Imports figure big in the U.S. toy market, but a sizeable and vibrant industry continues to churn out play goods from U.S. manufacturing plants.
Low labor costs have drawn a huge chunk of toy production to Asia, but for large toys it makes sense to produce them close to the U.S. consumer. Large plastic toys are full of air and take up too much space to ship them economically to North America.
American Plastic Toys Inc. of Walled Lake, Mich., is one longstanding toy firm that makes its toys in the United States. Its lineup includes ride-on vehicles, role-play sets, furniture, doll accessories and outdoor toys, mostly aimed at the 18-month-old to 8-year-old child.
The company remains competitive against imports by taking out as much labor cost as it can, by focusing on bulky products and by offering customers short lead times during the seasonal rush before Christmas, explained American Plastic Toys President John Gessert.
``If a customer imports, there can be a problem of not enough toys for the demand, or too much supply, which forces the retailer to mark the toy [price] down,'' Gessert said in a telephone interview from his firm's head office.
American Plastic Toys sells to most large U.S. retailers. Consumers choose the toys partly because they offer a lower-price choice in their categories, according to Gessert. An American Plastic Toys kitchen play set, for example, costs about half as much as one sold under a more famous brand name.
American Plastic Toys exports a lot of toys to Canada and Mexico, with more modest amounts going to South America and even to Australia.
Gessert said the company occasionally has looked at manufacturing in Asia, but it has found the idea makes sense only to source special components with high labor and detail content from offshore suppliers. In addition to Walled Lake, which is near Detroit, American Plastic Toys runs manufacturing operations in Rose City, Mich., and Olive Branch. Miss. The company does all of its injection molding and assembly in-house, mainly relying on polypropylene resins. It does not use outside molders.
Gessert said 2006 ``will be a good one vs. 2005.'' Among its new entries this year is Homestyle Kitchen, which he said provides ``value for a reasonable price.''
The company already is laying the groundwork for the 2007 season, during which it will introduce about a half-dozen toys, including new ride-ons and kitchen sets.
American Plastic Toys is closely held and does not release sales figures. It employs about 300.
Another domestic toy manufacturer is Step2 Co., a Streetsboro, Ohio, producer of indoor and outdoor play products, ride-ons and lawn and garden items, most of which are too bulky to viably ship from Asia.
Step2 President, Chief Executive Officer and founder Tom Murdough said being close to U.S. customers allows the firm to respond much more quickly to consumer trends than a business relying on offshore molding.
Manufacturers relying on offshore sourcing ``have tremendous inventory issues,'' Murdough said. ``Their ability to respond is so restricted.''
If a toy firm's products are not selling well, retailers typically ask for the freedom to mark down the price, which cuts profit margins. If they still don't sell, the producer ends up with a warehouse full of the goods. And a producer can't rely on the next season to sell the toys since some 25-40 percent of toys sold each year are newly introduced, Murdough indicated.
Murdough said Step2's strengths include its forecasting of U.S. trends and its ability to manage inventories. Being based in the middle of the U.S. market makes those exercises easier.
Toy imports can hit bottlenecks on their way to the United States, according to Cliff Annicelli, editor of Playthings Magazine.
``Toy companies are constantly complaining that their shipments are sitting off the coast of California waiting to unload at the port in Long Beach for days,'' Annicelli explained.
Step2 is a big rotational molder with injection and blow molding capabilities. It employs about 800 in plants in Streetsboro, Perrysville, Ohio, and Fort Valley, Ga.
Large toys such as those made by American Plastic Toys and Step2 might not be the top seller in a given year but they are in steady demand year after year. That probably ensures the United States will continue to have domestic toy production for years to come.
One reason for large toys' popularity is that grandparents can relate to their themes of creative and constructive play, according to Reyne Rice, toy trends specialist for Toy Industry Association Inc. in New York.
``Grandparents are involved in the purchasing,'' Rice said. Grandparents understand outdoor play offered by ride-ons and similar products but they aren't comfortable with the profusion of electronic toys.
Perhaps the best known large toy producer in the U.S. is Little Tikes, recently acquired by Van Nuys, Calif.-based MGA Entertainment Inc. from Newell Rubbermaid Inc. Little Tikes runs a large rotomolding plant in Hudson, Ohio, and one in Slupsk, Poland. About half of Little Tikes' annual sales of $250 million is generated from its rotomolding operations, the rest deriving from smaller toys made in China.
MGA has not given any indication it wants to move large toy production to China where its popular Bratz dolls are made, but it has hinted it might move rotomolding out of Hudson to another U.S. site if it does not get government incentives or an electricity rate discount in Ohio.
In September when the purchase deal was announced, MGA Chief Executive Officer and founder Isaac Larian said he wanted to retain Little Tikes' U.S. production if it can be competitive, efficient and profitable.
Annicelli said the ``buy American'' sentiment seldom figures into parents' toy-purchasing decisions, so this is no reason to make toys domestically.
``If parents complain about toys being made in China, it's typically because of preconceived notions about the quality of Chinese manufacturing, not because of any sense of patriotism,'' he concluded.
U.S. toy sales have been flat or down slightly for the past few years, estimated Toy Industry Association spokesman Frank Clarke. Sales have been healthy for young children's products but have fallen by 34 percent for pricey collectibles.
Wal-Mart Stores Inc. has cut prices for toys twice as Christmas approaches, and as of press time it was considering another discount to stimulate flagging sales, according to published reports.