Bratz dolls soon will be driving Cozy Coupes, as Bratz maker MGA Entertainment Inc. plans to buy Little Tikes Co., the rotational molder in Hudson, Ohio - and keep making toys in Hudson.
Tikes' parent company, Newell Rubbermaid Inc., announced the deal Sept. 11. Terms were not disclosed. The sale is scheduled to close in the fourth quarter.
Newell Rubbermaid said Little Tikes generated sales of about $250 million in 2005.
Isaac Larian, MGA's founder and chief executive officer, called Little Tikes ``a great iconic brand'' with a good reputation for durable, safe products. The acquisition diversifies MGA into toys for preschoolers and younger children, such as playhouses, sandboxes and riding vehicles.
``Little Tikes is an evergreen brand that people from every generation are familiar with,'' Larian said. The term ``evergreen'' means a line of toys that don't go out of style - desirable in the fickle world of toys. ``The brand fits into our portfolio and business plan nicely, and we plan to take Little Tikes to new heights with new product innovations and expert marketing,'' he said.
Since Bratz dolls were introduced in 2001, Larian said, MGA has sold more than 120 million of the dolls, with their huge eyes, pouty lips and funky clothing. The success of Bratz has hurt the all-powerful Barbie doll from Mattel Inc.
MGA contracts out production of the Bratz dolls to China. Little Tikes marks MGA's first acquisition - and the Tikes rotomolding plants in Hudson and Slupsk, Poland, are the company's first manufacturing operations.
Some reports say Tikes employs about 500 plant employees and 200 managers and office staff in Hudson. But Newell Rubbermaid has cut jobs in recent years, and Larian thinks the numbers are lower, at 300 in the factory and 170 office workers.
Whatever the job tally, Hudson stands as one of the last major toy factories left in the United States.
Will Van Nuys, Calif.-based MGA keep the Hudson factory open?
``We are evaluating this,'' Larian said. ``Our initial plan is to keep the factory open and expand its capacity through other manufacturing deals and expansion. Efficiency and profitability will be the key factors.''
Larian plans to move Little Tikes' product development and marketing operations to Van Nuys. Manufacturing will remain in Hudson, although Larian said he will contact Ohio officials for assistance.
Larian said MGA wants to keep production of Tikes toys in the United States. ``The key to these decisions are to be competitive, efficient and profitable. If the Hudson factory can offer these, we prefer not [to] move production to China and keep jobs here in the U.S.A.,'' he said.
But in a video posted on the walmartstores.com Web site, Larian extols the virtues of making toys in low-cost China. The clip is from a report on CNBC. The reporter and Larian are in a factory in Shenzhen where workers make Bratz dolls. Larian said Bratz sell for $15-$20 at Wal-Mart.
In the video, Larian said: ``You cannot make toys anywhere else but China, because of the costs involved. A lot of people say that we should keep the jobs in the U.S.A., don't do it offshore. It's impossible. If you make these in the U.S.A., it would cost $70.''
Asked now about that comment, Larian stood by it. ``You can't make it all in the U.S.A. now. I stand by my statement. The process it takes to make the doll - just the fact painting, it takes 16 rotations to paint the doll,'' he said.
Larian said he understands that large, bulky rotomolded toys are different.
``For the products that Little Tikes specifically makes right now, the big, rotational molded, big pieces of plastic, it's not economical to make them in China,'' he said.
Little Tikes already generates about half of its sales from smaller toys made in China, like cars and flashlights that sell for $10-$20, company officials have said. Larian said he will beef up Little Tikes by adding educational toys, dolls, radio-controlled cars and construction products, although ``it's not going to happen overnight.'' The expanded line could come in 2008, he said.
Chris Byrne, an independent toy analyst in New York, said that Tikes should benefit from Larian's ownership.
``[Tikes'] preschool line is really, really solid. It just hasn't been marketed that much,'' Byrne said. ``I think [Newell Rubbermaid] has left a lot of money on the table that a real savvy marketing organization can come and scoop it up.''
Newell Rubbermaid has owned Little Tikes since 1999, when Newell Co. purchased Rubbermaid Inc., to form a single giant consumer product company. Several sources have told Plastics News that officials of the Sandy Springs, Ga.-based consumer products giant were never enthusiastic about rotational molding, which was a new process for them.
In 2004, Newell Rubbermaid sold the Little Tikes Commercial Play Systems business in Farmington, Mo., to a competing maker of playground equipment.
Little Tikes has been on the selling block for at least a year. In 2005, Montreal, Canada-based Mega Brands Inc. looked at buying Tikes, industry sources said. But a deal never happened and Mega Brands, formerly named Mega Bloks, ended up buying craft product business Rose Art Industries Inc.
Toy analyst Byrne said growth by acquisition is a common strategy for toy makers, because it is a quick way to build a broader line of strong brands and - importantly - get more clout with big retailers.
Byrne thinks moving from the public company ownership of Newell Rubbermaid to the privately held MGA also could be good for Little Tikes.
``He doesn't have to worry about things like shareholder value. He can just focus on good toys. I think that's an important thing,'' Byrne said. ``People really love working for him. He really knows how to foster creativity.''
Larian is an Iranian immigrant who came to Los Angeles in 1971, at age 17, with $750 in his pocket. He got a job washing dishes and worked his way through college, getting a civil engineering degree. After college, he started the company that eventually became MGA.
After racking up cash from Bratz, Byrne said Larian can take risks.
``He has a level of freedom to try things. He tries things, and if they don't work, he tries something else. He's more of a traditional toy guy,'' Byrne said.