Supply clogs rush toymakers to shelves
Holiday season will be affected
NEW YORK — Running out of time to get its products on store shelves ahead of the holidays, the Basic Fun toy company made an unprecedented decision: It’s leaving one-third of its iconic Tonka Mighty Dump Trucks destined for the U.S. in China.
Why? Given surging prices for shipping containers and clogs in the supply network, transportation costs to get the bulky yellow toy to U.S. soil is now 40% of the retail price, which is roughly $26. That’s dramatically up from 7% a year ago. And it doesn’t even include the cost of getting the product from U.S. ports to retailers.
“We’ve never left product behind in this way,” says Jay Foreman, CEO of Basic Fun. “We really had no choice.”
Toy companies are racing to get their products to retailers as they grapple with a severe supply-network crunch that could mean sparse shelves for the holidays. They’re trying to find containers to ship their goods while searching for alternative ports. Some are flying in some of the toys instead of shipping by boat to ensure delivery before Dec. 25. And in cases like Basic Fun, they are leaving toys behind in China and waiting for costs to come down.
Like all manufacturers, toy companies have been facing supply chain woes since the pandemic started and temporarily closed factories in China in early 2020. Then, U.S. stores temporarily cut back or halted production amid lockdowns.
Labor shortages in the U.S. have made it difficult to get stuff unloaded from ships and onto trucks.
But for toymakers that heavily rely on holiday sales, there’s a lot at stake for the nearly $33 billion U.S. industry. The fourth quarter accounts for 70% of its annual sales. On average, holiday sales account for 20% of the overall retail industry. And 85% of the toys are made in China, estimates Steve Pasierb, CEO of The Toy Association.
The struggles are happening as the U.S. toy industry enjoyed a nearly 17% increase in sales last year and a 40% increase in the first half of this year as parents looked to entertain their kids at home, according to NPD Group, a market research firm.
Even the few toy companies that make goods in the U.S. have struggled because of labor shortages.
John Gessert is CEO and president of American Plastic Toys, based in Walled Lake, Michigan, with another plant in Mississippi.
He says the company is missing 35% to 40% of its front-line workers. Now, it’s shifting away its focus on play kitchens that require six workers toward less laborintensive toys like basketball sets, which require just three workers to put together.
“I have never had such a complicated puzzle to fix,” he said.