While the rest of the world has spent the summer focused on Lebanon, bomb plots, heat waves and Mel Gibson, toy industry hiring has continued at a rapid pace.  After the expected summer slowdown, Toyjobs is currently tracking to have its second best year out of twenty-five.  This is not because 2006 seems to be such an extraordinary year for the toy business, although “Pirates” is doing extremely well and “Dora” continues to be strong.  The year seems best characterized by “running harder to stay in place.”  The best explanation I can give is:  retailers are demanding more and more specials, custom jobs and private label products; they continue to put off actually committing to those demands until the last possible second; as such companies need more capable pairs of hands just to get the work done.  Another big reason for heightened hiring is that in difficult times it’s always easy to blame and change your sales team whether it’s their fault or not. 

With Mattel’s purchase of Radica, one w`onders what will become of Radica’s Texas offices and staff.  I’m sure that Mattel is telling everyone that they are part of some big future plan and that their jobs are secure but that is standard practice for a purchasing company whether it is true or not.  My take is that Mattel is mainly interested in acquiring Radica’s ability to develop technology or the electronic guts of things.  That part of Radica’s product development is based in Asia.  What happens to Texas over the next two years remains to be seen.  Another big rumor that is bouncing around these days is that Mattel is looking to acquire Leapfrog.  Certainly at its current stock price, Leapfrog is a lot cheaper than it used to be.  The purchase would also give Mattel a lot of additional space on retailers’ shelves.  It is important to keep in mind that while the Leapfrog Class A shares are publicly traded, the Class B supervoting shares continue to be owned by Knowledge Universe and its affiliates who also control the Board.  It’s unlikely that they would be willing to let the Company go at anywhere near the current price.   

Kudos to Ted Kieswetter for a very successful career and a successful exit strategy.  For over thirty years, he has built International Playthings into the strongest company in the specialty toy business.  He has always carried himself honorably and with both a sense of humor and a touch of class.  He has been a great ambassador both for International Playthings and the specialty toy business as a whole.  He will be greatly missed. 

I also feel compelled to mention a disservice done to another longtime toy industry standout.  In early August, Action Products issued a press release stating that Larry Bernstein (Big Larry) had been ousted as President and that Chairman Ron Kaplan would be stepping in to run daily operations.  The release stated that the reason for Bernstein’s ouster was that sales were down from $3.8 million to $3.2 million during the first half.  Just to illuminate things, Larry Bernstein only started at the company in November of 2005.  Any of the products that weren’t selling in early 2006 were developed before he got there and under Kaplan’s stewardship.  If sales suddenly take off in 2007, I don’t suppose that Mr. Bernstein will get credit for the products developed during his watch.  Action Products has blown through numerous short term Presidents (Ron Tuchman comes to mind) since Ron Kaplan took over from his parents.  I guess my point is:  It’s your company and you can do what you want, but you shouldn’t go taking potshots at a guy who parachuted in to try to save your bacon, when it is likely that it is you yourself who is the problem.  You may be able to fool yourself but people who know the toy business…know better.  Before I get off my soapbox; I’d like to add that I fully expect that my brief outburst will result in yet another self serving Action Products press release.

The sad saga of former Walmart Vice Chairman Tom Coughlin has finally (hopefully) come to a close.  Late last week, the judge sentenced him to twenty-seven months which can be served in home confinement due to poor health.  The Wall Street Journal reported that Coughlin, who was all tearful apologies in the court room, changed his tune as soon as he got outside and again claimed that he had been reimbursing himself for a clandestine scheme to fund anti-union activities.  I am sure that the judge was not pleased with his performance.  While I would have little trouble believing that Walmart has fought the unionization of its stores covertly as it has done openly, if Mr. Coughlin wishes to try to regain his reputation he will need to provide documentation.  Without that I have to believe that it’s just a load of hooey.  Of course, a little problem he has is that providing such documentation could easily lead to federal criminal charges for violating labor laws and racketeering.  Hopefully, Mr. Coughlin has more than just that one Celine Dion CD to listen to and that one jug of vodka to drink during his two plus years of home confinement.  If he runs low on provisions, he can always send someone down to the local…Walmart.  He had better bring cash though; I don’t think they’re going to be accepting any gift cards. 

Finally, on to more important matters.  So, is the Eleventh Avenue Toy Center going to work out?  It’s up to you readers to decide.  One common complaint is that it’s in a pretty bad area but I think you have to move past that.  Their aren’t a lot of great choices available.  Not many great choices are likely to become available.  I know you don’t want to pay the price per square foot that a great choice, even if it were available, would entail.  On the location’s positive side:  it is pretty close to the Javits Center and there is plenty of parking nearby at the Intrepid Aircraft Carrier. 

A much bigger problem is that there has been a degree of bungling in what is being offered.  When a company would request 1,000 square feet of space it would get 600 square feet of usable space plus 400 square feet of hallways and common area to pay for.  This effectively drove the price per square foot from $40 to approximately $70 AND you didn’t have all the showroom space you needed.  Every building has common space that needs to be paid for but from what I understand; 200 5th Avenue was more like 25%.  Bumping it up to 40% is a big bite.  Those better be really nice “luxury” hallways.  At the very least, communication could have been handled better so that both renters and rentees were talking the same language about what their space requirements were.  I don’t know if the value proposition works out for you or not.  I don’t need any space and as such don’t have any skin in the game.  I think it is important that the toy business has a home and is able to come together in one building.  If the numbers work for you, then it’s time to get moving.  Spinmaster and Mega Bloks/Rose Art have signed on and as fairly large players, can provide an anchor for the building.  So get your calculators calculating and your bean counters bean counting because time is of the essence. 

All the best, 

Thomas Keoughan  

P.S.  The following article has absolutely nothing to do with the toy business, but it makes fascinating reading.  Please feel free to skip it or take it to the beach.  Call it a light summer read.