BIC Corporation

views updated Jun 27 2018

BIC Corporation

500 BIC Drive
Milford, Connecticut 06460
U.S.A.
(203) 783-2000
Fax: (203) 783-2081

Public Subsidiary of Societe BIC, S.A. (63%)
Incorporated: 1958 as Waterman-BIC Pen Corporation
Employees: 2,400
Sales: $417.4 million
Stock Exchanges: New York
SICs: 3951 Pens and Mechanical Pencils; 3999 Manufacturing Industries, Nec; 3421 Cutlery

BIC Corporation is the country’s leading manufacturer of disposable ballpoint pens and cigarette lighters. It is also an industry leader in the production of disposable shavers. Producing inexpensive, quality products promoted through aggressive advertising campaigns, BIC has steadily increased its marketshare in the United States, maintaining 60 percent of the ballpoint pen market and 45 percent of the disposable shaver market in 1992. After moving into sporting goods with a leading brand of sailboards in the late 1980s, the company also strengthened its position in stationery goods by purchasing Wite-Out Products, Inc. in 1992.

The company was founded by Marcel Bich, who left his job as production manager for an ink company in 1945 to set up his own business outside of Paris, manufacturing parts for fountain pens and mechanical pencils. During this time ballpoint pens, although still very expensive, were becoming popular in Europe, and the first ballpoint pens were introduced in the United States, selling for $12.50 each at New York’s Gimbel’s Department Store.

First Bich expanded his business to include the manufacture of plastic barrels for ballpoint pen companies, and then, in 1949, he introduced his own line of ballpoint pens. Called BICs—using the phonetic spelling of Bich’s name—the pens were of a simple design, nonretractable with clear plastic barrels, and sold for around 19 cents each. While early ballpoint pens were known to clog and leak, Bich’s pens proved reliable and achieved immediate success in Europe with annual sales exceeding $5 million by 1955. Bich then turned his attention to marketing his products in the United States.

The Waterman Pen Company in Seymour, Connecticut, was founded by Lewis E. Waterman, an American insurance salesperson and part-time inventor, who developed the first practical fountain pen in 1884. At one time, Waterman Pen was the world’s leading maker of fountain pens. In the 1950s, however, with the growing popularity of ballpoint pens, the company had begun to falter. In 1958, Bich agreed to purchase 60 percent of the company for $1 million. When the true financial condition of the company became known, Bich was able to acquire the remaining 40 percent for nothing. The company was renamed the Waterman-BIC Pen Corporation, and its headquarters was moved to Milford, Connecticut.

The inexpensive BIC pens did not catch on as quickly in the United States as they had in Europe, probably because the U.S. market had been flooded with shoddy pens by other companies. The leading brand in the “over-a-dollar” pen market was made by the PaperMate pen company, purchased in 1955 by The Gillette Company. Bich’s U.S. managers urged him to make a more expensive ballpoint to compete with PaperMate, but Bich resisted. He reportedly told his advisers, “Waterman is 100 percent mine. You are going to do what you are told.”

In the early 1960s Waterman-BIC launched an aggressive television advertising campaign that boasted that BIC pens would write “First Time, Every Time.” To prove that a 29¢ BIC pen would perform as well as pens costing several times more, the commercials showed BIC pens still working after being drilled through wallboard, shot from guns, fire-blasted, and strapped to the feet of ice skaters. In another effort to establish a market in the United States, Waterman-BIC distributed its pens for sale in grocery stores and small shops near schools where students congregated, rather than in the department stores that carried more expensive pens.

After a rocky start, Waterman-BIC established itself as the largest maker of ballpoint pens in the United States. By 1967, the company was turning out nearly 500 million pens annually, accounting for nearly 60 percent of the U.S. market. In 1972, Time reported that “Baron Bich has done for ballpoints what Henry Ford did for cars: he has produced a cheap but serviceable model.” In 1974, a reporter for Forbes wrote, “From the start, Bich concentrated on the cheap end of the market—but with a difference. Where his competitors were turning out junk, Bich made a reliable pen that could command a premium, but still cheap price. … By the time his competitors figured out how to build an equally good pen for the price, Bich had a lock on the market.”

In 1971, Waterman-BIC became the BIC Pen Corporation, more accurately reflecting its business. However, that name soon became outdated as the company embarked on its first diversification.

In 1970, Gillette purchased the S. T. Dupont Company, a prestigious French manufacturer whose principal product was luxury cigarette lighters that sold for hundreds of dollars. During this time Dupont explored the possibilities of marketing a disposable lighter, developing an inexpensive disposable lighter called Cricket, which it introduced in the United States in 1972. Later that year, Time reported that BIC was test marketing a disposable lighter that could provide 3,000 lights before wearing out. BIC introduced this lighter in 1973.

To compete with Gillette, which was solidly entrenched as the market leader, BIC again turned to creative television advertising. A series of commercials soon showed sensuous women urging cigarette smokers to “Flick My BIG,” a phrase perceived as having sexual connotations, that soon became a part of the national lexicon. Writing about network censors in The Best Thing On TV: Commercials, Jonathan Price remarked, “They absolutely do not see sex in advertising if it’s blatant. …They can find sex in a garage mechanic talking about shock absorbers. But let somebody say, ‘Flick my Bic,’—this is beautifully obscene—everyone nods their heads and lets that go, because … well, we know you can’t possibly mean that, that would be obscene....”

BIC also slashed the wholesale price of its lighters so they sold at retail for less than one dollar. This action set off a fierce price war with Gillette. But by the end of 1978, BIC had surpassed Cricket, and in 1984, Gillette acknowledged defeat. It pulled Cricket from the market and later sold the brand to Swedish Match Corporation, which licensed the lighter for distribution in the United States. At the time, BIC controlled about 65 percent of the market for disposable lighters.

During the time that BIC and Gillette were battling over disposable lighters, the companies were also going head-to-head for a new segment of Gillette’s traditional business, disposable shavers. King C. Gillette had invented the safety razor in 1903, and the company he founded dominated the market for the next 70 years. Then in 1975, BIC’s parent corporation, the French Societe BIC, S.A., introduced a disposable plastic shaver in Europe. Anticipating that BIC would next bring out the shaver in the United States, Gillette quickly introduced its own disposable razor dubbed “Good News!” in 1976, a full year before the BIC shaver made its American debut. However, Gillette seriously underestimated the demand for disposable razors. Furthermore, it was not eager to see customers switch from its reusable razor systems to its disposables, since Good News! cost more to make and sold for less than the company’s replacement blades. Therefore, Gillette spent very little on advertising.

BIC, however, advertised heavily, again relying on catchy television commercials. In one series of commercials, people were blindfolded and shaved by professional barbers, using either the BIC Shaver or Gillette’s nondisposable Trac II razor. According to the ads, 58 percent of the participants claimed that there was no difference between the BIC shave and the Gillette shave. Gillette leaders were incensed by the ads and asked the three major television networks not to run the commercials unless BIC could document its claims.

By the end of 1979, Gillette and BIC each controlled about 50 percent of the market for disposables, which had grown to represent 20 percent of the total market for wet-shave razors. Disposables were especially popular among teenagers, and women appreciated the BIC Lady Shaver, the first razor specially designed and marketed with them in mind. Within ten years, Gillette would stop advertising its disposables to concentrate on its razor systems and replacement blades.

In 1982, with revenues approaching $220 million, BIC acknowledged its expanding status as a leading maker of lighters and shavers by dropping “pen” from its name to officially become BIC Corporation. By then BIC had also taken a tentative step into sports equipment. In 1982, the company introduced the BIC Sailboard, which quickly became the North American market leader. However, in 1985 the company was forced to stop selling the sailboard in the United States when a U.S. District Court ruled that BIC had infringed on a patent owned by Windsurfing International. BIC reintroduced the sailboard to the U.S. market when the patent expired in 1987.

Having weathered fierce competitive battles for three decades, BIC faced perhaps its most serious threat in April 1987 when the New York Times reported that at least three people had died because BIC lighters had malfunctioned. The newspaper also reported that the company agreed to pay $3.2 million in damages to a Pennsylvania woman who claimed her lighter ignited in a pocket while she was on a camping trip.

The Pennsylvania case was the first involving BIC to go to trial, and the Times reported that although “claims began to trickle in soon after Bic introduced its throwaway lighters in 1972, … the company has until recently been able to keep the cases quiet by settling them out of court.” The newspaper stated that BIC had settled more than 20 cases for amounts ranging from $5,000 to almost $500,000. During the trial, design engineers testified that BIC lighters occasionally leaked, and debris could cause the shut-off valve to fail. There were also reports of BIC lighters flaring up while they were being used or accidentally igniting while lying on overheated automobile dashboards.

At the time, lighters accounted for about 40 percent of BIC’s revenues, and the day the story appeared, BIC stock fell 25 percent, from $32 to $24 per share. For a week, the company stonewalled, refusing to provide information or answer questions about the allegations amid rumors that thousands of lawsuits had been brought against the company and that a New Jersey congressperson was threatening to hold hearings on the safety of BIC lighters. Eventually, the company changed its tactics and revealed that there were 42 lawsuits then pending. BIC maintained that most of the incidents were caused by user negligence. Also acknowledging that a woman had died in an accident involving one of its lighters, BIC reassured the public that it had discontinued the model that was involved in the accident.

As a result of BIC management’s candor, the company’s stock began to regain value. Although it stumbled again briefly in September following the airing of the ABC television program “20/20,” which featured a story on lighter safety, the stock was back to $31 per share by October. Bruno Bich, Marcel’s son, who became president of the U.S. subsidiary in 1982, later told Investor Relations that, “With hindsight we should have given out more information and done it faster to avoid the inaccuracies and exaggerations that appeared in the press.”

According to BIC, the company has defended itself in more than 50 lawsuits involving lighters between 1988 and 1993, losing only three. In one of those, however, a jury in Creek County, Oklahoma, found BIC responsible for injuries to three children severely burned while playing with a lighter, awarding $22 million in actual and punitive damages. The lighter allegedly exploded when it was dropped while lit. Attorneys for the children argued that the lighter should have been more child resistant; BIC argued that the children should have been better supervised.

In its 1992 annual report, the company said it was “vigorously appealing the verdict.” The annual report went on to say, “The legal expenses of defending product liability claims involving lighters continue to be heavy. However, as a result of our longstanding philosophy to vigorously defend these claims, and our success in doing so, the number of lawsuits continues to decline.” The first adverse decision resulted in a $1,000 verdict, and the second verdict that went against BIC has been reversed and remanded for a new trial following BIC’s successful appeal.

Also that year, BIC introduced a lighter with a “child resistant” catch, reportedly the result of a seven-year, $21 million development program. The patented Child Guard lighter required that a safety latch be moved to the side and up before it would light. The latch slid back into place automatically after each use. The Consumer Product Safety Commission has also adopted a child-resistant standard for disposable lighters that will become effective in July 1994.

However, the issue of safety became even more convoluted in 1992 when a U.S. Court of Appeals in Philadelphia ruled that manufacturers of products completely safe when used as intended may also have an obligation to make the product safe in unconventional circumstances. The ruling involved a case in which a three-year-old child took a BIC lighter from his father’s pants pocket and set fire to an infant’s bedclothes. The case, Griggs v. BIC Corp., was remanded to a lower court that had originally dismissed the case. In light of a subsequent decision by the Pennsylvania court, BIC is expected to re-file its motion for summary judgment.

During this time BIC attempted a further diversification by launching a line of inexpensive, pocket-sized perfume “spritzers” in 1989. Marketed under the name Parfum BIC, the fragrances were first introduced by Societe BIC, S.A., in Europe, where they were sold alongside other BIC products. Analysts were skeptical whether U.S. consumers would accept an inexpensive French perfume since part of the appeal of French perfumes lay in their image as luxurious and expensive. Despite an ad campaign that Advertising Age estimated as costing $22 million, touting the fragrances as “Paris in your pocket,” Parfum BIC lasted less than a year in the United States. Sales of the fragrances lasted longer in Europe, but were eventually dropped overseas as well in 1991.

In 1992, BIC purchased Wite-Out Products, Inc., the second largest maker of correction fluids for office use in the United States. The correction fluid was subsequently reintroduced as BIC Wite-Out. The company also changed the name of its Writing Instruments division to Stationery Products, indicating an intention to market an expanded line of stationery related products, while continuing to expand its successful lines of pens, lighters, and shavers. The company reported its highest ever sales and earnings in 1992, and moved its trading from the American Stock Exchange to the New York Stock Exchange. Recent corporate literature has reaffirmed the company’s intent to produce “excellent consumable products at the lowest possible price.”

Principal Subsidiaries

BIC Sport, Inc.

BIC Corporation

views updated Jun 11 2018

BIC Corporation

500 BIC Drive
Milford, Connecticut 06460
U.S.A.
(203) 783-2000
Fax: (203) 783-2081

86% Owned Subsidiary of Société BIC, SA.
Incorporated: 1958 as Waterman-BIC Pen Corporation
Employees: 2,700
Sales: $1.2 billion (1996)
SICs: 3951 Pens & Mechanical Pencils; 3999 Manufacturing Industries, Not Elsewhere Classified; 3421 Cutlery

BIC Corporation is the country’s leading manufacturer of disposable ballpoint pens and cigarette lighters. It is also an industry leader in the production of disposable shavers. BIC has extensive manufacturing facilities in North and South America, including in Toronto, Canada; Milford, Connecticut; Clearwa-ter and St. Petersburg, Florida; Guatemala City, Guatemala; and Cuautitlan, Mexico. BIC’s products are primarily low-cost plastic items. Its pens, lighters, and shavers are typically the most affordable in their category, retailing for less than other brands. Pens comprise about half of the company’s production, as well as half of its sales and earnings. One of BIC’s most prominent products is its clear plastic ballpoint. BIC’s lighter is the top-selling lighter in North America, first popularized in the 1970s with the slogan “Rick my BIC.” BIC also makes correction fluid and correction pens and has acquired a premium pen manufacturer, Sheaffer.

Early History

The company was founded by Marcel Bich, who left his job as production manager for an ink company in 1945 to set up his own business outside of Paris, manufacturing parts for fountain pens and mechanical pencils. During this time ballpoint pens, although still very expensive, were becoming popular in Europe, and the first ballpoint pens were introduced in the United States, selling for $12.50 each at New York’s Gimbel’s Department Store.

First Bich expanded his business to include the manufacture of plastic barrels for ballpoint pen companies, and then, in 1949, he introduced his own line of ballpoint pens. Called BICs—using the phonetic spelling of Bich’s name—the pens were of a simple design, nonretractable with clear plastic barrels, and sold for around 19 cents each. Whereas early ballpoint pens were known to clog and leak, Bich’s pens proved reliable and achieved immediate success in Europe with annual sales exceeding $5 million by 1955. Bich then turned his attention to marketing his products in the United States.

The Waterman Pen Company in Seymour, Connecticut was founded by Lewis E. Waterman, a U.S. insurance salesperson and part-time inventor, who developed the first practical fountain pen in 1884. At one time Waterman Pen was the world’s leading maker of fountain pens. In the 1950s, however, with the growing popularity of ballpoint pens, the company had begun to falter. In 1958 Bich agreed to purchase 60 percent of the company for $1 million. When the true financial condition of the company became known, Bich was able to acquire the remaining 40 percent for nothing. The company was renamed the Waterman-BIC Pen Corporation, and its headquarters was moved to Milford, Connecticut.

The inexpensive BIC pens did not catch on as quickly in the United States as they had in Europe, probably because the U.S. market had been flooded with shoddy pens by other companies. The leading brand in the “over-a-dollar” pen market was made by the PaperMate pen company, purchased in 1955 by The Gillette Company. Bich’s U.S. managers urged him to make a more expensive ballpoint to compete with PaperMate, but Bich resisted. He reportedly told his advisers, “Waterman is 100 percent mine. You are going to do what you are told.”

Expansion in the 1960s

In the early 1960s Waterman-BIC launched an aggressive television advertising campaign that boasted that BIC pens would write “First Time, Every Time.” To prove that a 29 cent BIC pen would perform as well as pens costing several times more, the commercials showed BIC pens still working after being drilled through wallboard, shot from guns, fire-blasted, and strapped to the feet of ice skaters. In another effort to establish a market in the United States, Waterman-BIC distributed its pens for sale in grocery stores and small shops near schools where students congregated, rather than in the department stores that carried more expensive pens.

After a rocky start, Waterman-BIC established itself as the largest maker of ballpoint pens in the United States. By 1967 the company was turning out nearly 500 million pens annually, accounting for nearly 60 percent of the U.S. market. In 1972 Time reported, “Baron Bich has done for ballpoints what Henry Ford did for cars: he has produced a cheap but serviceable model.” In 1974 a reporter for Forbes wrote, “From the start, Bich concentrated on the cheap end of the market—but with a difference. Where his competitors were turning out junk, Bich made a reliable pen that could command a premium, but still cheap price…. By the time his competitors figured out how to build an equally good pen for the price, Bich had a lock on the market.”

In 1971 Waterman-BIC became the BIC Pen Corporation, more accurately reflecting its business. That name soon became outdated, however, as the company embarked on its first diversification.

Expanding Its Product Line in the 1970s

In 1970 Gillette purchased the S. T. Dupont Company, a prestigious French manufacturer whose principal product was luxury cigarette lighters that sold for hundreds of dollars. During this time Dupont explored the possibilities of marketing a disposable lighter, developing an inexpensive disposable lighter called Cricket, which it introduced in the United States in 1972. Later that year Time reported that BIC was test marketing a disposable lighter that could provide 3,000 lights before wearing out. BIC introduced this lighter in 1973.

To compete with Gillette, which was solidly entrenched as the market leader, BIC again turned to creative television advertising. A series of commercials soon showed sensuous women urging cigarette smokers to “Flick my BIC,” a phrase perceived as having sexual connotations, that soon became a part of the national lexicon. Writing about network censors in The Best Thing on TV: Commercials, Jonathan Price remarked, “They absolutely do not see sex in advertising if it’s blatant…. They can find sex in a garage mechanic talking about shock absorbers. But let somebody say, ‘Flick my BIC,’—this is beautifully obscene—everyone nods their heads and lets that go, because… well, we know you can’t possibly mean that, that would be obscene.”

BIC also slashed the wholesale price of its lighters so they sold at retail for less than one dollar. This action set off a fierce price war with Gillette. But, by the end of 1978, BIC had surpassed Cricket and, in 1984, Gillette acknowledged defeat. It pulled Cricket from the market and later sold the brand to Swedish Match Corporation, which licensed the lighter for distribution in the United States. At the time BIC controlled about 65 percent of the market for disposable lighters.

During the time that BIC and Gillette were battling over disposable lighters, the companies were also going head-to-head for a new segment of Gillette’s traditional business, disposable shavers. King C. Gillette had invented the safety razor in 1903, and the company he founded dominated the market for the next 70 years. Then in 1975, BIC’s parent corporation, the French Société BIC, S.A., introduced a disposable plastic shaver in Europe. Anticipating that BIC next would bring out the shaver in the United States, Gillette quickly introduced its own disposable razor dubbed “Good News!” in 1976, a full year before the BIC shaver made its U.S. debut. Gillette seriously underestimated the demand for disposable razors, however. Furthermore, it was not eager to see customers switch from its reusable razor systems to its disposables, since Good News! cost more to make and sold for less than the company’s replacement blades. Therefore, Gillette spent very little on advertising.

BIC, however, advertised heavily, again relying on catchy television commercials. In one series of commercials, people were blindfolded and shaved by professional barbers, using either the BIC Shaver or Gillette’s nondisposable Trac II razor. According to the ads, 58 percent of the participants claimed that there was no difference between the BIC shave and the Gillette shave. Gillette leaders were incensed by the ads and asked the three major television networks not to run the commercials unless BIC could document its claims.

By the end of 1979 Gillette and BIC each controlled about 50 percent of the market for disposables, which had grown to represent 20 percent of the total market for wet-shave razors. Disposables were especially popular among teenagers, and women appreciated the BIC Lady Shaver, the first razor specially designed and marketed with them in mind. Within ten years, Gillette would stop advertising its disposables to concentrate on its razor systems and replacement blades.

Company Perspectives:

Bic’s core activities are the manufacture and sale of stationery products, lighters and shavers. Bic monitors the entire manufacturing process, giving constant attention to the development and improvement of its products. Bic’s aim is to provide consumers with top quality products for their day-to-day lives at the minimum fair price.

Challenges in the 1980s

In 1982, with revenues approaching $220 million, BIC acknowledged its expanding status as a leading maker of lighters and shavers by dropping “pen” from its name to become, officially, BIC Corporation. By then BIC had also taken a tentative step into sports equipment. In 1982 the company introduced the BIC Sailboard, which quickly became the North American market leader. In 1985, however, the company was forced to stop selling the sailboard in the United States when a U.S. District Court ruled that BIC had infringed on a patent owned by Windsurfing International. BIC reintroduced the sail-board to the U.S. market when the patent expired in 1987.

Having weathered fierce competitive battles for three decades, BIC faced perhaps its most serious threat in April 1987 when the New York Times reported that at least three people had died because BIC lighters had malfunctioned. The newspaper also reported that the company agreed to pay $3.2 million in damages to a Pennsylvania woman who claimed her lighter ignited in a pocket while she was on a camping trip.

The Pennsylvania case was the first involving BIC to go to trial, and the Times reported that although “claims began to trickle in soon after Bic introduced its throwaway lighters in 1972… the company has until recently been able to keep the cases quiet by settling them out of court.” The newspaper stated that BIC had settled more than 20 cases for amounts ranging from $5,000 to almost $500,000. During the trial, design engineers testified that BIC lighters occasionally leaked, and debris could cause the shut-off valve to fail. There were also reports of BIC lighters flaring up while they were being used or accidentally igniting while lying on overheated automobile dashboards.

At the time lighters accounted for about 40 percent of BIC’s revenues, and the day the story appeared, BIC stock fell 25 percent, from $32 to $24 per share. For a week the company stonewalled, refusing to provide information or answer questions about the allegations amid rumors that thousands of lawsuits had been brought against the company and that a New Jersey congressman was threatening to hold hearings on the safety of BIC lighters. Eventually, the company changed its tactics and revealed that there were 42 lawsuits then pending. BIC maintained that most of the incidents were caused by user negligence. Also acknowledging that a woman had died in an accident involving one of its lighters, BIC reassured the public that it had discontinued the model that was involved in the accident.

As a result of BIC management’s candor, the company’s stock began to regain value. Although it stumbled again briefly in September following the airing of the ABC television program “20/20,” which featured a story on lighter safety, the stock was back to $31 per share by October. Bruno Bich, Marcel’s son, who became president of the U.S. subsidiary in 1982, later told Investor Relations, “With hindsight we should have given out more information and done it faster to avoid the inaccuracies and exaggerations that appeared in the press.”

Safety Issues in the Early 1990s

According to BIC, the company defended itself in more than 50 lawsuits involving lighters between 1988 and 1993, losing only three. In one of those, however, a jury in Creek County, Oklahoma found BIC responsible for injuries to three children severely burned while playing with a lighter, awarding $22 million in actual and punitive damages. The lighter allegedly exploded when it was dropped while lit. Attorneys for the children argued that the lighter should have been more child resistant; BIC argued that the children should have been better supervised.

In its 1992 annual report, the company said it was “vigorously appealing the verdict.” The annual report went on to say, “The legal expenses of defending product liability claims involving lighters continue to be heavy. However, as a result of our longstanding philosophy to vigorously defend these claims, and our success in doing so, the number of lawsuits continues to decline.” The first adverse decision resulted in a $1,000 verdict, and the second verdict that went against BIC was reversed and remanded for a new trial following BIC’s successful appeal.

Also that year, BIC introduced a lighter with a “child resistant” catch, reportedly the result of a seven-year, $21 million development program. The patented Child Guard lighter required that a safety latch be moved to the side and up before it would light. The latch slid back into place automatically after each use. The Consumer Product Safety Commission also adopted a child-resistant standard for disposable lighters that became effective in July 1994.

The issue of safety became even more convoluted in 1992, however, when a U.S. Court of Appeals in Philadelphia ruled that manufacturers of products completely safe when used as intended may also have an obligation to make the product safe in unconventional circumstances. The ruling involved a case in which a three-year-old child took a BIC lighter from his father’s pants pocket and set fire to an infant’s bedclothes. The case, Griggs v. BIC Corp., was remanded to a lower court that had originally dismissed the case.

Other Developments in the 1990s

During this time BIC attempted a further diversification by launching a line of inexpensive, pocket-sized perfume “spritzers” in 1989. Marketed under the name Parfum BIC, the fragrances were first introduced by Société BIC, S.A. in Europe, where they were sold alongside other BIC products. Analysts were skeptical whether U.S. consumers would accept an inexpensive French perfume since part of the appeal of French perfumes lay in their image as luxurious and expensive. Despite an ad campaign that Advertising Age estimated as costing $22 million, touting the fragrances as “Paris in your pocket,” Parfum BIC lasted less than a year in the United States. Sales of the fragrances lasted longer in Europe, but were eventually dropped overseas as well in 1991.

In 1992 BIC purchased Wite-Out Products, Inc., the second largest maker of correction fluids for office use in the United States. The correction fluid subsequently was reintroduced as BIC Wite-Out. The company also changed the name of its Writing Instruments division to Stationery Products, indicating an intention to market an expanded line of stationery-related products, while continuing to expand its successful lines of pens, lighters, and shavers. The company reported its highest ever sales and earnings in 1992 and moved its trading from the American Stock Exchange to the New York Stock Exchange.

The company’s share price climbed astronomically in the early 1990s, rising from $8 a share in November 1990 to peak at $41 by March 1993. Though BIC still trailed Gillette’s pens in terms of pens sold to offices, the firm led the market for pens sold to individuals and had enhanced its line with many attractive new models. BIC marketed a line of “fashion” pens, featuring bright colors and graphics wrapped around the barrel, to appeal to children and teenagers. This so-called Wavelengths line soon led the market in the fashion pen category. BIC also broke out a new shaver, a twin-blade model. BIC’s lighters also continued to sell well, enhanced with the new child-resistant features. By the mid-1990s lighters accounted for 24 percent of the company’s sales. Lighters continued to be profitable for BIC in spite of increasing competition from China and Thailand. In 1994 BIC filed a petition with the Department of Commerce and the U.S. International Trade Commission asking to impose antidumping duties against disposable lighters from these two countries. BIC alleged that imports from China and Thailand were being sold at below market value, with lighters going for as little as six cents each wholesale, and the numbers of such cheap lighters were increasing yearly. Nevertheless, BIC, with its massive name recognition, did not appear to be struggling.

The company’s great profitability seemed due to its efficient, low-cost manufacturing. Double-digit growth in sales and net income was steady and, sometimes, spectacular. For the fourth quarter of 1995, BIC announced a 22 percent increase in profits and a 17 percent increase in sales. The company was a Wall Street favorite. Even when the stocks of many name-brand consumer product manufacturers hit a bump in the summer of 1993, analysts predicted more rosy growth for BIC. In 1995, with exchange rates very favorable to the French franc, BIC’s parent, Société BIC, S.A., offered to buy up a large chunk of BIC Corporation’s stock and take the company private. The offer came at a time when there was some speculation that rising plastic prices might cut into BIC Corporation’s profit margins. Société BIC was anxious to take advantage of the weak dollar and quickly made a sweet deal with stockholders to secure the merger. In December 1995 BIC Corporation ceased trading as a public company on the New York Stock Exchange. Société BIC now owned 86 percent of its U.S. subsidiary.

After the merger, business did not change substantially at BIC Corporation. The company had for the most part operated independently of its European parent, and the relationship did not alter after BIC Corporation went private. The company brought out a correction pen in 1996, using technology gained from its earlier acquisition of Wite-Out. This strengthened BIC’s position in the correction products market. Another significant development in the late 1990s was BIC’s acquisition of Sheaffer Group in 1997. The privately held Fort Madison, Iowa company manufactured high-end fountain pens, ballpoints, roller pens, and pencils. Sheaffer pens retailed from $25 to as much as $5,000 each, in stark contrast to BIC’s line, all of which sold for less than a couple of dollars. BIC planned to continue to market the Sheaffer pens under the Sheaffer name. The acquisition of Sheaffer put BIC in a better position against its long-time competitor Gillette, which had acquired two high-end pen companies several years earlier.

Principal Subsidiaries

BIC Sport, Inc.; Guy Laroche NA; Bic Inc. (Canada); No Sabe Fallar SA (Mexico); Bic de Guatemala; Bic Puerto Rico.

BIC Corporation

views updated Jun 11 2018

BIC Corporation

founded: 1958

Contact Information:

headquarters: 500 bic dr.
milford, ct 06460 phone: (203)783-2000 fax: (203)783-2086 url: http://www.bicworld.com http://www.qualitycomesinwriting.com

OVERVIEW

BIC Corporation is a leading manufacturer of stationery products, lighters, and shavers and, as of 1997, was a subsidiary of Societe Bic. With strong profits and annual sales in excess of $500 million ($439.3 million in 1996), BIC Corporation handles all of the company's business in North and Central America. The company has facilities in nine locations in North America, Guatemala, and Mexico. As of 1998, the company manufactured about 3.0 million ballpoint pens, 2.5 million shavers, and 1.0 million lighters per day.

HISTORY

BIC traces its beginnings to 1945, when Marcel Bich, a former production manager for a French ink manufacturer, purchased a factory outside Paris with partner Edouard Buffard to make fountain pen parts and mechanical lead pencils. They founded the company that would later become Bic. Soon after founding the business, Bich began to explore the idea of a reliable, low-cost ballpoint pen. In 1949, Bich introduced the BIC ball-point pen (shortened from his name) in Europe. The pen was successful in Europe, and in 1958 Bich purchased the Waterman Pen Company, based in Seymour, Connecticut, to gain access to the U.S. market.

In 1959, BIC pens were introduced to the U.S. market with a successful advertising and marketing campaign. A television ad campaign, with the slogan "Writes first time, every time—and for only 29 cents," was credited with creating broad appeal for the BIC pen in the United States. In 1963 Waterman-BIC, which later became BIC Corporation, moved into new facilities in Mil-ford, Connecticut. In 1967, the BIC Canada division was created, and in 1971, BIC Pen Corp. became a publicly traded company listed on the American Stock Exchange. The name was later shortened to BIC Corporation.

In 1973, BIC Corporation introduced the BIC Lighter, which became the top-selling lighter in North America. Again, a successful advertising campaign was credited with creating strong awareness and demand for the product. The slogan "Flick my BIC" was particularly memorable. In 1976, BIC Corporation continued its string of successful new product launches with the introduction of the BIC Shaver, which became a leading disposable shaver in world markets.

BIC Corporation launched its Specials Markets Division in 1978 to serve the promotional products industry with advertising specialty products. Another division, BIC Sports, was started up in 1981 to market sailboards; by 1996 BIC Sports was the world's leading sailboard company. In 1992 BIC acquired Wite-Out Products Inc. and began selling a complete line of BIC Wite Out correction fluids. During the same year, BIC introduced the BIC Lighter with Child Guard, a lighter with enhanced child-resistant features.

In the early 1990s, BIC Corporation faced major legal challenges to its disposable lighter business in the United States. Many product liability suits were filed against BIC Corporation alleging that its lighters caused personal injury. While almost all of these cases were decided in the favor of BIC Corp., the company had to pay costly bills for its legal defense. BIC Corporation's policy was to litigate rather than settle all product liability claims. According to one market analyst, while this was an expensive process, it helped dramatically reduce the number of new claims filed against BIC Corporation.

In 1998, BIC purchased the Sheaffer Pen Corporation, a Fort Madison, Iowa-based manufacturer. It was the fifth-largest pen manufacturer in the world, and this acquisition added premium writing instruments to Bic's line of product offerings.

FAST FACTS: About BIC Corporation

Ownership: BIC Corporation is a privately held company and a subsidiary of Societe BIC SA, which is traded on the Paris Stock Exchange.

Officers: Bruno Bich, Chmn. & CEO; Raymond Winter, Pres. & COO

Employees: 2,700

Principal Subsidiary Companies: BIC Corporation's primary subsidiary is the Special Markets Division, which had annual sales of $17 million in 1996.

Chief Competitors: BIC Corporation manufactures and markets writing instruments, razors, and lighters. Competitors in those industries include: American Safety Razor; Gillette; PaperMate; Pentel; Pilot; Sanford; Schick; and Warner-Lambert.

STRATEGY

BIC Corporation's basic business strategy in the late 1990s was to produce and market low-cost, high-quality stationery products, lighters, and shavers. The company also pledged to continually seek innovative extensions that distinguished its products from lower-price competitors. For example, while in the early 1990s BIC Corporation was said to have lost market share to cheaper (and lower-quality) imported Asian lighters, the company was able to reverse the trend by implementing more effective marketing and introducing value-added, higher-margin product line extensions. One of Bic's most successful product introductions was its "wrapped product," which consisted of a BIC disposable lighter with a decorative plastic wrap adhered to the body of the lighter. In 1993, BIC released a new series of limited edition, marble-finish lighters and a line of sports lighters featuring color illustrations of baseball, football, auto racing, boating, and other sports.

Another part of BIC Corporation's strategy was to grow through acquisitions. In June 1992, the company acquired Wite-Out Products Inc., the second-largest manufacturer of correction fluid, for $19.9 million in cash. BIC made modifications in the product—including formula improvements and changing the name of the brand to BIC Wite-Out—and was able to increase its market share in the category. The company's 1997 acquisition of Schaeffer also helped increase Bic's market share by adding premium writing instruments to its product offerings.

INFLUENCES

The enactment of federal rules requiring that all disposable lighters sold in the United States be "child-resistant" was seen as a beneficial development for Bic. The company developed and patented a child-resistant lighter design said to be superior to those of competitors' products. Since requirements for designing a child-safe lighter were difficult to meet, Bic—with its patented design—had a competitive advantage over other producers.

In the early to mid-1990s, BIC Corporation was also able to revitalize its writing instrument sales by applying the same line extension strategy used for its lighter products (the application of decorative wraps). For example, in the early 1990s, the BIC Wavelengths line of pens and mechanical pencils was broadened to include new designs, including a heat-sensitive pen that changes color as it is held.

In the disposable razor market, BIC Corporation continued to seek new markets by expanding its product line in the early to mid-1990s. The line included the BIC Shaver for Normal Skin, the BIC Lady Shaver, BIC Metal, BIC Pastel Shavers, and twin-blade products. As of 1993, BIC Corporation accounted for 11 percent of the U.S. shaver market measured in revenues and 22.6 percent of the market measured in unit volume (due to the lower price of BIC shavers).

CURRENT TRENDS

New products have long been a growth area for BIC Corporation, and the company continued to roll out many new products in the 1990s. Many of BIC Corporation's writing instruments were tailored for specific age ranges or population categories. For example, Go-Gos were aimed at 10-year-olds, Spring Fever for girls aged 10 to 18, and the Football and Basketball Series for 10 to 14 year old boys. The company's Fashion Rollers included the Bouquet brand, which appealed to young girls, while the Old World brand appealed to businessmen.

PRODUCTS

BIC products include pens, pencils, lighters, and disposable razors. BIC introduced Wavelengths fashion pens and pencils to the United States in 1990, and they soon became very popular. In the mid-1990s, the Wavelengths line in North America was broadened with new designs and the introduction of a series of Fashion Rollers. The company reported strong sales of both its Wavelengths and Classic pens. Also in 1996, BIC rolled out its new Wite-Out Pen, a no-squeeze correction pen. In January 1997, BIC released a line of decorator pens featuring a wraparound PVC shrinkband printed with a universal product code (UPC) that allowed consumers to purchase the pens individually or in packs.

CHRONOLOGY: Key Dates for BIC Corporation

1945:: Marcel Bich and Edouard Bufford start making pen parts in France
1949:: Introduces the BIC ballpoint pen
1958:: Purchases the Waterman Pen Company located in Seymour, Connecticut, to become Waterman-BIC
1959:: BIC pens are introduced into the U.S. market
1963:: Moves to Milford, Connecticut
1967:: BIC Canada division is created
1971:: BIC Pen Corp. becomes a publicly traded company
1973:: Introduces the BIC Lighter
1976:: Introduces the BIC Shaver
1978:: Launches the Special Markets Division
1981:: Starts BIC Sports
1992:: Acquires Wite-Out Products Inc.
1996:: BIC Sports becomes the world's leading sailboard company; introduces the Wite-Out Pen
1998:: Purchases Sheaffer Pen Corporation

In February 1994, BIC Corporation launched its first-ever line of twin-blade disposable razors, including the BIC Twin Select and Twin Pastel. The new line was designed to compete with Gillette Company's Blue II Plus. In 1996, BIC Corporation introduced its Twin Select Tough Beard Shaver, the first shaver for tough or heavy beards. The company reported strong sales of its twin blade products in 1996.

CORPORATE CITIZENSHIP

In order to further educational development, BIC offers "Quality Comes in Writing," an educational program created for the company by Lifetime Learning Systems. It is available to teachers at no charge on the program's Web site at http://www.qualitycomesinwriting.com. The program is designed to help students in grades 4 through 6 develop strong writing skills through interesting activities. Students practice writing skills as they decode, create, and write their own stories, study and write ballads, and keep a hypothetical journal for a famous person. The program contains four Activity Masters, which can be copied so students can use them as worksheets; a Teacher's Guide that includes a list of the program's objectives, suggestions for introducing activities, and follow-up activities; a poster of writing hints for classroom display; and 30 take-home booklets to promote parental involvement in the writing process outside the classroom.

BIC Corporation's status as a good corporate citizen was on shaky ground in the eyes of some students, however. Students at Bristol Eastern High School tried to curb Bic's product testing on animals. Earthlings, a student environmental group, sponsored a "pen swap" in hopes of encouraging peers to trade in BIC pens (the ink is tested on animals) with those from Pilot, one of the few writing instrument manufacturers that does not do animal testing. The group got the information from the PETA (People for the Ethical Treatment of Animals) Internet site, which contains information claiming BIC tests its ink in the eyes of rabbits and beagles. Pilot donated pens for the product exchange. In response, BIC claimed in March 1997, that animal testing was required by law ". . . to determine the safety . . . of any new formulations for . . . inks or correction fluids," as reported in The Tattoo: A student publication of The Bristol Press. "There is no ongoing testing," the statement says, contrary to PETA's claims. Students went ahead with the pen swap after hearing that Gillette (owned by Bic) and Pilot were both able to use older test data to get around the law requiring testing.

GLOBAL PRESENCE

BIC Corporation's international operations include subsidiaries in Canada, Mexico, Puerto Rico, and Guatemala. As of 1996, the company did not operate in Europe or Asia—markets being served by parent company Societe Bic. Sales by foreign subsidiaries accounted for about 20 percent of BIC Corporation's sales in the mid-1990s.

WRITING FOR MILES

BIC sells over 14 billion pens in 150 different countries every day. Each of BIC's medium point pens can write for more than two miles, and each fine point pen will write for more than three miles. Combined, that's enough ink to cover the Great Wall of China almost 2 million times per day!

BIC takes great care in making and packaging their world-renowned ball-point pens; each pen gets special attention. The whole process starts with huge 600 gallon tanks of BIC's own ink. They use black ink the most, followed by blue, red, and green. After making the ink, tungsten carbide pellets are ground into finished balls. This process takes more than 60 machine hours, and the balls are then visually inspected using a special screen. In all, 17 quality checks are made during the ball-grinding and point-making process.

The next step in the BIC production process is the cartridge assembly, where the ink is injected into the plastic tubes. Once they are filled, a robotic arm puts them in a centrifuge machine where all excess air is removed. Completed ink cartridges are then transported to the final assembly area by the BIC robot, which looks like the BIC Boy logo and travels throughout the halls just like a regular BIC employee. The robot can transport as many as 100,000 cartridges at a time.

During this time, injection-molding machines, along with plastic extruders, are used to create the barrels and caps for the pens. Caps and barrels start out as plastic pellets and are placed inside machines that run at temperatures of 400 Fahrenheit degrees. The machines shape the outside of the pens. Once the pens are assembled, they are packaged and sealed into boxes. From there they are shipped out all over the world.

EMPLOYMENT

According to the company, BIC invests heavily in employee training and technology. Employees are able to expand and grow with the company through their Employee Involvement Program in which individual ideas and suggestions are "recognized, implemented and rewarded."

SOURCES OF INFORMATION

Bibliography

bic corporation company report. new york: smith barney shearson, 20 august 1993.

bic corporation—quality comes in writing web site, june 1998. available at http://www.qualitycomesinwriting.com.

bic corporation web site, june 1998. available at http://www.bicworld.com.

"eastern students plan pen protest." the tattoo: a student publication of the bristol press, 7 april 1997. available at http://ourworld.compuserve.com/homepages/majerus_collins/bicpens.htm.

fox, harriet lane. "bic launch sets off razor wars." marketing, 3 february 1994.

hartman, lauren r. "bic pens a bestseller with shrinkbands." packaging digest, january 1997.

kaplan, andrew. "scorching demand for lighters." distribution journal, 15 april 1996.

societe bic 1996 annual report. clichy, france: societe bic, 1997.

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. bic's primary sics are:

3421 cutlery

3951 pens and mechanical pencils

3999 manufacturing industries, nec

Company Profiles for Students

BIC Corporation

BIC Corporation

Principal Subsidiaries

Further Reading

BIC Corporation

BIC Corporation

Early History

Expansion in the 1960s

Expanding Its Product Line in the 1970s

Company Perspectives:

Challenges in the 1980s

Safety Issues in the Early 1990s

Other Developments in the 1990s

Principal Subsidiaries

Further Reading

BIC Corporation

BIC Corporation

Contact Information:

OVERVIEW

HISTORY

FAST FACTS: About BIC Corporation

STRATEGY

INFLUENCES

CURRENT TRENDS

PRODUCTS

CHRONOLOGY: Key Dates for BIC Corporation

CORPORATE CITIZENSHIP

GLOBAL PRESENCE

WRITING FOR MILES

EMPLOYMENT

SOURCES OF INFORMATION

Bibliography

For additional industry research:

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