Asia
Pacific, where the brand values of FaberCastell are largely untapped and the need for
EB
education is constantly increasing.
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