Caran d’Ache Offerings Expanding on Pencils.com Store

Earlier this summer our Pencils.com unit began offering a selection of outstanding graphite and color artist pencils from Caran d’Ache, the Swiss producer of extremely high quality art materials and writing instruments. Known as the “Maison of Haute Ecriture” the company’s products feature “Swiss Made” quality, subtle luxury, craftsmanship, authenticity and contemporary personality that set an aspirational benchmark within the creative art materials and writing instrument industry.

Originally founded in Geneva, Switzerland in 1915, as Fabrique de Crayons Ecridor the company was acquired in 1924 by Arnold Schweitzer, predecessor of the present day owners. At that time Mr. Schweitzer acquired his pencil factory he gave it the name Fabrique Suisse de Crayons Caran d’Ache in honor of a famous French artist he very much admired, Emmanuel Poiré. Under the pseudonym “Karandash”, which is the Russian word for a pencil, Poiré worked as a designer and caricaturist in Paris during the Belle Epoque.

The term “Karandash” is derived from the Turkish phrase “kara tash,” which means “black stone,” referring to the graphite found in pencils. He was most famous for his “Stories without words” which were printed by most of the illustrated newspapers of the time, and he is considered one of the fathers of the comic strip. In fact, the painter’s original signature, slightly modified, is still used today as the highly distinctive logo of all Caran d’Ache Fine Arts products range shown here.

We at CalCedar are extremely proud of our multiple generation association as wood supplier to Caran d’Ache and of the close relation between the family owners of both companies. This relationship began with my grandfather who travelled annually to Geneva, visiting his friends at the factory, consulting on technical matters related to wood machining and pencil making followed by a period of hiking the glaciers of the Swiss Alps. The commitment to excellence in use of quality materials and technical processes to produce superior products in a responsible manner are mutually shared values of both companies.

One important example of this long collaboration and shared values is the commitment Caran d’Ache demonstrates to supporting responsible forestry practices through the utilization of our FSC Certified slats in all of their Incense-cedar pencils throughout their product range. All of the Caran d’Ache pencils offered on Pencils.com feature FSC cedar wood in combination with superior pigments, product performance and craftsmanship. Our current offerings include the 120 strong color pallets of both their famous Pablo coloring pencils and their Supracolor watercolor range, the extensive 15 grade range of Grafwood graphite pencils and the outstanding set of Artist Series pastel selections covering 84 vibrant colors in both pencil & cube form. All these top professional quality ranges offer rich and smooth coloring performance for fine artists with great coverage and high lightfast performance. Many of these have long been used by some of the most noted pencil and fine artists past and present.

Now I’m also very excited to announce that we will be adding in the coming days and weeks a larger mix of fine Caran d’Ache products including an interesting selection of ball point pens, mechanical pencils, fixpencil and some specialty gift selections which represent totally new categories of products to the Pencils.com store. This selection has been curated to extend our commitment to creativity in offering one stop shopping for the best of wood cased pencils and a growing range of outstanding artist and writing products as we enter the holiday gift giving season and a variety of price points. While we won’t be adding any of the Ultra-Luxury fountain and ball point pens Caran d’Ache is well known for, we’ve selected a couple of classic and stylish pens that we think complement our fine and general writing pencil selections and demonstrate the great writing performance of Caran d’Ache products as well.

Also to improve our commitment to educating our customers about products we offer on Pencils.com our Studio602 blog will publish a series of more detailed product posts regarding different Caran d’Ache product ranges in the coming weeks as well.

Keeping A Road Trip Journal

Each year Ginger and I take a road trip together in August. This year we’ve headed North to Oregon and I decided to try keeping a road trip journal using one of the beautiful prompted journals from the Journals Unlimited Range we stock on Pencils.com. This is a great series of Journals, each promoted with relevant data depending upon the topic. There are both mini and normal sizes in a number of topics. All the notebooks are “Made in the USA” and use soy based inks as well so they are environmentally friendly. Would be a nice pairing with our ForestChoice pencils as a gift, but on this trip I’m using my Blackwings and trying out a prototype pencil case.

For this trip I selected the Journal entitled, Adventures, My Road Trip Journal. Each day’s entry has prompts related to who you’re traveling with, departure and destination points and stops along the way. There is a technical data section for keeping track of odometer readings, MPG, gas prices, total distance travelled, and the route taken. Also sections for noting highlights, sights and memorable places visited, where you ate and things to remember for the next trip. The back page is open form for notes and journal thoughts about the day. I’m using it to make notes of interesting things Ginger and I talked about during the ride. Also each year we listen to one or two books on CD, usually picking an old classic. This year’s selection is Steinbeck’s The Grapes of Wrath and I’ve taken to writing down a few thoughts of interesting passages we listen to that day.

Overall the format seems pretty helpful, though on a down driving day like here in Sun River for a few days the technical sections are less useful, though I did use an app to track our bike ride and there is plenty of space for writing about our wilderness kayak trip today and my fishing trip tomorrow.

Introducing the Blackwing Pearl


Recently, our Palomino business unit announced the newest addition to our Blackwing pencil range, the Blackwing “Pearl”. Here is the first photo of the “Pearl” set to make it’s official debut on May 2nd at Pencils.com and other dealers around the world. You can register for the Studio602 newsletter updates at Pencils.com for more information on just when the product will go live.

May also marks two years since we introduced our “602” model as a follow up to our first Palomino Blackwing pencil launched in October 2010. Since then, we’ve focused on building awareness and distribution for our two Blackwing pencil models, as well as our flagship Palomino and ForestChoice brands. This included introduction of a complementary range of high quality notebooks and sketchbooks. We’ve been pleased with the progress, as many of these three product ranges are now available in an increased variety of online and independent retail stores throughout the U.S. and Canada, as well as growing international distribution in Europe, Australia and Asia.

Over the past two years, we’ve received numerous requests for new Blackwing items from fans as well as our dealers and distributors. Many want new color combinations for the casing and/or erasers and others have made suggestions for alternative graphite formulations. We’ve also considered numerous requests for custom imprint services on Blackwing pencils similar to the custom imprint options now available on our traditional Palomino HB eraser tipped pencils.

One of our key concerns in introducing any additional Blackwing pencils has been positioning the new pencil for use when it comes to differentiation of the graphite performance. In the tradition of the original Eberhard Faber Blackwing 602 pencils, we’ve never published a specific hardness grade for our Blackwing models. When we launched our 602 model in 2011 we introduced the “firm and smooth” and “soft and smooth” descriptors to differentiate the new pencil from our original Palomino Blackwing in the black matte finish, which has a much softer, buttery feel loved by those doing a lot of sketching, music notation and other activities that require a dark mark. The “firm & smooth” 602 has been well received by those doing extended writing and note taking who want longer lasting performance between sharpening in a pencil that more closely replicates the original Blackwing 602 in performance, look and feel. Adding new grades and colors and keeping such graphite performance descriptors certainly foretells future taxonomy challenges and increases potential for confusion among consumers, so we’ve thought much about this before proceeding. In fact we’ve already had a few interesting suggestions from fans on coming up with our own Blackwing graphite grade scale to simplify things down the road.

Given that we already have a well-received graded graphite range in the Palomino brand, we’re not looking to replicate that by continuing to add a large variety of graphite grades in the Blackwing brand. In selecting a course of action for adding one additional grade we could have gone firmer than the “602” or even softer than the Blackwing, but we experimented with several options and looked at things within the context of our wider artist graphite range and decided to go for something in the middle to fit the broadest user base which offers about the same darkness of the 602, with a bit softer feel that still gives improved wear rates vs. the “soft & smooth” model. We’ve decided to call it our “balanced & smooth” formulation.

For the casing décor, we chose a completely new effect by adding a pearly luster finish to contrast with the flat matte black of the Blackwing and the gunmetal metallic look of the 602 model. White is our most requested color for lacquer finishes and we think it looks just great with this new finish style. Thus the combination of white lacquer and pearly finish lead us naturally to name this pencil the Blackwing Pearl. We chose a black imprint for a stronger contrast, which looks great with the black eraser combination. In fact, we think the Pearl will look great with all six of our available eraser colors, which allows for further personalization or “hacking” for those so inclined.

We can see the Pearl being popular for use in home office décor or used as great guest gifts in weddings and other special events, but also well received for a broad range of existing uses by our fans and new initiates. In reality, regardless of the many different uses of our Palomino or Blackwing pencils, the selection of any specific pencil is always a matter of personal preference. In that sense, we think there is plenty of opportunity for you to find the pencil that is “just right” for your individual taste or a specific need in different situations throughout our full Palomino family as it’s grown and adapted over the past two years. We hope you’ll try out the Pearl and continue to discover the great function, design and performance of our developing Palomino family of products that help you to express your creative spirit in new and exciting ways.

Hough’s American Woods: 141 Incense Cedar


This post initiates an extended project I’ve given long consideration to pursue on Timberlines. That is, writing more extensively on my long running interest in the study of natural history and in particular the history of early naturalists as well as the development of various scientific disciplines within the broad field of natural history.

One of the major influences in this hobby was my grandfather and namesake, Charles P. Berolzheimer, whose broad intellectual curiosity in the sciences, including botany, forestry, wood-machining among many other fields of study as well as my exposure to his extensive library which he developed over a lifetime of scholarship. Both during his lifetime and after his death in 1995 I was quite fortunate to receive from his collection a number of books which focused on the natural history topics I find most interesting. He was a unique individual, equally comfortable giving a technical speech on wood sciences in several languages, discussing art and enlightenment thinking or walking through the woods collecting and assembling his personal herbaria. He was particularly fond of trees and fungi. My access to this collection of books has spurred my own further research into these topics, sometimes in specific technical fields, but more generally focusing on the human side of the story of those individuals who advanced knowledge in particular areas of interest, the early field naturalists, discoverers, catalogers or researchers.

My first post in this series covers Hough’s American Woods. I’ve selected this work as a first post not so much due to Hough being an early pioneer of natural history study, though the scope of his work and focus on documenting physical wood samples of American tree species was indeed pioneering in many respects, but rather as this work strikes a bit closer to home for me with respect to the influences of my Grandfather and his interest in area relative to wood processing and treatment.

Hough’s work is a multivolume collection of wood cuts including the Transverse, Radial and Tangential section to show physical specimens exhibiting the natural character of woods, both native and introduced to North America, that he considered import to the study of forestry. The series in total includes 14 volumes and 350 individual species. Each volume includes both the section samples of 25 species as well as a bound pamphlet describing the individual species general and technical information as well as general information covering a range of topics from taxonomy, botanical identification of parts of trees and on the geographic area specific to each volume. The author, Romeyn B. Hough, personally supervised the selection of living tree samples of each species to assure accurate identification and production of the physical sections. The final 14th and final volume was published posthumously in 1928 with his daughter writing the pamphlet.

Given the broad geographic distribution of species extensive work required to identify, harvest and prepare these samples it’s not surprising the publication of this multi-volume work spanned from 1888 to his death in 1924. The specific care to assure proper drying, cutting and preservation of actual wood samples that would stand up without degrade now over 100 years later relates specifically to the technical study of wood chemistry and machining that my grandfather dedicated his own professional career to given our company’s role in supply of wood to the Pencil Industry. American Woods is certainly a labor of love, which in his first Volume Hough dedicated to his own father, who in addition to his influence in Hough’s study of nature he also credits the original suggestion of the pursuit of the body of work covered in this entire series, officially titled, The American Woods, Exhibited by Actual Specimens and with Copious Explanatory Text.

Naturally of all the possible woods in these volumes I’ve chosen to feature sample number 141, Libocedrus Decurrens, or California Incense Cedar. This species is included in Part VI (published in 1895) which covers specifically woods of trees found growing in the Pacific Slope of the U.S. (a scan from my personal collection is shown) (today the Genus Calocedrus has commonly replaced the original taxonomy Libocedrus). Incense cedar first began to be investigated for pencil production around 1906 by our family members at the Eagle Pencil Company and produced commercially into slats at their Hudson Lumber Company mill. For more information on Incense cedar in pencil slat production, read here.

Originally, this collection sold for $5 per volume. Today a complete set including the 14th Edition sells for tens of thousands. You can see all the wood cuts from Hough’s American Woods on line here.

I, Pencil – The Movie

Over the past year or so I’ve been providing some techincal advice and input to the Competitive Enterprise Institute (CEI) producers of a new video based on Economist Leanard Read’s essay,  I, Pencil. I was in Washington D.C. a couple weeks back and met with them though unfortunately I missed thier launch party for the video presentation.  I’ve written about that essay before here.

The CEI has put together a nice website ipencilmovie.org that includes the movie and a supporting curriculum and many other resource links. So it’s a great new resource for teachers wishing to give thier students a good introduction to some of the key economic concepts behind Read’s essay.

We’ve agreed to do some cross links from our Story of Pencils pages over at at Studio602 on Pencils.com, to help build awareness of this new learning resource.

A View to the Future of U.S. Pencil Manufacturing

My last post addressed recent news regarding allegations of illegally
imported Chinese pencils.  In order to
avoid anti-dumping duties these pencils were apparently transshipped via third party countries such as Taiwan, Vietnam and
Indonesia and mislabeled as to country of origin.  Today I am addressing the
overall U.S. market for pencils and future of U.S. production of pencils relative
to how I see this topic coupled with other developing industry trends.

In my view, regardless of the final outcome of this particular
legal case I believe this is a positive development for U.S. pencil
manufacturers and other established pencil industry participants who are
committed to making quality products and playing by the rules when it comes to
all manner of international trade, environmental, labor and product safety
regulations.  For the past 20 years the
trends of globalization, retail channel consolidation and other competitive market
forces have contributed to a dramatic shift in our industry structure just as
in many other industries.  As a free
market thinker I do not believe these are inherently bad trends and they have
led to a number of benefits for society as a whole though those benefits may
not always be evenly dispersed and has not always resulted in comparable
product quality. 

When it comes to pencils, both here in the U.S. and worldwide,
we are seeing more pencils sold and consumed at lower average prices than 20
years ago.  Despite the common misconception that pencils
are a dying business, pencil consumption generally grows globally at or around
the rate of population growth.  Also per
capita pencil consumption tends to increase with income growth as well.  Providing
we continue our positive immigration trends we should see stable and slowly
growing demand for wood-cased pencils over the long term.  Obviously income growth and dispersion is a current
concern in light of recent economic developments, but ultimately I still remain
optimistic about U.S. potential from the macroeconomic stand point.

The rise of computers, tablets, or smart phones over this
period have yet to prove to me that these technologies are going to displace
writing instruments and pencils as a whole. 
Technology certainly can impact how and where we use pencils at the
margins. However, there is a strong emotional and tactile connection people have with
their preferred writing tools and the physical act of depositing graphite, ink, paint or
color pigments onto paper.  What could
impact per capita pencil consumption even more than technology is allowing
another generation of kids to be raised without access to and experiencing the
use of good quality pencils. This could drive consumption patterns to alternate
writing instruments in the long term.  Despite the benefit of ever cheaper wood-cased pencils on household budgets over the past 20 years , one negative byproduct has been exposing children, teachers
and other consumers to a general reduction in the quality of the average pencil sold here
in the U.S.  At Pencils.com one of our
most common consumer questions is: “Where can I find a decent pencil at a
reasonable price in which the lead won’t break, the eraser works without
smearing and that actually writes well?” 
Teachers often report that the simple act of more frequent breakage and sharpening has become a disruption in the classroom.

One complicating factor is the poor state of funding for
education in the U.S., especially when it comes to the provision of basic
school supplies. As a result the burden of supplying pencils and other suppliesis increasingly pushed onto teachers and families who have their own budgetconcerns.  The drive for ever lower
prices has helped, but has also compromised quality and selection.  As a result the assortment of pencils on retailers’
shelves has declined and the mix increased towards imported private label or
low price non-manufacturer brands.  Lower
space allocation is offered to traditional quality manufacturer brands.

So what do a bunch of economic, social and demographic
trends have to do with an illegal transshipment case and whether this helps the
U.S. industry or not.  The question lies
in part whether the retailers as a group, begin to see that price of pencils
cannot be their sole determining factor in the product mix as there are other
costs such as the associated anti-dumping duties and penalties.  Also will consumers take a greater interest in the quality and origins of their
pencil purchases? 
Sure they are still going to want the best price possible.  However, I tend to think that a supplier who
is willing to illegally transship pencils is also a supplier who is more likely
to cut corners in product safety and quality.. These are all problems the retailers and
consumers don’t want to deal with over the long term.  If retailers increasingly find they will be
held responsible for penalties, fines and consumer dissatisfaction as a result
of the potential negative aspects of their product supply chain then they are
going to increase their diligence in vetting and selecting their
suppliers.  Certainly they cannot be
expert in every product range they sell and as they are importing many products
globally, the headache of assuring compliance on products with anti-dumping
duties and other safety or regulatory concerns may result in some level of
return for advice and supply to known domestic vendors for improved
reliability.  This does not necessarily
mean an imported pencil will be replaced by a domestically produced one, but
the opportunity for engagement on that supply decision will certainly improve
for the U.S. producers.

Further there are currently added economic trends that point
towards some return to U.S. manufacturing in general.  My belief is this ultimately will have some positive
benefits for the U.S. pencil industry also. 
Labor costs in China are now increasing dramatically and though still quite
low relative to the U.S. are making it difficult for many general
manufacturing companies to find and retain qualified employees.  Chinese labor regulations as well as other
environmental and bureaucratic regulations are beginning to impact the general
cost of doing business in China.  This
first impacts those producers in China who play by the rules, but in time the effects should
spread further throughout the Chinese economy. Meanwhile, U.S. domestic energy costs
are declining with the increase in domestic gas exploration and development.  Long lead times on overseas supply chains
complicate planning and inventory investment while domestic producers can often
be more flexible with quicker response times. 

Another important concern within the pencil industry is that
Chinese basswood and other Chinese woods have come under pressure for use in
other domestic purposes.  More wood is
coming from Russia which has less stringent regulatory oversight causing more
concern with legal wood supply issues.  A
resurgence in total Chinese GDP growth from their current slowdown will have
further inflationary impact on global wood supply and thus eventually pencil
prices as well.  In my personal
assessment we’ve seen a low point reached in global wholesale pencil prices
that was reached about two or three years ago. 
There will always be some other part of the world, the next low cost
country, to move on to, but adequate quality wood supply and transportation
costs also have an important impact on pencil economics beyond labor costs and
regulatory environments.  Overtime, the
developing world catches up in relative costs so the U.S. should be able to
adapt and innovate to remain competitive. 
That is as long as we do not let our current political stagnation and
increasingly burdensome regulatory environment overwhelm us over the long term. As the U.S.
remains one of the most important global growers of trees this ultimately will
have some positive impact on a host of products manufactured from solid wood.  As a result I do predict that we will
eventually see at least some small improvement in U.S. production of pencils and other wooden products over
time.

In our own business at California Cedar Products Company we
are certainly not prepared to return our slat manufacturing operations to the
U.S.  However, we are increasing our
commitment to U.S. based wood supply with the recent introduction of our
Pacific Albus product range.  Eventually
we expect this will be an increasingly relevant component of our business displacing Chinese and Russian Basswood and supplementing
our premium California Incense-cedar product range

Additionally, we have recently made several small movements towards
U.S. production regarding our Palomino Brands pencil ranges.  Recently we relocated the final eraser
tipping process for our Palomino Blackwing and Blackwing 602 pencils from Japan
to our Stockton, CA using a newly developed tipping process.  This should improve tipping quality and responsiveness as demand for Blackwing pencils grows.  Thought the pencils themselves will continue to be produced in Japan.  Also, we are transitioning our Prospector and
Golden Bear products from Thailand production to the U.S. where we are working
with one of our slat customers Musgrave Pencil Company to produce these items.
The new “made in the USA” versions of both pencils will phase out our prior California Republic
versions and be available exclusively on Pencils.com in the coming weeks.  These pencil items represent only a very minute segment of the U.S. pencil market, but do expand our commitment to
offering a “Made in the U.S.A.” product selection in our Pencils.com store.

Ode to Blackwing Animated Version

Today marks the 1 year anniversary of the introduction of our Palomino Blackwing 602 pencil for sales on Pencils.com.  It’s been a fun first year with alot of positive developments, including most recently our original Palomino Blackwing pencil being featured in an upcomming movie.  But today is really about poetry.

Yesterday was also the first anniversary of my original post “Ode to Blackwing”, my rather hokey attempt at a poetic tribute to the history and revival of the Blackwing pencil and the process of responding to customer feedback to create the later Palomino Blackwing 602 version as we introduced it.  Today we have just released the Animated version of “Ode to Blackwing”.  This video was produced as suprise to me for the Blackwing Experience event in New York back in April.  It was playing on an animated loop at the end of the historical timeline on the pencil industry. A few lines were modified by our creative team from my original version and the voice of course is not mine.  Thanks to Cartoonist Gary Kopervas for collaboration on this project.  Hope you enjoy.

As we are celebrating Literature and Poetry as our theme on the Studio602 blog this month and yesterday we launched our Pencils.com Poetry Slam contest I thought I’d share this video for a bit of inspiration.  Hope you’ll enter by June 19th for a chance to win a great giftset. 

Studio 602 Introduces “Blackwing Sessions”

I am very pleased to announce “Blackwing Sessions”, a new adventure in expanding the range of fresh content we are producing to support creativity and the use of pencils. Blackwing Sessions is a new production from Studio 602, our entertainment and educational blog at Pencils.com. The inaugural Blackwing Sessions video features my good friend Christian Tamburr as our first Blackwing Featured musical artist, and will be released on Studio602 in its full length version on Monday December 12th. Until then here is a short teaser cut from the full length version. More about Christian and the Blackwing Sessions below.

Christian’s musical talents in the jazz world as a top vibraphonist (he plays a mean piano too) are well respected, and include an “Outstanding Jazz Solo Performer” award from Downbeat Magazine. He and a growing number of talented musicians have become big fans of our Blackwing pencils for scoring and other notation purposes. The video was filmed during the recording session for Christian’s new album “Places”. It includes interviews with Christian and his quartet members about their creative process and tools used in composing, performing and recording their music. It also features the process of working out the intro of and then recording of the final cut to “Sailing Serenity”, one of 4 original compositions by Christian included in this album. The remaining 5 songs are some great arrangements of other artists tunes including the Beatles’ “Eleanor Rigby” with a fun modern groove and Julio Iglesias’ “La Carratera” featuring a nice Latin feel. Coincidentally, Christian served as musical director and piano player for Julio on the road for three years.

We all had a lot of fun putting together for you. We hope to see you on Studio 602 on Monday when we release the full 12 minute video, plus a more complete bio on Christian as our first Blackwing Featured musician. In addition we’ll be launching sales of his new CD “Places” on Pencils.com as well. For now you can listen to the album here on Soundcloud or download via iTunes, but for those who still like the full CD we’ll have it available for sale Monday which would make a great gift for the musician in your family when paired with our limited time offer on a Blackwing 6 Pencil combo pack. We hope you’ll like our inaugural Blackwing Session video. If things go well with this we hope to collaborate with and feature more Blackwing artists, writers and musicians in the future to build upon the Blackwing Experience.

Guitars, Pencils and Lacey Act Compliance

This photo is of my father back in the 1970s during a visit to Kitaboshi Pencil Company in Tokyo, Japan, where I actually visited today. He is being presented a guitar produced using California Incense-cedar by a member of the Sugitani family who are customers using our pencil slats for their products. This gentleman is now retired, but I happened to see him today, he says he still plays guitar every day and had that guitar specially commissioned for my father as a gift. Look for my upcoming post about the history of Kitaboshi Pencil and their products that we will begin selling on Pencils.com next week. California Incense-cedar used in our pencil slats, our customers’ pencils using our slats (and in this one of a kind guitar) is fully compliant with the US Lacey Act which is the main subject of this post.

The recent news of the US Fish & Wildlife Service raid and seizure of Rosewood and Ebony wood raw materials as well as guitars from Gibson Guitars and subsequent claims by Gibson’s CEO that the US government is over reaching in its actions has an interesting relevance to challenges also faced by our company and our customers in the U.S. pencil industry. Here are links to three articles about the Gibson issue over the past month:

At issue is the application of the 2008 Amendment to the Lacey Act, a law originally established in 1900 governing the illegal trafficking of hunted wildlife and game across state lines and since inception has continually expanded in scope and breadth to cover fish and plants. The law is administered by the Animal and Plant Health Inspection Service (APHIS) within the U.S. Department of Agriculture and jointly enforced with U.S. Department of Fish & Game which is the lead agency in the case against Gibson Guitars. Under the 2008 amendment the law was extended to plants, wood and products made from wood and plant materials. The amendment requires importers of applicable products to certify that the wood materials used in their products were not obtained from illegally harvested materials or include any protected or threatened tree species. The amendment implemented a number of documentation and declaration requirements that must now accompany each import shipment with respect to specific species used, country of origin of the trees from which the wood product was produced and statements relative to the legal harvesting of the trees used in the. Knowingly importing wood or wooden products covered by the law is a violation of the law subject to both civil and criminal penalties. Heralded as an improvement in environmental policy the amendment was also supported by the Bush Administration as a protectionist measure for the US timber and wood products industry against lower cost imported woods. While I have no specific knowledge of and cannot speak to the specific issues involved with Gibson’s case I can certainly state that illogical and inconsistent application of the rules process by government agencies responsible for enforcing the Lacey Act is a ripe example of the “law of unintended consequences” as with much government regulation. CalCedar has been deeply involved in addressing the 2008 Lacey Act amendment relative to compliance of our own pencil wood supply as well as understanding the impacts of the law on our company, our customers and the pencil industry supply chain as a whole. We have long taken an industry leadership position in assuring the wood resources we utilize are harvested from well managed forests according to applicable rules and regulations in any countries we source our wood from. We have and continue to support industry efforts to increase the overall sustainability and have been a pioneer in implementing FSC and SFI third party certification to an increasing proportion of our wood supply. Thus in concept implementation of the Lacey Act amendments in 2008 was a step in a positive direction with a goal of eliminating illegally sourced raw material or utilization of any threatened plant species. Though the standards applied as to what’s illegal or legal or threatened or not can vary from country to country as the Lacey Act simply requires compliance to the applicable laws in the country of harvest. Thus the level of added environmental protection here is inconsistent from country to country. The Lacey Act requirements added a whole new level of documentation and due diligence required for us to supply slats to our US based pencil manufacturing customers. This included updated investigations and documentation of our wood supply chain and added costs of consulting in the investigation with an accredited third party certification agency as to appropriate precautions including the added burden to segregate and/or eliminate any wood of potential concern and to maintain clear chain of custody of all our through the supply chain. All of this was already occurring with respect to our FSC and SFI material in both Cedar and Basswood, but we felt it important to apply these processes to the balance of our Basswood supply chain. Where we could not clearly document exact origin we sorted out the material to create yet another classification of inventory. Thus with respect to our Basswood pencil slats we now must keep separate inventory and track three different groups of products; FSC certified, Lacey Compliant and standard inventory which we do not believe is a compliance concern but will not take the risk of selling into the US market without clear chain of custody back to the forest. However, this burden of declaration documentation was not extended to the importers of pencils themselves. Thus wood sold to our customers who produce pencils in the US is subject to the documentation requirements while finished imported pencils are not, placing an added burden on U.S. pencil producers. Given that the majority of pencils consumed in the U.S. today and before the amendment took effect were imported this inconsistent application of the statute to intermediate vs. finished products hardly serves to protect US manufacturing jobs or to ensure that the majority of pencils sold in the US are indeed Lacey Act compliant. This does not mean many or even most pencils are not compliant, just that the chances are higher that they could be. As far as musical instruments are concerned importation of pianos and stringed musical instruments, including guitars, seem to have become subject to the documentation and declaration requirements in April 2010, so in this case it appears the compliance playing field may be a bit more level between US and Foreign producers in that industry. Next, the rules are not very specific on the level of sufficient due diligence to protect an importer from prosecution and civil and criminal penalties under the act. The “due care” principal is used which is generally contextually applied depending upon the level of organizational expertise and level of involvement in the supply chain of the importer of record. Thus as an experienced wood products manufacturer standards for “due care” applied to our company may be interpreted by the relevant agency differently than that of an importer of finished pencils who tends to rely solely upon the level of documentation they choose to request from their supplier. In many cases such suppliers are simply foreign trading companies, not manufacturers themselves, relying on the say so of their own supplier. With much pressure put on the price of imported pencils and other wood products this provides some level of incentive to less ethical suppliers to fudge in the information provided to their U.S. import customer. If a U.S. importer does not perform an on the ground investigation or use a knowledgeable third party certification agency, which is not specifically required under the statute, and simply relies on the paperwork provided by their supplier, they may be at some elevated risk of exposure to prosecution as to whether they employed “due care” in the event there is ultimately some problem found with the legality of the raw materials. This essentially becomes a risk management exercise for each importer with differing levels of risk tolerance and exposure. Finally, as a knowledgeable U.S. company operating our own facility in China and selling globally we are more at risk of punishment under this U.S. act than are our foreign competitors. It’s going to be difficult for a U.S. importer penalized under the act to recoup any fines even if they have some form of guarantee. As such we’ve taken a more conservative approach to managing this issue in our company. This is also more costly than most of our foreign competitors especially those who are exporting finished pencils to the US where no specific requirements for their U.S. import customers to file the import declarations. This does not mean those pencils are not subject to requirement to be legally harvested, but they have less risk of being challenged as to compliance.

As a company we are continually working to insure that an increasing portion of our wood supply to the pencil industry actually is part of one or more accepted third party certification programs, most specifically FSC or SFI, under the PEFC umbrella. Given both inflationary cost and supply developments with respect to Basswood in China resulting from the Chinese government now enforcing greater harvest restrictions we are currently testing and introducing a new 100% FSC certified product line named Pacific Albus. This new product is U.S. plantation grown and fully Lacey Act compliant. We see Pacific Albus becoming increasingly important versus Chinese or Russian grown Basswood in our company’s supply program and is a product that will be proprietary to our company. I expect to post more about this new product range as we move forward with greater adoption and acceptance into the industry by our customers.

Celebrating the Japanese Pencil Industry

Sometime next week, tentatively on November 2nd, we’ll be introducing a few select items from two Japanese brands on Pencils.com; Kitaboshi Pencil Company and Tombow. The selection includes several great items for the holiday gift giving season. You can learn more about those specific items in an upcoming Studio 602 story early next week. This expansion of brands at Pencils.com is a part of our continuing effort to introduce more of the products of our pencil slat customers’ from around the world. This allows us to increase the breadth of great high quality pencil offerings on Pencils.com, some of which are not readily available or well known in the U.S. Market. It also helps increase awareness and appreciation of some great pencils and of the wood-cased pencil in general. Given our close relations as a wood slat supplier to many producers around the world, we hope to continue growing our offering mix quite a bit over the next year. This week also marks my annual visit to Tokyo to visit a number of our pencil slat customers and to work with our Palomino and Blackwing producer about production planning and product development for new pencil items we expect to introduce in 2012. Most notably a Palomino quality, private label pencil program, though we’ll share more about this in the coming months as that program moves closer to launch. The Japanese Pencil industry is probably one of the most interesting domestic pencil industries in the world. Relatively young by comparison to its European and US counterparts with several brands dating back 100+ years, most Japanese production and development of wood-cased pencils began in the post World War II era. Over the past 20 years the industry has been subject to many of the globalization pressures faced by other developed western markets it also faces an extra challenge of demographic trends; a declining and aging population which means the consumption of pencils in Japan is actually declining year to year and has been for some time. Japan is the highest cost pencil production market in the world which is reflected in their prices. As a result very little exportation of Japanese wood-cased pencils is occurring, so the local market dictates overall production trends domestically. (In fact Pencils.com with our Palomino and Blackwing products and more Japanese pencils coming may be one of the largest volume export distributors to North America already.) Despite these trends the Japanese production supply chain remains relatively intact and traditional without the degree of radical makeovers of mergers, acquisitions, or the extent of off-shoring production that the industry has witnessed in North America and Europe. Yes, there are certainly fewer producers over time, with several dropping out over the pat few years, but the basic structure has been relatively static. Also taken in context of relative market size vs. Europe and North America there are actually proportionately more Japanese companies actively involved in the production of pencils and pencil components in Japan today than in these other regions. Why is this? Several factors contribute. First, Japan is a high quality and brand loyal market with consumers who understand the difference between good and bad pencils and are willing to pay the difference. The 100 yen pencil is quite common and Beyond the major brands, Mitsubishi with its Hi-Uni and Tombow with it’s Mono, there has long been a unique demand for specialty pencils that also give a collectibles status such as “Character Pencils”, popular Disney, Pokemon and Anime characters licensed to either a pencil producer or a marketing company that contracts a local producer to produce their pencils. “Game Pencils” which treat the 6 sides of the pencil as a sort of die which children can roll against one another and win each other’s pencils. And a whole range of designer theme pencils. Such innovations were first made popular in the Japan before being adopted by some US companies focusing on the school pencil market as they attempted. Even if a marketing company has the rights to a character they most generally still use a Japanese sub-contractor for quality reasons and there have been a few lessons learned about the expectations of the Japanese consumer when the quality of an imported character pencil was not up to par. In the US, more and more of such license or designer theme pencils are imported by marketers from lower cost manufacturing, with just a couple companies actively producing such pencils in the US today. In Japan all the companies are involved in this segment of the market. Second, the unique structure of the Japanese industry involves a variety of specialist subcontractors, some who only specialize in one or two parts of the manufacturing process, such as wood-working, lacquering and finishing, graphite & color core production or packaging. Larger companies such as Mitsubishi and Tombow and mid tier producers such as Sakamoto and Kitaboshi use these often more nimble or uniquely skilled sub-contractors to meet special processing needs, smaller production run sizes and do quicker turnaround on orders. The character pencil marketing companies as well as some branded pens producers such as Pentel rely entirely on sub-contractors for their wood cased pencil needs. Such a structure helps to shorten the supply chain vs. imported pencils in the changing specialty, novelty pencil market. All of these sub-contractors are small family owned companies operating essentially in a building that co-locates production with their own homes. They are more like traditional artisan workshops than what the average person would picture as a factory. The owners of these businesses are highly skilled and knowledgeable about their business. The extreme care and detail they speak with in discussing the technical aspects of doing this or that operation in the manufacturing process can be a truly amazing experience. Generally their home and factory debt has long been paid off and though their equipment is old and slow they are the best at what they do. Still this industry structure faces several threats which are a factor of both the demographic and competitive globalization trends over time. As the overall market shrinks and largest producers feel pressure from lower cost pencils they tend to keep more production in house to retain their economies of scale, thus slowly squeezing some of the subcontractors out. Mainly, focused on non-pencil products such as pens, markers, correction tape, etc. these companies still feel their pencil business is important and need remain the most efficient volume producers. Some have set up off-shore production of certain pencil components or assembly operations for some products in Vietnam or China, similar to western producers who have gone multi-national in their operations. Over time the mid-tier companies have adapted by focusing on introducing new products to diversify their business away from pencils into complementary novelty items, by broadening their sales distribution channels or dropping certain manufacturing functions to use subcontractors, etc. Finally, as the business owners’ age in the sub-contractor segment, often the 2nd or 3rd generation family members are not interested in continuing with the same passion as their parents, so these businesses also tend to shake out due to lack of management succession or natural selection of a sort. As a wood supplier to the Japanese Pencil Industry for three generations, our company is always conscious of these challenges. We value the close relationships we’ve built with many of these companies and families and salute their commitment to producing the highest quality wood-cased pencils. Adding and promoting more pencils produced in Japan to our Pencils.com offerings is just one small way of supporting these friends in the industry. They produce some of the most unique and interesting novelty pencils in the world and in time we hope to make this collectable segment a larger part of our offering in addition to some of the branded items we’ll be introducing in the coming weeks and months. We hope you’ll help you’ll join us in our Japanese Pencil Celebration event in November at Pencils.com.