Writing innovations cater to both fashion and function

WRITING IT OUT: A.T. Cross CEO Chad Mellen said the recently acquired Sheaffer unit is “strong where Cross is not as strong,” including with its growing calligraphy business. / COURTESY A.T. CROSS
WRITING IT OUT: A.T. Cross CEO Chad Mellen said the recently acquired Sheaffer unit is “strong where Cross is not as strong,” including with its growing calligraphy business. / COURTESY A.T. CROSS

Lincoln-based A.T. Cross Co. is in some ways a brand new 175-year-old company. Founded in 1839, the high-end pen maker was sold to private equity firm Clarion Capital Partners in July 2013, while its former eyeglass division was renamed and eventually sold as well.
Now privately held, Cross can focus more exclusively on the writing-instrument market and last month announced the acquisition of the Sheaffer pen brand from BIC for $15 million. CEO Chad Mellen, who was picked to lead the Cross accessory division (which includes pens) in 2008 and then named CEO by Clarion when it bought that division last year, is working to counter the impression that writing instruments are tools of the past.

PBN: Is innovation taking place in pen making, or is the business more about maintaining traditional standards?
MELLEN: There is definitely innovation. You have to look at it more as an accessory instead of a functional tool. The first source of growth is to reflect fashion trends, which are always changing: yellow metals to white metals, certain colors in apparel. We reflect that. The second thing is truly functional innovation and that comes around traditional writing – physical ink dropped on paper – and digital ink, or the stylus market for interacting with electronics. In traditional ink on paper, Cross has had tremendous innovation such as an antibacterial pen, which looks like a Cross pen and kills bacteria when you touch it. … We introduced satin ink, which combines all the benefits of ballpoint ink, which dries quickly and doesn’t smear, with the benefits of gel ink, which gives a deep, dark color and writes smoothly. In digital stuff we are partnering with Samsung to develop styluses for their products.

PBN: Does Cross have a lot at stake in Android or non-Apple devices doing well because Apple is anti-stylus?
MELLEN: No. The rubber styluses are operating-system agnostic and can work with any product, Apple, Android, Microsoft or other. They just replicate your finger with a point the size of a ballpoint tip, so you can do handwriting and it’s less big and awkward. The next generation is about an electronic stylus, which is more complicated. That is a complex issue, because dealing with different operating systems is complex. … [But] there is still a vibrant market for the pen as an accessory. When people say the pen is going the way of the typewriter, they are wrong. It is not.

PBN: How has Cross changed, if it has, since being acquired by Clarion?
MELLEN: It has. As a public company there was a quarter-to-quarter focus, how the company was performing in the current and past quarter. Clarion’s focus is much more long term and on how we drive growth over multiple years. That has allowed us to make investments in opportunities that we may not have been able to before. The Sheaffer deal would have been difficult under the public company. It might have been dilutive to earnings in the short term, but in the long term should drive tremendous growth.

PBN: Why did you buy Sheaffer?
MELLEN: It is a really great global brand in the writing-instrument category. Since 1913 it has been an American brand. It has great consumer strength and retailer strength. But even though it is a U.S. brand, the majority of its sales are outside the U.S. We were very interested in bringing on a brand with that strength. The second thing is product assortment. Sheaffer is strong where Cross is not as strong. Sheaffer has an extensive and growing calligraphy business and we don’t have that at Cross. … The third thing is their distribution strength in certain markets.

PBN: How big is Sheaffer?
MELLEN: Sheaffer is about 30 percent the size of Cross as a business. But when you look at developing markets like India or Mexico, it is bigger. It is very strong in the United Kingdom and Japan.

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PBN: Are the emerging markets where all the growth is?
MELLEN: For Cross, 65 percent of sales are outside the U.S. For Sheaffer it is higher than that. There is organic growth outside the U.S. in most developed markets like Mexico, Latin America, the Middle East, India and China. In the mature markets – the U.S., U.K., Japan – growth comes from share gain. While we are growing in those markets, it is share-gain growth, whereas there is organic growth in the emerging markets.

PBN: Do you plan to bring Sheaffer manufacturing in with Cross?
MELLEN: We are both global companies and both look at where it is best to manufacture, where the supply chain is most efficient. Sheaffer buys the majority of inventory through factories it does not own. Our intent is to bring it within the Cross-owned factories.

PBN: What are your biggest challenges right now?
MELLEN: This is a very competitive category and growth comes from taking market share, so it is imperative to take market share in a relatively low-growing category. The other thing is how we get talented people to come to Cross and Rhode Island. We compete in a global marketplace and need people who know not only the U.S. market, but the Asian, European and Latin American markets and getting those people has not been easy. •

INTERVIEW
Chad Mellen
POSITION: CEO, A.T. Cross Co.
BACKGROUND: An Ohio native, Mellen has 25 years of experience in consumer-brand management and came to A.T. Cross in 2005 as vice president of global marketing.
EDUCATION: Bachelor of science in economics, University of Pennsylvania, 1985
FIRST JOB: Dishwasher
RESIDENCE: Barrington
AGE: 51

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