MADE IN THE U.S. (AGAIN)
With a push from Walmart, Tonka’s Chinese owner is beginning to manufacture toys in America. It’s no easy game.
What kid wouldn’t be enthralled by a 12-foothigh, black-and-yellow Tonka truck jacked up over gigantic wheels, armored with steel bumpers, roof racks, side steps and ladders, and mounted with a constellation of blinking LED lights?
Never mind the kids. It’s their parents the folks at toymaker Funrise are going after with these life-size promotional trucks like the 10,000-pound Tonka T-rex. The Van Nuys, Calif.-based company takes them to events like the Lucas Oil Of-road Racing Series, where souped-up trucks (some spon- sored by Tonka) chew up hilly tracks at insane speeds. The hope is that they’ll inspire nostalgic adults who remember pushing Tonka trucks in the sandbox to buy pintsize versions for their little ones.
It seems to be working: Tonka sales are up 63% since 2011, says Funrise, which licensed the manufacturing and distribution rights from Hasbro in 1998. Originally made from steel at a Minnesota factory, Tonka trucks have been imported from Asia for the last couple of decades. But there’s a surprising twist to the story: Now the new Chinese chief executive of Funrise is exploring how to make at least a few
Tonka trucks in the United States.
“Toy manufacturing in the U.S. has dwindled to almost zero,” says CEO King C. Cheng, 23, who is too young to remember when toys were made anywhere but Asia. But with a nudge from Walmart, which has vowed to buy $250 billion worth of American-made products over the next decade, Funrise is giving its manufacturing footprint a second look. Says Cheng: “We’re trying very hard to bring a Tonka vehicle back to the U.s.—something that’s simple, probably not steel, but fits the heritage of the brand.” He’s got a milestone to shoot for: In 2017 Tonka will mark its 70th anniversary.
Cheng, who was born in Hong Kong and graduated from Pennsylvania’s Franklin & Marshall College, grew up in the business. His father, Y.P. Cheng, is the chairman of Hong Kong-based Matrix Holdings, which has been making toys in Asia for some 35 years, including millions of Happy Meal toys for Mcdonald’s. In 2007 Matrix acquired Funrise, which now accounts for an estimated 60% of its $149 million in revenue.
Now it’s up to the younger Cheng, who took over as Funrise CEO in May, to answer Walmart’s challenge.
The company’s first target was Gazillion Bubbles, a “premium” soap-bubble solution it’s been selling since 2004. While it was cheap to mix and bottle the solution in Vietnam, plastic bottles filled with mostly water are heavy, which means shipping containers reached their weight capacity before they were fully loaded. “We had to ship mostly empty space,” says Cheng.
Executives thought, If beverage companies can produce bottled water in the U.S., why couldn’t Funrise make bubbles? The key was swapping toy-grade plastic bottles for ones made with recycled plastic resin. That enabled Funrise to cut the price of its bubble solution in half, despite brewing the stuf in California rather than Asia, and boost sales. “We’ve more than doubled our revenue from Gazillion Bubbles in the last three years,” says Cheng. “That really opened our eyes to ask, what other products could we manufacture and sell domestically?” adds President Shirley Price.
Trendy restaurants in Los Angeles provided the inspiration for the company’s next American-made product, due in 2016. Booger Balls are colorful, squishy slime balls that kids can fling at one another. Just as a chef can create faux caviar out of olive oil, kids can mix up a biodegradable powder and then drop it into a water bath, where it congeals into small balls, or “boogers.” Booger Balls will be made in California and New York.
But manufacturing Tonka trucks domestically is a much tougher challenge. Tonka has hundreds of steel, die- cast, plastic and motorized vehicles in its portfolio, most of them made in Vietnam. Production is very labor-intensive—whether it’s painting toy trucks or affixing them securely to the packaging. Funrise is in talks with multiple American manufacturers about the potential for building Tonka products. “There are still factories left in the U.S. that want to do this,” says vice president of product development Kevin Bloomfield. A year ago it didn’t look viable. “But it’s starting to add up. The technology is getting better and more efficient. The business is diferent today.” He adds: “The push from Walmart is so huge. You need big quantities for it to make sense.” The company is still exploring alternatives, but one option under review is a simple injection-molded toy that snaps together.
Walmart understands that companies like Funrise need time to reassess their manufacturing strategies and is trying to help by matching vendors with potential factories or raw material suppliers. It’s also providing $10 million in research grants to advance domestic manufacturing. “It’s a journey,” says Cindi Marsiglio, Walmart’s vice president of U.S. manufacturing. “The biggest thing Walmart can do is to be a ready and willing partner with a big purchase order.”
For Tonka and Funrise that’s all the motivation they need.