Tuesday, July 8, 2003

Folding tool kit marks 20 years

Success despite scorn: Leatherman changed the market

By Andrew Kramer
The Associated Press

The Leatherman pocket tool.
(AP photo)
| ZOOM |
PORTLAND, Ore. - On the crowded streets of Saigon in the early 1970s, Tim Leatherman watched in wonder as Vietnamese teenagers tore down and rebuilt Honda motorcycles with their bare hands.

"I got ashamed, I couldn't do these things myself," Leatherman said. But the ingenuity served as an inspiration.

The Leatherman pocket tool - which celebrated its 20th anniversary Saturday - is owned by one in 12 American men. It revolutionized the pocket knife industry, forcing Swiss Army knife to add pliers to its instruments.

But sales have dropped off in the past three years, largely because of the economy. Trying to boost sales, Leatherman is developing designs that appeal to women and niche markets, such as yachtsmen or bicyclists.

Leatherman tinkered in his Portland garage for eight years before he sold his first tool in 1983, to a German tourist at a Eugene knife show.

He had packed 13 tools - such as needle-nosed pliers, wire cutters, files, knife blades, screwdrivers and a combination can and bottle opener - into 4 inches of stainless steel that weighed 5 ounces.

But Leatherman despaired of ever making money on his invention, first conceived during a car trip through Europe with his wife, Chau, in 1975. The couple had met in college in Oregon, where Chau was an exchange student from South Vietnam.

In 1972, Leatherman quit a drafting job to follow Chau to South Vietnam. He lived in bustling Saigon, where he worked as a helicopter mechanic and watched Vietnamese teens remake motorcycles by hand.

The couple fled in April 1975, a week before the fall of Saigon, and later that year headed to Amsterdam.

"It was a 'What are we going to do with the rest of our lives?' trip," said Leatherman, a slender, soft-spoken man, who wears a shop apron, pockets stuffed with pens and wrenches, as he pads around the factory in Portland.

A problem-prone Fiat car decided it; Leatherman realized that he needed a pocket knife that included basic tools for auto repair. He cut the first designs from cardboard during the trip.

Back in Oregon, the couple lived off Chau's income as a social worker while Leatherman tinkered. And tinkered some more.

After eight years, two dozen or so pocket knife companies had scoffed at his design as glorified pliers, while tool companies shrugged it off as a gadget.

"Leatherman came up with a great idea and a lot of people laughed at him," said Mark Schindal, a spokesman for Portland-based Gerber Legendary Blades, one of the companies that blew off the young engineer, and later regretted it.

Despairing of ever finding a large market for his product, Leatherman thought that he could at least sell it to the few thousand members of a survivalist movement taking to the woods in southern Oregon in the late 1970s.

Leatherman ended up finding the wider market he had hoped for. After it appeared in a Seattle mail order catalog in 1983, the first model sold more than 1 million units a year at about $45 a piece, making Leatherman instantly rich. His tool showed up on all sorts of belts, from NASA astronauts on three Space Shuttle flights to Hells Angels bikers.

Leatherman Tool Group Inc. has sold 35.2 million pocket tools worldwide since incorporation July 5, 1983, about 26 million in the United States.

Some 90 percent of the owners are men. Yet about half the tools are bought by women as gifts for men, according to company spokesman Mark Baker.

With success came imitators, many from companies that initially rejected the idea.

As a young inventor, Leatherman lacked money to hire a lawyer to patent the folding handles. The patent was complicated because somebody had already patented folding scissors in the 1800s, he said. Lacking a patent, Leatherman lost a trademark case against tool giant Cooper's ToolzAll multi-tool in appeals that went to the U.S. Supreme Court.

Even with competitors pinching off pieces of the market, sales grew at 30 percent to 40 percent a year. Gross sales peaked at $110 million in 1999.

Then the economy soured. Since 1999, sales have dropped off by 20 percent. By 2002, Leatherman Tool Group Inc. had laid off 60 of its 400 or so workers.

Also, 20 years on, many who wanted a multi-tool already owned at least one, spokesman Baker said. A ban on carrying pocket knives in carry-on luggage after the Sept. 11, 2001, terrorist attacks has also dented sales.

Perhaps the biggest untapped market, however, is women who previously bought the chunky, manly Leatherman tools as gifts.

In 2001, the company introduced the Juice line. About a half-inch shorter than the traditional tool, rounded and available in bright colors such as red, blue and orange, the device is slender and slips neatly in a pocket or purse.

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