Mattel closes factories amid toy slump
Toy maker overhauls production to cut costs
Mattel Inc. said it has closed two factories in Asia and plans to close one in Canada, as the toy company reduces its sprawling manufacturing footprint to cut costs.
The maker of Barbie dolls and Hot Wheels cars shut manufacturing sites in China and Indonesia last year, and it said it would close a facility in Montreal sometime this year. Mattel had previously announced plans to close and sell a factory in Mexico.
Unlike Hasbro Inc., a rival that has outsourced most of its production, Mattel has manufactured many of its own products for decades and until recently still owned 13 factories and employed thousands of production staffers globally.
Closing the Montreal plant, which makes Mega Bloks, would affect about 580 workers, a spokeswoman said. She declined to say how many jobs were affected by the Asia closures. Mattel employs about 35,000 workers during peak manufacturing periods.
The manufacturing overhaul is part of Chief Executive Ynon Kreiz’s plan to turn around and stabilize Mattel, one of the world’s largest toy companies, which has struggled in recent years, from both weak sales in large divisions such as FisherPrice preschool toys and American Girl dolls and the industry upheaval caused by the liquidation of Toys “R” Us.
Weak sales have exposed inefficiencies in Mattel’s manufacturing network and led to some factories being underused.
Mattel has sought to tackle various supply-chain problems, from sharply reducing the number of products the company makes to culling the number of colors available to designers.
Roberto Isais, Mattel’s chief supply-chain officer, said the changes have turned the toy maker’s supply chain into a competitive advantage.
“We are continuing to optimize our manufacturing footprint, increase the productivity of our manufacturing infrastructure and achieve efficiencies across our global supply chain,” he said.
Mattel plans to retain some factories, such as those that make Hot Wheels and Barbie, where the company would have an advantage over outsourcing to a third party. Executives say such a structure would allow Mattel to move more quickly to capitalize faster on trends.
The China factory made finished goods, while the Indonesia plant made tooling gear used in other factories. The manufacturing will be moved to other Mattel facilities.
Mattel and Hasbro are scheduled this week to report earnings for the key holiday shopping period.
Already, there have been signs of caution. Research firm NPD Group Inc. said U.S. toy sales declined in the fourth quarter, which had six fewer shopping days between Thanksgiving and Christmas, compared with a year earlier, leading to a 4% decline for the industry for 2019.
Target Corp. blamed soft toy sales for its weaker-than-expected holiday season. Other toy companies, such as Spin Master Corp. and Funko Inc., have warned of a weak holiday period.
Some toy companies have expressed concerns that the coronavirus outbreak in China could disrupt the toy supply chain. Isaac Larian, CEO of MGA Entertainment Inc., a Mattel competitor and maker of L.O.L. Dolls and other toys, said a large Chinese toy factory is remaining closed for another week.
“The coronavirus is not solely China’s problem,” Mr. Larian said. “It will impact the global economy.”