I was a private equity analyst in the 90's and we owned Berol - one of the classic American pencil companies. Their classic wood pencils were made the exact same way - batch oriented and quite labor intensive.

Their next gen process was a fully automated continuous process co-extruder that extruded a core of hot graphite surrounded by a cellulose/wood mixture. That continuous string of graphite/wood composite was pulled down a two hundred foot line where it was cooled, sealed, painted twice, varnished, cut, capped with erasers and boxed. The whole line could be operated with two people.