NATIONAL PEN CO.
CEO: Dave Thompson.
Revenue: $194 million in 2011; on track for $210 million this year.
No. of local employees: 150.
Owner: Lincolnshire Management.
Headquarters: Scripps Ranch.
Promotional giveaways like pens imprinted with a business name may seem like the poor man’s mode of advertising, but not to San Diego-based National Pen Co. Nat Pen, as it’s called by those belonging to the team, is busier than ever this time of year, knocking out orders for clients who want to make sure they let their customers know they appreciate them, says Dave Thompson, chief executive officer.
“This time of year we’re processing about 7,000 orders a day,” Thompson said.
The majority of those orders come from small businesses with less than 20 employees that don’t have big advertising budgets but understand the importance of saying thanks, he said.
“Our typical customer is Joe the plumber,” Thompson said. “It’s the local pizza shop, or a beautician … and the normal order involves pens, flashlights and calendars.”
Though the products are modest, it’s the sentiment that resonates with customers.
“This is a great way to promote your business and to say to your customers, thank you for being my customer,” Thompson said.
Checking National Pen’s recent annual sales figures, the freebies given to customers aren’t going out of style. This year, revenue should hit $210 million, up from $194 million in 2011.
Private Equity Purchase
Nat Pen’s prospects should continue to improve following its sale last month to Lincolnshire Management, a private equity firm based in New York City, Thompson said.
The sellers were Berwind Corp., a family-owned investment management firm, based in Philadelphia. The sale price was not disclosed.
“Berwind were fantastic owners, and I expect that Lincolnshire will be exactly the same,” said Thompson, who took the top job in 2009.
Nat Pen was founded in 1948 as Modern Mold and Tool in Brooklyn, N.Y., making some of the first ballpoint pens ever produced in the United States. In 1966, the owners — the Liguori family — shifted the business to making personalized pens and other promotional materials. Ten years later, they moved the company to San Diego, “because the owner felt like this was a terrific place to live,” Thompson said.
Over its 64 years Nat Pen has made more than 3 billion pens, Thompson said, but now most are manufactured in China. It operates three main plants in Tijuana, Tennessee, and Ireland where most of the custom imprinting occurs, and ships its products to about 20 countries.
During the peak production cycle from September to Christmas, Nat Pen’s employment expands to about 1,650, but during the rest of the year drops to about 1,300, Thompson said.
The bulk of the workers, around 500, are at its three factories. It has about 150 employees at its corporate headquarters in Scripps Ranch, he said.
Identifying New Customers
In recent years, Nat Pen has been more adept at figuring out where it can pick up new customers through the use of market research analysis that shows what businesses are more likely to yield orders.
Ralph Pesqueira, the owner of El Indio Shops Inc., operator of the Mission Hills-based Mexican restaurant, said he’s been using Nat Pen’s products for several years.
“It’s kind of a way of thanking our customers, and giving them something that’s useful,” Pesqueira said.
With the upcoming Christmas tamale-making season near, El Indio will be busy selling loads of masa dough for tamales. Along with those sales, the store will pass out calendars and probably 1,500 pens, he said.
While it’s difficult to say whether the free pens result in new sales, it’s a relatively low-cost way of maintaining good customer contact, Pesqueira said.
Today, Nat Pen counts some 1 million customers, and has licensing agreements with most of the major professional sports leagues and the Walt Disney Co.
While half of the volume it produces is pens, other popular items used by small businesses promoting themselves include mini-flashlights, calculators, Post-it notes, calendars and cards.
When counting all the various products, the entire promotional item industry generated nearly $18 billion in sales last year. Sales of writing implements accounted for about 9 percent of that total, while wearables was the largest category at 30 percent, according to the Promotional Products Association International.
Obviously, it’s a space that breeds lots of competition, but Nat Pen has not only carved out a nice niche, it’s building market share quite well, Thompson said.
“There aren’t many competitors who are interested in filling orders of $200,” he said of the average order size.