MATTEL MOVING BRITISH TOY OPERA TION TO ITALY

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U.S. toy giant Mattel Inc. is pulling the plug on its manufacturing in the United Kingdom.

Just days after announcing plans to shut its Medina, N.Y., rotomolding plant by May 31, the Hawthorne, Calif.-based firm said it will close its only British toy plant by year's end to cut costs, and will switch production to Italy, where it already buys plastic parts and other components from subcontractors.

The company said the 20-year-old Fisher-Price Inc. plant in Peterlee, England, is not costcompetitive. Mattel said the move is part of its overall restructuring strategy to eliminate excess production capacity in Europe.

The plant produces Spears Games products, including the word game Scrabble, and a range of big molded Fisher-Price preschool educational toys, such as garage and kitchen sets.

In the past three years Mattel has invested about 1 million ($1.63 million) in new production machinery at Peterlee, according to Malcolm Metcalfe, the plant's finance controller.

About 175 of Peterlee's 250 workers will lose their jobs in August, with the remainder leaving by December, Mattel said. Production will switch to an existing plant at Oleggio, in northern Italy.

Peterlee operates 43 plastics processing machines, including 36 injection presses, with 118-700 tons of clamping force, from suppliers such as Negri Bossi, Krauss-Maffei and Sandretto, and seven Uniloy blow molding machines, according to Mattel.

The firm injection molds high-impact polystyrene parts and blow molds components mainly from polyethylene and polypropylene.

At the root of the move is a global market shift away from demand for bulky molded plastic toys in favor of smaller items, particularly electronic products. Mattel also wants to locate its plant closer to its European continental marketing bases, Metcalfe said.

He said Peterlee still is one of the group's smallest units. To adjust to the market trend would have required a major investment at the plant, according to Mattel.

The closing will come as a blow to the region, which has lost its once-dominant mining industry in recent years and is trying to rebuild its economy through internal foreign industrial investment.

``We regret that this action is necessary. However, we shall do everything in our power to assist employees and to minimize the impact on the local community,'' said Flavio Borgatta, senior vice president of Mattel's European operations.

As for U.S. plans, Mattel recently announced it will close a 175-employee rotomolding plant in Medina that makes outdoor play equipment, and shift production to Augusta, Ga.

Meanwhile, another U.S. toy maker, Hasbro Inc., will idle 251 workers in June when it shuts down two Waddington Game plants in England. The operations include an injection molding unit. Production will shift to modern plants in Spain and Ireland.