Scaling back its non-U.S. toy manufacturing, rotational molder Step2 Co. has closed a plant in Northern Ireland and ended an agreement with a rotomolding company in China.
Step2 had targeted England and Europe when it opened a rotomolding factory in 1997 in Coleraine, Northern Ireland, which was its first factory outside of the United States. But Thomas G. Murdough Jr., chairman and chief executive officer, said Step2 discovered Europe is moving to the same brutal, mass-retail environment found in the United States.
``What's happening in the European market and the [United Kingdom] market is the same type of consolidation in retail that's happening in this country,'' he said. ``There was a very limited number of accounts that handle our type of product.''
Step2 was able to find jobs for the 25 laid-off workers, he said. The company had leased the plant.
Murdough, in a Sept. 16 telephone interview, said opening the factory in Northern Ireland was an attempt to dip a toe into the European market. ``We decided, `Let's see what will happen here.' It was never a major factor in our sales and our business plan,'' he said.
Step2 also faced local competition from European molders, he said.
Streetsboro, Ohio-based Step2 made its manufacturing move into China in late 1999, when it announced a venture with Hong Kong-based rotomolder Lerado Group (Holding) Co. Ltd. Publicly held Lerado molds toys in Shanghai.
That manufacturing arrangement now is over, although Murdough said Step2 is doing well in Southeast Asia, especially South Korea and Japan, through a separate South Korean licensee. Now, that licensee also will sell into China, he said.
``China is a very, very small consumer products market,'' Murdough said. ``Our thought in going into China was never to establish a distributor who was going to compete with our licensee in Korea. We wanted someone with a facility in China, for sales in China.''
Rotomolded toys still are a luxury for most people in China, he said.
Closer to home, Step2 has ended warehousing operations at its plant in Twinsburg, Ohio, and placed the 100,000-square-foot building for sale. The Twinsburg operation was the original factory for Step2 when Murdough founded the company in 1991. Before starting Step2, Murdough founded Hudson, Ohio-based Little Tikes Co., which he sold to Rubbermaid Inc.
Step2 had rotomolded lawn and garden products in Twinsburg, and in recent years produced battery-powered toy cars there. The company stopped molding operations in Twinsburg in January, but used about half of the space for a warehouse for about six months. The company officially moved out in June, Murdough said.
Step2 continues to run four U.S. factories, in Streetsboro and Perrysville, Ohio; Bakersfield, Calif.; and Fort Valley, Ga.
Step2 is the second-largest North American rotomolder, behind Little Tikes, according to Plastics News' ranking. Step2's sales declined 5 percent in 2001, to $100 million.
Murdough said Step2 is in solid financial shape even as it faces a harsh retail environment.
``The retail market is as tough as I've ever seen it and as challenging as I've ever seen it, yet from our standpoint, we're very excited about the direction we're taking,'' he said.