Sheaffer Pen Corporation

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Sheaffer Pen Corporation

301 Avenue H
Fort Madison, Iowa 52627
U.S.A.
Telephone: (319) 372-3300
Fax: (319) 372-7539
Web site: http://www.sheaffer.com

Wholly Owned Subsidiary of Bic USA Inc.
Incorporated: 1913 as W.A. Sheaffer Pen Company
Employees: 250
Sales: $38.6 million (est.)
NAIC: 339942 Lead Pencil and Art Good Manufacturing; 339941 Pen and Mechanical Pencil Manufacturing

The Sheaffer Pen Corporation is a leading maker of pens, particularly luxury fountain pens. The Sheaffer brand hails back to the early 20th century, and it remains one of the best known fine pen brands in the United States and abroad. The company was controlled by three generations of its founder's family until 1966, when it was bought by a conglomerate. Since then, Sheaffer has gone through several owners, and is now wholly owned by Bic USA Inc., itself a subsidiary of the French manufacturer Societé BIC. Sheaffer makes several lines of moderately priced pens, including its EVT, Sentinel, and Award brands, and its Sheaffer Gift Collection. It also makes several lines of fine pens, which sell for thousands of dollars. Its White Dot line is its storied luxury brand, and Sheaffer also sells luxury pens under the names Prelude, Agio, Javelin, Valor, and others. Sheaffer manufactures calligraphy pens and kits as well. Other lines include ballpoint pen refills; roller ball refills; highlighter refills; Skrip ink, in both bottles and cartridges; and erasers.

BUILDING A BETTER PEN

Sheaffer Pen Corp. was founded by Walter A. Sheaffer, an Iowa jeweler, in 1912. Sheaffer was born in Bloom-field, Iowa, in 1867, and brought up in the jewelry trade. He worked at jewelry stores in Iowa and Missouri as a teenager, and then at the age of 20 became a partner in his father's jewelry store in Bloomfield. Sheaffer then started his own jewelry store in Fort Madison, Iowa. He was fascinated by fountain pens, and he began experimenting in the back of his jewelry shop, trying to devise a better filling system. Fountain pens before the 1890s were usually filled with ink by means of a fragile glass dropper. This system was both inconvenient and messy, and several inventors had developed improvements on it by the turn of the century. Around the time Sheaffer was experimenting, pens were filled by various more or less complicated systems employing syringes, the vacuum principle, or buttons that sometimes had to be turned or pressed with a coin. Walter Sheaffer came up with a simple and elegant filling system that he patented in 1907. It employed a lever on the side of the pen, which, when depressed, caused ink to rise up from the ink bottle into the pen. Sheaffer's lever system was easy to use and clean, a big advantage, and the enclosed lever did not detract from the appearance of the pen. Sheaffer's pens were at first just a sideline, but in 1912, when he was in his mid-40s and the father of a family, he decided to risk all and go into pens full time. He raised $35,000 to enable him to manufacture his pens on a large scale. The company incorporated in 1913 as the W.A. Sheaffer Pen Co.

Sheaffer poured money into advertising the pens, which were cast as modern, big-city, big-business writing instruments. Growth was quick, and by 1917, when Sheaffer writing instruments were advertised as "For Uncle Sam's Fighting Boys," the company's annual pen production had reached 100,000 units. In the 1920s the company experimented with new plastics, then very much in vogue, and launched its own ink brand, Skrip, in 1922. Sheaffer always stood for quality, and one of Walter Sheaffer's maxims was that it was "better to sell one pen for $10 than ten pens for $1." The company introduced the Lifetime pen, a luxury model, in 1920, and in 1924 modified it to include a signature white dot on the cap. The White Dot line continued as the most high-priced and sought-after Sheaffer model, both in vintage pens and new releases. These sell in the 2000s for thousands of dollars. In 1928, Sheaffer took the company public on the New York Stock Exchange. By that time, the company had captured some 25 percent of the domestic pen market. Sheaffer was one of the so-called Big Four pen makers, along with Parker, Waterman, and Wahl Eversharp. Between 1913 and 1925, the company had grown some 2000 percent, while its rivals had to be satisfied with mere 400 percent growth.

THE DEPRESSION YEARS AND THE BIRTH OF THE BALL POINT

In 1929, Sheaffer told the Wall Street Journal (December 20, 1929) that the past two months had been "the best in the history of his company," and that the "outlook was very bright." For many manufacturers, the impact of the October stock exchange crash and ensuing Great Depression was not felt for a few more months yet. Sheaffer Pen was a rarity in that it actually continued to prosper as the Depression dragged much of the country down. Sheaffer claimed that the profit-sharing system he had instituted with his employees was responsible for the company's good fortune. Perhaps Sheaffer was also insulated from the worst effects of the Depression because much of its business was in luxury goods. Whatever the reason, Sheaffer saw significant sales gains in the 1930s (for example, sales of 50 percent greater in 1934 than 1933), and employees received bonuses regularly throughout the decade of the 1930s.

During World War II, pens sold well, as they were a popular gift for people in the armed forces. Sheaffer even had trouble keeping up with demand in 1942. The company also reconfigured some of its manufacturing during the war years, making artillery fuses and bomb components for the war effort. At the end of the war, Walter Sheaffer resigned the presidency of the company in favor of his son, Craig. Walter Sheaffer died in 1946. Craig Sheaffer ran the company until 1953, when he left to take a post in the Eisenhower administration as assistant secretary of commerce. His son Walter Sheaffer II then took the top job.

Sheaffer continued to prosper in the 1950s, coming out with several significant models. The Snorkel pen, which debuted in 1952, was a fountain pen with a revolutionary and much admired filling system. Sheaffer's PFM (the Pen for Men) came out in 1959, and was an enduring seller. Sheaffer had grown to three manufacturing plants in Fort Madison by 1950, as well as running a plant in Mount Pleasant, Iowa, and another in Canada. In 1951 the company consolidated the Fort Madison plants, spending $2.5 million to expand its production capacity and office space. Sales were about $25 million in 1952. The company was still doing well, though the pen market was changing drastically. Many new writing instrument companies had come into the market after World War II, most capitalizing on a recent invention, the ball point pen.

COMPANY PERSPECTIVES

The Sheaffer brand today reflects who you are—it's your signature, a reflection of your personality, ambitions and image. Our fine writing instruments provide a welcome "escape" from the hectic pace of modern times, and our exciting range of fresh luxury finishes complements any attire or mood. Most importantly, we do all the of the above while continuing to provide the superior writing experience you expect!

The earliest known patent for a ball point pen dates back to 1888. Though the idea was a good one in theory, ink at the time could not be made thick enough to work effectively in a ball point. Though several ball points were patented and manufactured in the 1910s and 1920s, mass production of ball points did not begin until 1935. Then two Hungarian brothers, Lazlo Joszef and Georg Biro, came up with their own ball point pen, which they patented in 1938. Their pen, colloquially known as the Biro, became a best-seller in England when it was introduced in 1943. The Eberhard Faber Pencil Co. bought the U.S. rights to the Biro in 1944. The new ballpoints could write for months without a refill. While the first models retailed in the U.S. in the high price range of from $12 to $18, by 1947, the market was flooded with cheap ball points that could be bought for less than $1. Sheaffer had been one of the Big Four pen companies, and its total competition was estimated at some 60 pen manufacturers in the early 1940s. By the close of the decade, three times that many companies had some stake in the writing instruments market. The Wall Street Journal (May 13, 1947) noted with some alarm that more pens were being produced per year in the U.S. than there were people.

Given these conditions, one fountain pen maker after another struggled or went out of business. Wahl Eversharp was bought by its competitor Parker in 1957, and ceased to exist by the end of the 1960s. A premier British pen maker, De La Rue, stopped making pens in 1958, and many other European makers went under around this time. Waterman USA (though not its British counterpart Waterman England) also collapsed, leaving only Sheaffer and Parker of the Big Four.

UNDER NEW OWNERS

Sheaffer was still a profitable company in the early 1960s. It made both ball point and fountain pens, and continued to emphasize quality rather than price as the major selling point. In 1966, Walter Sheaffer II, the founder's grandson, resigned the presidency to become chairman, and the company was run by a former Standard Packaging Corp. executive, John A. Keenan. A few months after the leadership change, the company announced that it was being acquired by Textron, Inc., for approximately $19 million. 1965 sales had reached over $30 million. Textron, with sales of $720 million, described itself as a diversified manufacturer, and in fact it was considered the first modern conglomerate. Its interests were varied, from machine parts to defense to stationery.

In 1976, Sheaffer was combined with another Textron unit, the Massachusetts-based Eaton. Eaton had been acquired by Textron one year after Sheaffer, and it made typing paper and other writing paper. The new combined division was called Sheaffer Eaton, and its headquarters were in Pittsfield, Massachusetts. By the early 1980s, Textron had grown to a $3 billion behemoth. It made Bell helicopters, machine tools, ball bearings, industrial measuring devices, and many other mostly industrial products. While diversification was once thought to be a hedge against swings in the business cycle, the company was evidently unwieldy by the 1980s, with sales and profits sliding. The company took on some $800 million of debt in 1986 when it bought a Michigan machine tool company, Ex-Cell-O, and soon Textron began shedding some of its units. Sheaffer Eaton was one of the first to go.

In 1987, Sheaffer Eaton was acquired by a subsidiary of a Swiss merchant banking company, the Gefinor Group. Gefinor (USA) Inc. paid $135 million for the Textron unit, which at that time had sales of approximately $140 million. Its product lines included Sheaffer pens, Eaton stationery, At-A-Glance appointment books, and Duo-Tang report covers. Gefinor considered Sheaffer Eaton a strong brand with much potential for growth. Textron had clearly not been paying much attention to the unit, and the new European owners may have seen much more potential for fountain pens than the American conglomerate did. Sheaffer had staked out a position as a maker of fashion and luxury pens, a trend which was even stronger in Europe. Indeed, under Gefinor's wing, Sheaffer's luxury pens had rising sales. Its line of pens priced between $75 and $175 rose 25 percent in 1990. One of Sheaffer's most popular products in the early 1990s was a silver fountain pen and ball point pen set that retailed for almost $1,000. Sheaffer's product line included even more expensive pens, with a solid gold Masterpiece fountain pen selling for $4,000.

KEY DATES

1907:: Walter Sheaffer patents his lever filling fountain pen.
1912:: Sheaffer abandons the jewelry business to manufacture pens full time.
1913:: Company is incorporated as W.A. Sheaffer Pen Co.
1928:: Sheaffer Pen is launched on the New York Stock Exchange.
1946:: Founder Walter Sheaffer dies.
1966:: Company is sold to conglomerate Textron.
1976:: Textron combines Sheaffer with a stationery firm to form the Sheaffer Eaton division.
1987:: Textron sells Sheaffer Eaton to Gefinor.
1997:: Gefinor sells Sheaffer to Bic.

After ten years with Gefinor, Sheaffer was sold again, this time to the U.S. subsidiary of French manufacturer Bic S.A. Bic, founded by French baron Marcel Bich, had entered the ball point pen market in 1952 and made cheap, disposable pens a worldwide sensation. The company was also well known for its disposable razors and lighters. In 1997, Bic offered an undisclosed amount (but claimed to be less than $50 million) for what was then known as the Sheaffer Group. Sheaffer by that time did about $50 million in sales annually on its pens. While the overall pen market had gone up and down in the 1990s, fountain pen sales, particularly of high-end pens, were strong. Sheaffer was no longer associated with Eaton products, which had been sold earlier to Fox River Paper and Pratt & Austin. It focused on fine pens, some of which were made by hand by skilled artisans. These might retail for as much as $5,000. Bic's own high-end pen lines had not enjoyed strong sales, and the company wished to acquire Sheaffer's prestigious brands. The sale was complicated by a counter-offer by a group of Sheaffer executives. They claimed to have a right of first refusal of any buyout. Bic took the case to court and upped its offer by $2 million. The sale to Bic eventually went through. The sale of Sheaffer to Bic echoed the sale of another former "Big Four" American pen manufacturer, Parker, which was acquired by Gillette in 1993.

Under new ownership, Sheaffer seemed to do what it had always done well, which was to emphasize quality rather than price. Though its parent was known for some of the cheapest pens on the market, Sheaffer concentrated on its select customers for the prestigious White Dot and other high-end lines. Sheaffer launched a magazine called Sphere in 1999, which went to Sheaffer customers but contained no articles or advertising for Sheaffer pens. This was part of an overall strategy to position Sheaffer as an essential element in a luxurious lifestyle. Consequently, the magazine did not mention pens, but was filled with articles about travel, food, and fine design. Sheaffer marketing in the 2000s continued to emphasize the elegance and mystique of its pens. In 2005, the company began a push into a distribution channel it had entered previously and then let fall: duty-free shops in airports, border crossings, and cruise ships. Though pen technology had changed dramatically since 1913, Sheaffer managed to endure, not as an anachronism but as a luxury brand.