Steady Progress

A model of a new playset sits on Andrea Schauer's desk—it is hinged, accessible from both sides and an ideal portable toy for children. It is a perfect example of how the Playmobil brand has advanced in recent years. “Playmobil now gives greater attention to detail, and has become more complex,” says Schauer, managing director of the brand.

Today, even classic toys must be attractive and inviting for children to play with them; as a result, new play features and themes (such as dinosaurs) and more electronics have entered Playmobil's world. “We must make sure we develop along with our children,” Schauer says.

Children have responded by rewarding Playmobil with double-digit growth rates in the past year. Besides its strong position in the German market, the company can also be proud of its export business, posting growth between 5 and 35 percent. Even the challenging U.S. market shows promise: the Zirndorf-based firm's products are now sold by Target and Toys “R” Us.

Having previously focused on lower cost items, American consumers are increasingly turning their attention to Playmobil, perhaps partly in response to the recent toy recalls. The effect of this jump in demand is that the company has struggled to meet global orders. “Our aim is to deliver quality—as a result, we cannot open endless production capacities,” Schauer says.

Production at Playmobil's factories in Dietenhofen, Germany, Malta and the Czech Republic can cope with an annual growth rate of up to 15 percent and still guarantee quality, Schauer says. Unlike those who blame China for problems in the toy supply chain, Schauer does not believe that quality is linked solely to production location, taking a very balanced view of China's production record: “Many high-tech products are made in the Far East. There is no doubt that we could achieve Playmobil quality in China as well.”

However, Chinese production would not bring about the cost savings expected, Schauer says. “With Playmobil, the devil lies in the detail. The necessary controls would push our personnel capacities beyond the limit,” Schauer says, quoting company owner Horst Brandstätter who once told his European workers: “If we wanted to produce in China, I would have to clone you all.”

Instead, Brandstätter chose to invest nearly 50 million euros in the firm's European facilities. Schauer believes that Playmobil's business model only works so well because of the company's readiness to invest. And rashness, she says, is something the company prefers to avoid. “We do not go for cheap thrills, but for long-term play value.”