Once again a client has lamented the rate of change and the challenges they face as a toy company dealing with rising costs, unfavorable currency exchange rates, and shortages of labor. They enjoy the challenge, sort of, but wish that it could be a little less so.
One of the largest toy makers has a factory built for 50,000 workers, but can hire only 10,000 to staff it. No one wants to work in the toy industry any more. And they will be lucky to be able to maintain even 10,000 workers next year.
Some manufacturers, like Mattel, are moving production to Mexico – but only highly automated processes like the extrusion of Hot Wheels tracks that require low-skilled labor. In Mexico quality control and security are almost overwhelming problems.
Large rotocast goods such as are manufactured by Little Tikes and Step 2 can be made there. No one is going to steal extruded orange track out the back door. Or giant playsets, for that matter. But manufacturing small, high-value goods in Mexico is a big problem, it seems.
For now our neighbors to the south provide a limited manufacturing option.
India has a long history of cut-and-sew manufacturing and the infrastructure to handle it, and for that type of product, India is becoming a go-to source. That is not the case for plastic or electronic products, and hasn't been for a generation or more.
Chinese toy companies have often looked to Indonesia when outsourcing their manufacturing needs. More and more, I believe, we will see toy companies in the US and other countries moving production there.
As they have for 60 years and more, from Japan to Korea to Hong Kong and then to China, manufacturers keep moving to lower-cost sources of labor to maintain and contain their retail prices, else the consumer won’t buy.