Supply chain crisis boosts relocation efforts • The Toy Book
Toys have always been a global business, but the politics and climate of the 70s and 80s succeeded in pushing most manufacturing and packaging – with exceptions like Slinky, Wiffle Ball and Lincoln Logs – out of the United States. Decades later, the COVID-19 pandemic has revealed the real weaknesses in the supply chain and how inflation, labor issues, rising raw material costs and dependence on regard to global shipping cartels could wipe out the financial advantage of international production. Coupled with recent concerns over tariffs and intellectual property (IP) theft, relocation and proximity efforts are a priority for manufacturers.
While a recent study by the Reshoring Institute found that nearly 70% of U.S. consumers would prefer to buy — and pay more for — products labeled “Made in the USA,” the industry faces several hurdles to domestic production. Opening a new factory in the United States requires significant initial investment, machinery and tools from overseas, and environmental considerations. Once built, a new facility must be operated by a workforce that, for the most part, no longer exists due to a labor shortage in the United States.
As the toy industry well knows, with challenges come opportunities.
REINVENTED MANUFACTURING AT RETAIL
Last year, Walmart reinforced its commitment to manufacturing in the United States with its America at Work initiative. The successor to Walmart founder Sam Walton’s Bring It Home to the USA campaign in 1985, America at Work is a commitment to buy $350 billion worth of goods made, grown or assembled in the United States. the middle class requires a national effort from businesses, industry leaders, legislators and others. Walmart estimates its efforts will support 750,000 manufacturing jobs by 2030.
A key part of Walmart’s plan is the “American Lighthouses” concept that aims to unite business leaders with government and local economic development groups to create regenerative supply chains in six key areas. For the toy and play industries, two of Walmart’s supply chain focus areas are plastics, and metals and motors.
In Ohio, Little Tikes, Step2 and Simplay3 produce rotational molded toys and home products for the global market. Many of their products are large items that would be expensive to import. The companies’ central location makes it easy to ship direct to consumers or to US retailer warehouses.
According to several industry experts, the vehicle category has seen consistent retail outages over the past year, not only for die-cast cars and trucks, but also for playsets. As a result, Simplay3 has collaborated with Walmart to bring a new product to market in record time.
“The Monster City Extreme Wheels Track was developed from a conversation with a buyer who had specific needs for a product,” says Brian McDonald, vice president of sales and marketing at Simplay3. “Because our design, engineering, and manufacturing are all located in Streetsboro, Ohio, we were able to communicate and develop this product in 17 weeks.”
The double-sided playset is compatible with most 1:64 scale monster trucks, and McDonald’s says it’s just one example of what’s possible when retailers source them nationally.
In New Jersey, EastPoint Sports is using the success of a homegrown product, Kan Jam, as a springboard to launch an entire segment of “Made in the USA” products that will debut at Walmart this spring.
“We are focused on more US manufacturing efforts that will ultimately create jobs and provide near-term supply opportunities,” said Jonathan Berkowitz, CEO of EastPoint Sports.
BRING HOME THE CLASSICS
Smaller, American-made companies — including American Bubble Co., Blu Track, Cubles and LuxBlox — are emerging. Meanwhile, the nation’s largest facility producing toys and games manufactures products for one of the largest toy companies: Hasbro.
Hasbro sold its factory in East Longmeadow, Massachusetts, to the Cartamundi Group in 2015, but the companies have since formed a partnership under which Cartamundi continues to manufacture certain Hasbro products – such as Monopoly and Clue – in the United States. five years, production for some Play-Doh products also returned to the United States
For Hasbro, supply chain diversification has been in the works for many years. Speaking to CNBC in 2019, the late Chairman and CEO Brian Goldner said the decrease in reliance on China had been underway since 2012, in part due to what he called business risk reasons”. At the time, Hasbro produced about 50% of its global production in China and hoped to reduce that to a third by 2023. Today, Hasbro’s current president and chief operating officer, Eric Nyman, points out that the further diversification of its supply chain is currently a delicate balance.
“Our biggest challenge in moving more manufacturing to new locations is to ensure that we stay true to our company values of manufacturing a safe, high-quality product at a price that provides great value for the consumer,” says Nyman. “As we continue to expand production in the United States, we have a great team that is smart and strategic about where our product comes from.”
THE NUANCES OF “MADE IN USA”
The red, white, and blue “Made in USA” label that adorns domestically produced consumer goods is a symbol of American manufacturing. In a crackdown on what it called “rampant Made in USA fraud,” the Federal Trade Commission (FTC) officially issued a binding rule last summer.
The rule states that companies cannot make unconditional “Made in USA” claims on labels unless final assembly or processing of the product takes place in the United States; all significant processing necessary to create the product takes place in the United States; and all, or substantially all, of the product’s ingredients or components are manufactured in and sourced from the United States.
“When we launched Simplay3, we decided that we would not only manufacture our products in the United States, but also support American component suppliers,” McDonald says. “We’ve heard of companies that couldn’t ship a product made in the United States because they were waiting for additional components to arrive from overseas.”
Two years ago, CreateOn partnered with Magna-Tiles for its first collaborative line of magnetic play structures which it calls “Designed and Assembled in the USA”. Using imported Magna-Tiles as a base, CreateOn designs products that are printed, assembled and packaged in Illinois. Vice President Steven Rosen says he believes “a hybrid model [of sourcing] will be needed to be able to meet the needs of the global supply chain” this year and beyond. He also says that one of the main advantages of making toys in the United States is being able to fine-tune the play experience.
“The biggest benefit for us is the ability to design and build new products in-house within a day to see if the product is viable,” Rosen says. “We can let our family and friends play test them quickly for us.”
Last fall, New Jersey-based LaRose Industries LLC, maker of Cra-Z-Art and RoseArt products, opened a 315,000 square foot manufacturing facility in Jacksonville, Florida. Cra-Z-Art now maintains over 1 million square feet of manufacturing space dedicated to the production of toys, art supplies, craft kits, and school supplies in the United States.
Meanwhile, Starplast USA, which manufactures toys under the StarPlay brand, has revealed plans to invest nearly $18 million to open a second US manufacturing facility in an existing building in Chesterfield, Va. .
Aside from crafts and plastics, toy manufacturing in the United States still poses major challenges, which fall into complex categories, such as action figures, electronic toys, or anything involving metal. For more than two years, Emmy Klint has been working to revive her grandfather’s business, Nylint. The company was once a leader in stamped steel toys alongside Tonka and Buddy L. Today, it says there’s simply no infrastructure in place to manufacture the products in the United States, which means that the first two Nylint reissues are produced in China. something she hopes to avoid in the future.
“It has been a very long and difficult road and has made me even more certain that the next toys must be made in the United States,” she says, warning that without major investment this cannot happen.
In a company filled with creative individuals who work tirelessly to create positive play experiences for children around the world, the idea of growing America’s toy industry here at home is no longer considered impossible. At a bare minimum, this is now a consideration as the hassle of international factory closures, transport issues and rising costs have tipped the balance so that even the biggest toymakers are willing to explore new possibilities.
This article originally appeared in the February 2022 edition of the toy book. Click here to read the full issue!