It Takes More than a Factory; the challenge of re-shoring

Some want the U.S. toy industry to return manufacturing to the United States. It’s a noble idea. The challenge, however, is that it’s not about building a factory. It’s about creating a complex system to supply a factory with all of its toy-making components.

A factory does not function independently. It requires other companies to provide inputs and a supply chain to deliver them to its doors. What makes China attractive is not its low prices. There are countries that have lower wage rates. China attracts toy companies because of the sheer scale of its manufacturing resources in and around the Pearl River Delta in southern China. In other words, China is a vast consumer products manufacturing ecosystem.

A factory in China can acquire virtually any resource it needs, resin, paint, a new mold, parts, cardboard, cloth, you name it, within an hour. Supporting this infrastructure is a supply chain that can deliver in quantity and (at least before the pandemic) on time. Toy manufacturing on the scale taking place in China has not existed in the U.S. since the mid-20th century, if it ever did.

For toy manufacturing to return to the U.S., the private sector will need to collaborate with local and state governments willing to to commit the resources to make their geographic area a consumer products manufacturing center. One where all of the resources required are readily available. If state and local government can underwrite football stadiums, they can certainly underwrite business development.

Do you think an effort should be made to reshore manufacturing? What do you think needs to be done to make that a reality.

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