By: By Rachel Abbey McCafferty
CRAIN'S CLEVELAND BUSINESS
August 27, 2013
Hudson, Ohio, toy maker Little Tikes Co. has seen growth in recent years, and it's growth that Executive Vice President and worldwide General Manager Thomas Richmond attributes in large part to the company's decision to manufacture more of its toys at its northeast Ohio plant instead of overseas.
When Little Tikes started out more than 40 years ago making toys for young children, everything was made in the U.S. However, some production was moved to China in the '80s and '90s when that country's manufacturing sector began to take off, he said.
"Now, the wheel is kind of coming full circle," Richmond said.
The company in recent years started to bring production of some of its toys, like the 2-in-1 Snug 'n Secure swing, back to the Hudson plant. It has also been creating new toys, like a low-cost slide for toddlers, which the firm has intended from the start to produce in northeast Ohio.
The Made-in-the-USA initiative makes economic sense, because it's not just about salaries in China vs. salaries in the U.S., Richmond said.
Indeed, energy costs are up globally, input costs for materials like plastic resin and natural gas are lower in the United States, and the cost of shipping from China back to the U.S. is high.
Not to mention, there is an "enormous amount" of logistics costs in Little Tikes production when it's done overseas, he said.
To account for the moves, as well as an improving economy, Little Tikes has added nearly 50 permanent employees and some temporary employees in the past two years, Richmond said.
The company currently has about 800 permanent and temporary employees in Hudson, which is its only U.S. manufacturing site, he said.
And those employees have been kept as busy as ever, as the company has continued to introduce new products into the market, at a rate of about 60 new toys per year.
"We are constantly refreshing and adding and changing and adapting," Richmond said.
Scott Paul, president of the Washington-based Alliance for American Manufacturing, said while it's relatively easy to find U.S.-made artisan toys, it's more of a struggle to find mass-produced toys like those from Little Tikes made in the United States.
Paul said in addition to a "surge in interest" in favor of U.S.-made products, recent recalls of toys made overseas have created a perception problem. Both are developments that have made Little Tikes' work shift back to the Hudson plant even more effective, he said.
Little Tikes has invested regularly in the Hudson plant, Richmond said, including $3 million spent recently on new injection molding technology. The machinery should start to arrive in September and be ready by mid-2014.
And while Richmond declined to share annual revenue, he said it has steadily gone up since the recession hit in 2008.
Little Tikes is one of the larger companies in Hudson, said Chuck Wiedie, economic development director for the city, and it has been a good corporate citizen for decades.
Wiedie said the city and the state worked hard to keep Little Tikes in Hudson when the company was purchased by Van Nuys, Calif.-based MGA Entertainment Inc. in 2006, a decision that Richmond said had value.
The biggest benefit to staying in Hudson was retaining the decades of experience its senior-most employees had, Richmond said.
"You just don't find that in America, not these days anyway," he said.
He said he also appreciated being in a technology and plastics-rich area, noting that he had recently met with someone pitching a new kind of material. That sort of spontaneous interaction wouldn't happen as easily if the company's headquarters was 1,500 miles away.
The region's shale gas boom also could eventually offer a long-term competitive advantage for the U.S., he said, as the long-term prospect for natural gas and the plastic produced from it are on a downward cost trend. The company hasn't seen a direct benefit from the shale play, but Richmond said it bodes well for the future of the economy and the region.