Hard Work Ahead

Toy testing has always been a vital step in Hasbro's production cycle. The company says it has had strict safety standards in place since high lead levels on toys first became banned in the 1970s; it checks paint before it is applied to any of its toys throughout every stage of production.

Hasbro owns two factories, one in East Long Meadow, Mass., and another in Waterford, Ireland, for its board game manufacturing, plus several others outsourced in China for production of its other toy categories. The company has had its fair share of recalls—including a 1-million-unit recall earlier this year of its classic Easy Bake Oven due to risk of burns—but says it has stepped up quality control efforts overseas and at home, an effort that now includes performing greater numbers of random tests of product. “We review and monitor everything ourselves through a variety of safety checks during multiple stages,” says Wayne Charness, senior vice president of corporate communications for the Pawtucket, R.I.-based toy maker.

This may be easy for a company as large as Hasbro, but for companies that have smaller production numbers, having a representative at a plant can be a costly endeavor. At a time when recalls, particularly for children's products, have hit what many in the business fervently hope is a high water mark, it's more important than ever for manufacturers to assure consumers that they are keeping a close eye on what materials are in—or on—their children's playthings. In the past eight months there have been 247 recalls worldwide involving 48.7 million units of children's products, including toys, according to the Hong Kong Trade and Development Council. Parents' awareness has never been higher of the perceived hazards lurking in their child's toy chests.

“It would always be optimal to have someone stationed on site to keep an eye on quality control,” admits Joe DiMenico of Morton, Pa.-based Applehead Studios, makers of Teddy Scares plush, comics and vinyl figures. “But with the budget limitations of a small company, sometimes you need to compromise by just having a representative visit the plant to assure things stay on track. For us, we have always tried to keep our product as high quality as possible—it is what sets you apart from the more mass-marketed toys. We try doing everything we can to assure our customers that they are getting what they expect.”

In the wake of the Mattel recalls, MGA Entertainment, the Van Nuys, Calif.-based marketer best known for its Bratz dolls, is paying more for its goods by using “quality” factories and 100 hired testers within China who check the company's goods at all times in order to maintain quality, according to president and CEO Isaac Larian. As a result of such monitoring, “the factories don't look to cut corners,” he says. In addition, the company is using third party testing companies, like SGS, to confirm its products meet safety standards, and is checking larger samples of goods and doing so more often, Larian says.

Fortunately for David Scroggy's company, the Milwaukie, Ore.-based Dark Horse Comics, it produces smaller numbers of product at a time and has close relationships with its manufacturers in China, which allows it to continue to negotiate smaller production requests as the face of the labor force in that country rapidly changes the economics of doing business with Chinese factories. Higher wages outside of factories are starting to lure Chinese workers away from industrial manufacturing plants in favor of higher-paid jobs located closer to home, Scroggy says.

Traditionally, Scroggy says, young Chinese workers would staff the factories in industrial areas like Guangdong as well as other parts of China because there were little or no employment opportunities in their local regions, then they would move on to Dongguan or Shenzhen to work at a factory there for three to four years, all the while saving enough to go back home and open a store or buy some land. China's growing economic prosperty, however, is negatively impacting that possible career path. “Now, with the economic boom, either there is an employment opportunity closer to home or else non-factory employment opportunities that are preferable to working in a factory painting eyeballs onto some action figure all day long,” he explains to Playthings.

When he visited China this past November, Scroggy found unused space in factories that would normally be used for production lines. Those areas were empty because of problems recruiting workers, according to factory owners. This is particularly evident in the more specialized areas, such as tool-and-die making or engineering, Scroggy says. “Master painters, for example, now get courted by competing factories, with the attendant increases in compensation.”

Despite the perception that working conditions in manufacturing plants are driving workers away, “the factories we use are all good facilities,” Scroggy says. “They are well-ventilated, well-lit and have nice worker housing. That's one of the reasons I go each year, to personally observe that we are using good manufacturers. But it is still boring work in many cases and still doesn't pay that well.” That way be why, according to Applehead's DiMenico, “approximately a half million workers did not return to Southern China this year.”

Production timelines seem to be getting longer and costs also seem to be going up as a result, according to Scroggy. He adds that he's stumped as to how some of these short-staffed factories can produce such short runs when there are bigger manufacturers with much larger orders in front of the production lines.

“You need to have more than 200 pieces to get a factory to produce our product in China,“ he says. “I know they can charge a lot for one piece, but from the factory's perspective it is not cost-effective to set up a production line for a run of 350 or 500 figures. Most of the manufacturers I work with simply won't do it. I might be able to get away with making 1,500 to 2,000 pieces, but this doesn't excite them much, although they will usually accommodate me because of our overall business and personal friendship.”

Applehead's DiMenico agrees. He says factories are typically seeking only large orders, which has been a problem for his company—and it's accelerating. Currently, Applehead is having difficulty producing Tofu the Vegan Zombie, a short-run vinyl toy, DiMenico says. “Lower quantities have always been an issue for smaller production and design companies like us, but this year it was definitely magnified,” he says.

Dark Horse's Scroggy adds that the increase in the cost of raw materials doesn't help the quality situation. “It all worries me a little, since I'd wager that many of the facilities that are doing these short runs are very likely not of a good quality,” he says. “If you've ever been to a bad Chinese factory, you know they can be pretty funky and unsafe. I am sure the artists would be horrified if they saw some of these places. This never comes up with Dark Horse, but it could elsewhere.”

The result for Dark Horse has been that tasks that used to take 30 days now take two or three times as long. “I think we are fortunate to have spent a lot of time exploring Hong Kong over the last 10 years,” says Scroggy. “We have sought out a wide variety of manufacturers. I think some of the factories we use are still unknown to others in our collectibles field, which has helped us now that things are tight.”

DiMenico tells Playthings that Applehead has considered moving its production to South America or India, where the company thinks it can have greater quality control, but it's not easy for smaller manufacturers to just up and move out of China. “Most of our international distributors all consolidate their shipping containers out of Hong Kong,” he says. “Even if we just moved our production further inland in China, they will probably have many new laws and logistic issues that may come with dealing with a new territory. Obviously, whenever there is change like this, it causes problems in some way and as a small company, you try to make these issues as seamless as possible to the end consumer.” But Applehead will continue to explore potential alternatives to Chinese production to produce “some of our other categories that China does not have such a deep hold on,” DiMenico says.

For MGA Entertainment, the recent toy recalls have not had an effect on its overall business, according to Larian, but, naturally, the America consumer's view of everyone in the toy business may be slanted for some time as a result of the volume and brand identity of the products that were pulled from the market. To ride that out, the company will continue to “do our own testing and we won't cut corners or squeeze our vendors at the expense of poor quality products for consumers,” Larian tells Playthings, noting, “We've always spent money on safety testing.”

Overall, Hasbro's Charness says he believes that any possible negative view of toys made in China from American toy shoppers will probably not last much longer than this year's holiday season. “I know the stringent control that our products go through and have no problem giving a toy to a kid,” he says. “Over the long term, I think things will be fine.”

In the meantime, DiMenico says he is still keeping his eye on what's going on inside and outside of China, but he feels that it is really up to the bigger toy manufacturers to make the first move when it comes to finding alternatives to Chinese manufacturing, especially considering the impact such moves could have on smaller companies (and the industry) when such a large percentage of the world's toys are currently produced and shipped from just one place.

“For the larger U.S. toy manufacturers, it would proably be much easier to move production to another country, as they buy full containers for shipping. Until those companies move their manufacturing to another country, we, the smaller companies, need to wait to determine where the next 'toy country' will be.” n

Toy testing has always been a vital step in Hasbro's production cycle. The company says it has had strict safety standards in place since high lead levels on toys first became banned in the 1970s; it checks paint before it is applied to any of its toys throughout every stage of production.

Hasbro owns two factories, one in East Long Meadow, Mass., and another in Waterford, Ireland, for its board game manufacturing, plus several others outsourced in China for production of its other toy categories. The company has had its fair share of recalls—including a 1-million-unit recall earlier this year of its classic Easy Bake Oven due to risk of burns—but says it has stepped up quality control efforts overseas and at home, an effort that now includes performing greater numbers of random tests of product. “We review and monitor everything ourselves through a variety of safety checks during multiple stages,” says Wayne Charness, senior vice president of corporate communications for the Pawtucket, R.I.-based toy maker.

This may be easy for a company as large as Hasbro, but for companies that have smaller production numbers, having a representative at a plant can be a costly endeavor. At a time when recalls, particularly for children's products, have hit what many in the business fervently hope is a high water mark, it's more important than ever for manufacturers to assure consumers that they are keeping a close eye on what materials are in—or on—their children's playthings. In the past eight months there have been 247 recalls worldwide involving 48.7 million units of children's products, including toys, according to the Hong Kong Trade and Development Council. Parents' awareness has never been higher of the perceived hazards lurking in their child's toy chests.

“It would always be optimal to have someone stationed on site to keep an eye on quality control,” admits Joe DiMenico of Morton, Pa.-based Applehead Studios, makers of Teddy Scares plush, comics and vinyl figures. “But with the budget limitations of a small company, sometimes you need to compromise by just having a representative visit the plant to assure things stay on track. For us, we have always tried to keep our product as high quality as possible—it is what sets you apart from the more mass-marketed toys. We try doing everything we can to assure our customers that they are getting what they expect.”

In the wake of the Mattel recalls, MGA Entertainment, the Van Nuys, Calif.-based marketer best known for its Bratz dolls, is paying more for its goods by using “quality” factories and 100 hired testers within China who check the company's goods at all times in order to maintain quality, according to president and CEO Isaac Larian. As a result of such monitoring, “the factories don't look to cut corners,” he says. In addition, the company is using third party testing companies, like SGS, to confirm its products meet safety standards, and is checking larger samples of goods and doing so more often, Larian says.

Fortunately for David Scroggy's company, the Milwaukie, Ore.-based Dark Horse Comics, it produces smaller numbers of product at a time and has close relationships with its manufacturers in China, which allows it to continue to negotiate smaller production requests as the face of the labor force in that country rapidly changes the economics of doing business with Chinese factories. Higher wages outside of factories are starting to lure Chinese workers away from industrial manufacturing plants in favor of higher-paid jobs located closer to home, Scroggy says.

Traditionally, Scroggy says, young Chinese workers would staff the factories in industrial areas like Guangdong as well as other parts of China because there were little or no employment opportunities in their local regions, then they would move on to Dongguan or Shenzhen to work at a factory there for three to four years, all the while saving enough to go back home and open a store or buy some land. China's growing economic prosperty, however, is negatively impacting that possible career path. “Now, with the economic boom, either there is an employment opportunity closer to home or else non-factory employment opportunities that are preferable to working in a factory painting eyeballs onto some action figure all day long,” he explains to Playthings.

When he visited China this past November, Scroggy found unused space in factories that would normally be used for production lines. Those areas were empty because of problems recruiting workers, according to factory owners. This is particularly evident in the more specialized areas, such as tool-and-die making or engineering, Scroggy says. “Master painters, for example, now get courted by competing factories, with the attendant increases in compensation.”

Despite the perception that working conditions in manufacturing plants are driving workers away, “the factories we use are all good facilities,” Scroggy says. “They are well-ventilated, well-lit and have nice worker housing. That's one of the reasons I go each year, to personally observe that we are using good manufacturers. But it is still boring work in many cases and still doesn't pay that well.” That way be why, according to Applehead's DiMenico, “approximately a half million workers did not return to Southern China this year.”

Production timelines seem to be getting longer and costs also seem to be going up as a result, according to Scroggy. He adds that he's stumped as to how some of these short-staffed factories can produce such short runs when there are bigger manufacturers with much larger orders in front of the production lines.

“You need to have more than 200 pieces to get a factory to produce our product in China,“ he says. “I know they can charge a lot for one piece, but from the factory's perspective it is not cost-effective to set up a production line for a run of 350 or 500 figures. Most of the manufacturers I work with simply won't do it. I might be able to get away with making 1,500 to 2,000 pieces, but this doesn't excite them much, although they will usually accommodate me because of our overall business and personal friendship.”

Applehead's DiMenico agrees. He says factories are typically seeking only large orders, which has been a problem for his company—and it's accelerating. Currently, Applehead is having difficulty producing Tofu the Vegan Zombie, a short-run vinyl toy, DiMenico says. “Lower quantities have always been an issue for smaller production and design companies like us, but this year it was definitely magnified,” he says.

Dark Horse's Scroggy adds that the increase in the cost of raw materials doesn't help the quality situation. “It all worries me a little, since I'd wager that many of the facilities that are doing these short runs are very likely not of a good quality,” he says. “If you've ever been to a bad Chinese factory, you know they can be pretty funky and unsafe. I am sure the artists would be horrified if they saw some of these places. This never comes up with Dark Horse, but it could elsewhere.”

The result for Dark Horse has been that tasks that used to take 30 days now take two or three times as long. “I think we are fortunate to have spent a lot of time exploring Hong Kong over the last 10 years,” says Scroggy. “We have sought out a wide variety of manufacturers. I think some of the factories we use are still unknown to others in our collectibles field, which has helped us now that things are tight.”

DiMenico tells Playthings that Applehead has considered moving its production to South America or India, where the company thinks it can have greater quality control, but it's not easy for smaller manufacturers to just up and move out of China. “Most of our international distributors all consolidate their shipping containers out of Hong Kong,” he says. “Even if we just moved our production further inland in China, they will probably have many new laws and logistic issues that may come with dealing with a new territory. Obviously, whenever there is change like this, it causes problems in some way and as a small company, you try to make these issues as seamless as possible to the end consumer.” But Applehead will continue to explore potential alternatives to Chinese production to produce “some of our other categories that China does not have such a deep hold on,” DiMenico says.

For MGA Entertainment, the recent toy recalls have not had an effect on its overall business, according to Larian, but, naturally, the America consumer's view of everyone in the toy business may be slanted for some time as a result of the volume and brand identity of the products that were pulled from the market. To ride that out, the company will continue to “do our own testing and we won't cut corners or squeeze our vendors at the expense of poor quality products for consumers,” Larian tells Playthings, noting, “We've always spent money on safety testing.”

Overall, Hasbro's Charness says he believes that any possible negative view of toys made in China from American toy shoppers will probably not last much longer than this year's holiday season. “I know the stringent control that our products go through and have no problem giving a toy to a kid,” he says. “Over the long term, I think things will be fine.”

In the meantime, DiMenico says he is still keeping his eye on what's going on inside and outside of China, but he feels that it is really up to the bigger toy manufacturers to make the first move when it comes to finding alternatives to Chinese manufacturing, especially considering the impact such moves could have on smaller companies (and the industry) when such a large percentage of the world's toys are currently produced and shipped from just one place.

“For the larger U.S. toy manufacturers, it would proably be much easier to move production to another country, as they buy full containers for shipping. Until those companies move their manufacturing to another country, we, the smaller companies, need to wait to determine where the next 'toy country' will be.”