If everything goes as planned, Little Tikes Co. soon will have a new owner, MGA Entertainment Inc.
Who is MGA Entertainment?
Most people, outside of the toy industry, have never heard of the company or its founder, Isaac Larian — not until you say the words “Bratz doll.” The sassily dressed dolls with the big, round eyes and cartoonish features have challenged Mattel Inc.'s Barbie. By hitting a bull's-eye with girls in the “tween”-aged category of 8 to 12, Isaac has made waves and won the respect of toy makers.
According to MGA's tag line, Bratz dolls have a “passion for fashion.”
The question now is: Will Larian have a passion for rotational molding? Larian clearly is a “toy-guy,” not a bean-counter. A good dose of entrepreneurial enthusiasm is just what Little Tikes and its 700 employees in Hudson, Ohio, need right now, after seven years of ownership by Newell Rubbermaid Inc., the publicly held giant that is cutting one-third of its 80 manufacturing factories and slashing 5,000 jobs.
Top executives made it clear they want to exit “resin-intensive” commodity products. (Can you say Little Tikes Cozy Coupe?)
Newell Rubbermaid leaders named their restructuring program Project Acceleration. It might as well be “Project Move Everything to China,” since that seems to be the plan. You need a score card to keep track of the plant closings, the tax abatement deals gone bad in recent years — many of them involving the plastics-heavy Rubbermaid Home Products.
But when it comes to Little Tikes, Newell Rubbermaid soon will be old news. The future lies with Larian. After the deal was announced Sept. 11, Larian issued a statement saying he was excited about buying Tikes. “We have not looked at the whole organization yet. For sure, the manufacturing and warehousing will stay in Ohio,” he said.
Bratz dolls are made in China, like nearly all toys these days. How will Larian handle one of the last toy factories left in the United States? Tikes uses the labor-intensive rotomolding process to make big parts with a lot of polyethylene, which saw prices shoot up as much as 50 percent after last year's hurricanes.
The rotomolding industry will be watching closely — especially Tom Murdough, who founded Little Tikes and created a new toy category. He sold Tikes to Rubbermaid Inc. in 1984, stayed on for five years, then quit after disagreements with Rubbermaid management. In 1991, he started Step2 Co. Today Step2 is located only about five miles from Tikes, its archrival.
The Step2-Little Tikes competition is intense. But Isaac Larian and Tom Murdough appear to share key traits — most importantly, a love of toys and a spirit of innovation.
What remains to be seen is whether Larian also shares a commitment — long term — to making rotomolded toys in the United States. Given high resin prices, retailers squeezing the toy makers, and competition from video games, profit margins are under severe pressure for makers of the large, hollow toys.
We'll see if Larian has the stomach for it. Newell Rubbermaid did not. But his zeal for toys, in a rough-and-tumble industry full of huge competitors, could be the best news for Little Tikes and its employees.