Every small town has its characters, but one magnetic personality in Smethport, Pa., (pop. 1,684), is famous nationwide for evoking smiles for more than half a century. Wooly Willy is a shifty character full of disguises and funny faces. Sometimes he's bald, sometimes bushy-haired. He might wear a mohawk with a mustache, a flattop with muttonchops, or a ponytail and an eye patch. The Wooly Willy character has entertained millions of children since 1955 when Jim Herzog conceived the idea for the toy while grinding magnets at his family's toy-making business, Smethport Specialty Co. "The ends of the magnet had to be run across a grinding wheel to make them level and it created a lot of dust," recalls Herzog, 81, of Smethport. "I came in and ground the magnets one day and all of a sudden it came to me. I put a pile of dust on a piece of cardboard and used magnets to play around with it." Herzog envisioned a simple toy that could be made by encasing magnetic powder in a clear plastic package atop a cardboard picture. Kids could use a magnetic wand to pick up the powder and draw details on the picture. "It's one of those ideas that's small, but in the end it's big," says Herzog, the proud inventor of Wooly Willy. "What's unusual is that the packaging became the product, so it made manufacturing cheap." The first Wooly Willies, drawn by artist Leonard Mackowski, were printed one at a time on yellow cardboard with an 1883 printing press. Some of the early toys came unglued during hot weather and the iron powder rusted, but Herzog remedied the problems by using different glue and magnetite powder. Then, he faced another challenge with the 29-cent toy: Getting his creation to children. "Everybody turned it down," Herzog says about the dime-store retailers he and his brother, Don, 85, approached. After several months of unsuccessful peddling, a reluctant buyer for G.C. Murphy Co., based in McKeesport, Pa., ordered six dozen Wooly Willies and tested them in his store in Indianapolis. "He said, 'I'll still have all of them a year from now,'" Herzog recalls. "Two days later, he called and ordered a thousand dozen. The rest is history." And what a history. More than 75 million Wooly Willies have been sold along with more than 200 million magnetic toys with a cast of characters, including Dapper Dan, Hair-do Harriet, Betty Brunette, Fuzzy Wuzzy and Doodle Bug. In the 1950s and '60s, Smethport Specialty Co. worked frantically to fill orders for the popular toys, running three shifts a day, even on Christmas Day. The company built a modern factory in 1965 on Magnetic Avenue and expanded the building three times. Today, Wooly Willy is making another generation smile and is among 200 magnetic toys, games and puzzles manufactured by Smethport Specialty Co., now owned by Patch Products, headquartered in Beloit, Wis. (pop. 35,775). Wooly Willy's appeal is timeless because the toy is simply fun, says Greg Rounsville, 51, Smethport Specialty's general manager. "Kids can draw so many faces on him," adds Rounsville, whose three sons today are among the company's 42 employees. Though Wooly looks much the same as he did in 1955, the manufacturing process today is fully automated. An offset press prints 3,000 cardboard sheets an hour, then adds a glossy, smudge-proof coating. Other machines form plastic packages and assemble the toys, which are packed for shipping to hundreds of stores in the United States, Canada and the United Kingdom.