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Fall Toy Preview: Success Without Crowds

Fall Toy Preview: Success Without Crowds

From an aesthetic point of view, the Fall Toy Preview was great. There was no clutter and lots of open space. At the heart of the show on the twelfth floor of the Dallas Market Center the corridors before, between, and behind the booths were as wide as boulevards. Unfortunately, the wide open spaces were the result of there being significantly fewer booths.

Attendance at this show is always tricky to evaluate because exhibitors and buyers are tucked away in closed booth cubby holes for much of the
day. My favorite “metric” is to look over the edge at lunchtime and see how crowded things look around the food court. This year the traffic was sadly sparse. Even the Starbucks line was short (scientific inquiry at its best). If the show were to be judged by looking around and taking a head count, you would think that the show was a failure…but you’d be wrong.

All the exhibitors that I spoke with were in high spirits and had very full dance cards. Buyers were there en masse. Wal-Mart, Target, Toys ‘R’ Us, Amazon, Walgreens, CVS were all well represented. In all, about 350 retailers were in attendance. There was a bit of a kerfuffle when a lone Kohl’s buyer canceled at the last minute, citing Ebola fears, although I suspect it was really more of a babysitting issue. True, both retailers and exhibitors seemed to send smaller contingents than in years past. This certainly contributed to the lower headcount. That said, the teams were sufficient to get the job done. No one seemed to be absolutely scrambling. More troubling is that year after year, more manufacturers seem to be dropping out of the event.

I hear a lot of manufacturers complain about the Dallas Show as a waste of time and money. I have listened to it for years and when I hear it, what usually runs through my head is – “you have unreasonable expectations.” If you think you are going to have a big breakthrough with Wal-Mart or Target at the Fall Toy Preview – that just ain’t gonna happen. If, on the other hand, you work the show as it is intended, focus on getting retailer feedback on product, packaging, merchandising, product packs, and pricing, you will certainly get that. Also, if you can meet with twenty mid-tier retailers in one place over a three-day period, I can’t imagine why you wouldn’t go ahead and do that. My thought has always been, if you go into a trade show with the proper expectations, you will come away feeling successful. Of course, what do I know, I’m “just a headhunter.”

Obviously, the October Trade Show Season is a mess. We have buyers running to Los Angeles during the two weeks prior to Dallas and running back to LA or Hong Kong or both in the two weeks after. For good or ill, the toy industry today is overwhelmingly centered in Southern California. So let’s agree to try to find an appropriate venue in the Los Angeles area. That should be pretty simple.

The bigger problem is scheduling. The reality is that the larger companies like Mattel, Spin Master, MGA, and Jakks Pacific don’t want to show at the same time as the rest of the toy industry. I understand the big boys wanting to monopolize buyers’ time without having them “distracted” by their smaller and often more innovative competitors. Unfortunately, this situation hurts the toy industry as a whole. It’s probably a conflict of interest for the largest companies to sit on the TIA Board, while at the same time undermining TIA events and initiatives which are meant to support the industry as a whole. It’s pretty clear that if the TIA scheduled an October show in the Los Angeles, then the big boys would just move their events to before or after it. Since they’re not going to play ball with the rest of the industry, here’s a relatively simple solution which should serve everyone.

Let there be a two week Toy Trade Show located in the Los Angeles area in October. During the first week, the largest companies can use their current spaces and exhibit their wares in the same way that they are doing now. So as to not discriminate, any other manufacturer who feels that their product line and sales volume is strong enough to peel buyers away from the big boys are welcome to rent space and try to do so. Keep in mind that buyers are going to have to get into cars and drive in Los Angeles traffic just to see you so you may be disappointed.

During the second week, the TIA can identify and arrange for a venue for all the other exhibitors, which should be a convenient one stop shop. Since the toy industry is clearly unable to arrive at and adhere to a common sense solution like this, it is up to the buyers. It is the buyers who are being run around willy nilly. It is time for them to be the grown-ups in the room and play some hardball. The buying community should come together and go to the TIA and say, “Arrange this for us. This is where we will go and this is when we will be there. If a manufacturer wants to see us, this is where they should be – end of story.” That should get someone’s attention. Do I really expect Target to kick Mattel out for not being in attendance? No, but Mattel might find that three or four feet of their shelf space was given to somebody else. Be there or be square. As for me personally, I sorta like the idea of being in New York in October and Los Angeles in February.

Meanwhile back in the USA, the economy continues to improve. In September, the headline unemployment rate fell to 5.9%, the lowest level since July 2008. Wage growth has continued to lag but that is typical of an economic recovery. Overall wages won’t rise until the talent pool grows tighter. U-6, which includes consultants and part time workers who would prefer full time work remains stubbornly high. A possible explanation are the rules imposed by Obamacare, which require employers to provide health insurance to most full time workers but not to part timers. That is causing some employers to control schedules so that people don’t work enough hours to qualify as full time.

There are reasons to be optimistic about the upcoming holiday sales season. Retail sales rose broadly in August and consumer sentiment hit a 14 month high in September. According to NPD, US and European toy sales will be up 3 to 4 per cent this year. Even beleaguered Toys ‘R’ Us had its first half comparable store sales turn positive for the first time since 2010. We have hot products which will drive consumers to the stores. Anything Frozen is flying off the shelves. Minecraft has addicted a generation of 8 year olds. Teenage Mutant Ninja Turtles are inexplicably back big time. Moose Toys has several hot lines with Shopkins, Little Live Pets, and Mutant Mania. Lastly, cheaper oil will lower gasoline prices, which should increase purchasing power for U.S. consumers in time for the holiday sales season.

Toy industry hiring continues to be strong but the mix of job openings continues to be abnormal. For our thirty plus year career, two-thirds of Toyjobs searches have been in Marketing and Product Development. Another 25% were Sales with the rest being “other” (QA, supply chain, etc.) Since last October, when toy hiring rebounded sharply, about 90% of searches have been for Sales Execs. That continues to this day. The toy industry being a seasonal business also tends to hire cyclically with August through December being the hiring season for Sales people. February through July tends toward Marketing and Product Development. I’m hoping that predictions of a strong holiday sales season prove true and that it stimulates a Marketing and Product Development hiring binge next Spring. We will have to wait and see.

All the best,
Tom Keoughan

By ToyJobs|2020-11-20T08:51:00-06:00October 20th, 2014|ToyJobs Blog|Comments Off

Toy Jobs – August Means Mixed Signals

When everyone heads off for summer vacation; any public utterance takes on greater importance because there are so many fewer voices in the air. The stock market may move but with so few active buyers and sellers it is difficult to discern if there is much conviction in its zigs or zags.

What we do know is that the eurozone is still locked in an existential crisis. There are rumblings of a slowdown in China and we are hurtling ever faster toward the fiscal cliff. While “Rome” may not yet be burning; both European and American politicians are either fiddling around or have gone on vacation.

The looming fiscal cliff and the threat that it may cause a double-dip recession is already making it difficult for businesses to plan, hire or expand. Retail sales have also stalled for several months as consumers wait for the other shoe to drop. Both businesses and consumers appear to be sitting on their wallets as they wait out tax, regulatory and election uncertainty. All this has caused the US economy to slow sharply.

While July gave us a better than expected jobs report with nonfarm payrolls rising by a seasonally adjusted 163,000, there appears to be something amiss. The Institute for Supply Management’s index of business activity fell below 50% (the dividing line between expansion and contraction) for the second month in a row for the first time since the depths of the Great Recession in 2009. At the same time the Bureau of Labor Statistics found that July factory jobs increased by 25,000. Hmmm, that seems a bit puzzling. It turns out that the BLS added 377,000 jobs for seasonal adjustment, the largest such adjustment for July in the last ten years. So, here in the real world, rather than there being 25,000 additional jobs there were actually 352,000 fewer.

The July unemployment rate ticked from 8.2% to 8.3%, while Toyjobs’ favorite statistic – U6, which includes people who’d prefer a full time job or more rewarding job but can’t find one, moved from 14.9% to 15.9%. That means that one in every seven Americans is either unemployed or underemployed. Paradoxically, the stock market keeps going up, reaching four year highs last week. Of course, this is also subject to a seasonal effect as stocks were traded in very small volumes as many buyers and sellers have gone to the beach.

There are, however, some reasons to be cheerful. Anecdotally, here at Toyjobs, we have, as expected, seen actual hiring slow during the summer months as companies have difficulty actually pulling the trigger due to vacations, daydreaming on Fridays, etc. There are, however, many searches “in process” which should close soon as the majority of people return to their desks. Also, search starts have been quite high since the beginning of August which is early in the annual job opening cycle. Stay tuned to our job board in the coming weeks as we’ll be posting many new toy jobs.

Also, the types of new job openings have started to shift. Over the last four years, what hiring there was has focused on Sales, Sourcing and Safety which can be translated to “revenues, cost reduction and regulation.” We are just beginning to see a boom in Marketing and Product Development jobs, which have been largely absent. Hopefully this is an indication that toy companies are no longer “hunkered down” and are ready to develop new products and try new things. Perhaps buyers are becoming less risk averse; at least in terms of the items they’re picking even if they’re still not willing to order on a timely basis.

Also, the National Retail Federation is projecting an almost 22% rise in back-to-school sales. We should keep in mind that these are only predictions based on a survey model and people will often say that they are going to spend more than they actually do. Add to that, back-to-school sales are a notoriously poor predictor of holiday spending – where the big money is.

The overall story here is that summer statistics, like summer love, is notoriously capricious. We shouldn’t put too much stock in them. We shouldn’t take too seriously the non-vacationing jabberers pointing at them to support whatever strain of the truth they are paid to push on the rest of us. Summers are slow and there is less going on which gives whatever is happening the appearance of greater significance. It’s wise to wait for September and, better yet, October data which is much more reliable to try to divine what our true circumstances are. That said, it would be incredibly beneficial if currently vacationing or campaigning politicos would give a one year extension to the current taxation, spending and regulatory regime providing both businesses and consumers the confidence needed to get their heads and wallets back into the game. No need to leave the beach. Ya’ll can just Skype it in.

All the best,
Tom Keoughan

By ToyJobs|2020-11-20T08:51:01-06:00August 22nd, 2012|ToyJobs Blog|Comments Off

Toyjobs Sees Surge in Search Starts

There’s a lot of gloom and doom on Wall Street right now which the media is only too happy to capitalize on in order to sell more advertising to more eyeballs (for the media it’s a sort of a stimulus program). However, most economists think there is only a 25-30% chance of a double dip recession. That percentage is up from 20-25% but economists overwhelmingly feel that the most likely outcome is continued slow growth (CSG?). While CSG doesn’t feel all that good, we’ve gotten used to it and it’s a helluva lot better than 2009, right?

Big investment managers on Wall Street are jumpy and stock indices are swinging wildly on any even minor news. “The current Greek bailout plan is in danger! Oh, heavens! …Gee, I think there will be another one. Factories in Pennsylvania, Delaware and South Jersey slowed down in the month of July! Oh, my.” I’m told (because I ain’t no expert) that a lot of this crazy volatility is caused by hare triggered computerized high frequency trading. The stock market has been trading in a range for a while so these programs are set to sell massive blocks of stock when we reach a point near the top of the range and conversely scoop stocks up when we near the bottom. This leads to wild gyrations which will take a little while to settle out.

On a positive note, retails sales were up 0.5% in July and figures for the previous two months were revised upward as well. Japanese supply chain disruptions are coming to an end. Prices have come down for oil, energy transportation and commodities. Unfortunately for the toy industry there are still problems in China with: manufacturing costs, labor, electricity and transportation.

The job market continues to slowly improve and unemployment has stabilized at just over 9%. The government also revised its May and June jobs reports upward. July non-farm payrolls increased by 117,000 (154,000 private market jobs minus government layoffs) which is the tenth straight monthly gain. 117,000 additional jobs per month isn’t enough to keep up with population growth (for that we need approx. 200,000) but it is heading in the right direction.

Total Nonfarm Payrolls All Employees

While it will be interesting to see the August numbers, we have to remember that during July and August we are in the midst of “the summer doldrums” when hiring slows down on a seasonal basis even during good times. I expect that we will see noticeably improved numbers in the October and November jobs reports. I hear you – “Where did that come from? What makes you say that, Tom?” Well, for one thing – I am in the employment business.

Toyjobs noticed a much improved employment atmosphere in January as companies started with new budgets after a decent, though unspectacular, Christmas. The slope of the improvement curve steepened in mid May as retailers went from “happy talk” to actually placing orders. Unfortunately we then hit July and August during which hiring slows down while hiring managers go on vacation and everybody (me too) is a little more focused on “outside activities.” A lot of the searches that we started in late May and June slowed to a crawl during July and will be finalized in the next couple of weeks. If we were publishing two or three weeks from now you would see a much bigger list of Toyjobs Success Stories (or you can just check back next month). Summer doldrums generally continue through the first half of August while toy company executives stare at their phones and pray that they don’t ring with purchase order cancellations. When they start breathing again about the third week of August, they suddenly seem to realize that the Fall Toy Preview is upon us and they better get moving if they want their team in place for the 2012 selling season. This year they didn’t all wait until late August. Toyjobs saw a surge in search starts at the beginning of August. Those searches are being worked now and will likely be filled in September/October. I foresee continued strength in search starts in late August and September. Why? Because that’s the usual seasonal pattern. Let me curb my enthusiasm by saying that we are nowhere near back to normal again but we are in so much better shape than we were two years ago and things seem to be getting better faster.

So, if you’re out of work, make the day after Labor Day the time when you renew your efforts to reach out to your network. If you’re working but would like to change jobs, now is the time to dust off your resume and tweak it up a bit. If you’re a hiring manager, think about how you can shorten your “decision cycle” and “pull the trigger” quicker. Otherwise one of your competitors might hire the person you want.

Muddling through more confidently,
Tom Keoughan

By ToyJobs|2020-11-20T08:51:02-06:00August 23rd, 2011|ToyJobs Blog|Comments Off

He’s baaaaaack!…Neil Friedman Returns

After just a few short weeks in “retirement” Neil Friedman has returned to the retail side of the desk by being named Toys’R’Us’ US President. This comes just in time for the upcoming TRU IPO (good for him!). Early in his career, Neil spent ten years at Lionel Leisure before moving to the toy manufacturing side with Hasbro, Gerber and finally Fisher Price and Mattel. He also spent an additional short stint at Lionel Leisure in the early nineties.

The toy industry should benefit nicely by having Neil in such a prominent place at Toys’R’Us which has been looking awfully “Targety” lately. It should certainly be helpful that he understands and empathizes with the challenges that manufacturer/importers face. Congratulations to Neil and good luck to the toy industry which hopefully will find it just a little bit easier to do business with TRU.

Mr. Friedman’s alma mater, Mattel, just lost the most recent round in its “total war” with MGA. Most toy industry executives that I have spoken with are absolutely flabbergasted. To hear MGA Chief Executive Isaac Larian crow “After seven years of fighting with Mattel, I’m finally vindicated” reminds me of Ollie North saying “I’ve been completely exonerated. It seems that Mattel and MGA are now tied at one and one with one “do over”. So what happens next? Appeal? Jumpball? Tiebreaker?

From my reading of the case (which is admittedly far from complete) it seems clear that Carter Bryant created the original Bratz drawings on Mattel’s time and dime. It seems equally clear that Mattel turned the concept down internally (oops!). That’s completely understandable. We’re in a fashion business and much of product selection is just guessing at what a very fickle group will decide they must absolutely have usually for a very short period of time.

I, of course, haven’t read Carter Bryant’s Mattel contract but I do know (as does everyone in the toy industry) that these contracts are meant to cover all intellectual property developed day or night or weekend while in a company’s employ. Both Carter Bryant and Isaac Larian must have known that in producing Bratz, they were on a very slippery slope whether there was some loophole in the Bryant/Mattel contract or not. On the other hand, it is also very clear that MGA overwhelmingly built the Bratz franchise through smarts and hard work.

So, what should be done? This isn’t the way “the law” reads or the way contracts were written but it I were King Solomon…First, no damages for anybody. I would guess there was an adequate amount of “stolen trade secrets”, dirty tricks, subterfuge and just plain smarmy behavior by both combatants. The original concept was probably technically owned by Mattel but the business was built by MGA. So Mattel should receive the highest customary inventor’s royalty paid in some sort of split by MGA and Carter Bryant who surely knew he was violating the spirit if not the letter of his contract.

I’m not particularly happy with that opinion. I am decidedly not an MGA fan but in trying to be impartial that’s where I come out. It’s just one man’s opinion admittedly based on a very limited reading of the evidence (mostly newspaper stories). If I had more first-hand access to the evidence, my opinion might be different. So please, there’s no need for huffy phone calls from either the Mattel or the MGA camp. You both need to focus on the next round of your battle (and I’m predicting there will be a next round).

On to more broadly important matters. Last week we learned that US manufacturing output has been rebounding at an incredibly fast rate. During the first quarter it increased at an annual rate of 9.1% compared to an estimated growth rate of about 2% for the US economy as a whole. This is due to a number of factors. In 2010 most large companies postponed purchases in order to hoard cash. Now that the deer in headlights portion of the crisis is over and the recovery has slowly begun, companies are beginning to spend to satisfy pent up demand. Large increases in corporate spending for computer and software upgrades are being seen.

Another reason in commodity inflation as US companies seek to jump on the bandwagon of rising prices and growing sales volume. Food price inflation is boosting spending world-wide on agricultural equipment. Globally rising metal and oil prices have encouraged spending on mines and oil and mineral exploration requiring additional equipment. As freight traffic grows, trucking firms are investing in vehicles with better fuel efficiency.

All of this heavy machinery will require additional people to build it. Additional workers will mean increased spending on consumer products and consumer products firms will need additional employees to fulfill demand. When the manufacturing sector does well the rest of the economy generally follows. The whole shebang is beginning to snowball albeit very slowly. Indeed in March, the unemployment rate edged downward in its fourth consecutive monthly decline. I’ll be leaving tomorrow to attend a Pinnacle Society conference with the other Big Dogs of Recruiting. It will be interesting to hear how employment is fairing in all of their various niches.

There are, of course, a few concerns. One is that the recent earthquake in Japan will lead to shortages of automotive parts, semiconductors and electronic components. That could slow production of some goods but thus far the effect seems to be relatively minor. A bigger worry is a spike in oil prices due to Middle East unrest. Saudi Arabia has enough spare oil capacity to offset almost any Middle East problems short of someone going to war with Iran (which doesn’t seem likely). The biggest danger would be if Saudi Arabia itself sank into crisis. If that happens…well, let’s just hope it doesn’t.

Toyjobs continuing forecast is for increased toy industry hiring of specific and necessary jobs and an increase in sales to toy retailers. Unfortunately, due to China’s slowly strengthening currency, rising labor costs, rising commodity prices and general inflation – we foresee lower margins. Things are so much better than they were a year ago but in 2009 the economy sank so low that it’s still not even close to normal.

All the best,
Tom Keoughan

By ToyJobs|2011-04-27T10:02:00-05:00April 27th, 2011|ToyJobs Blog|Comments Off

From the Yuan Wars to Toy Company Jobs

As November’s very heated election approaches in a continuing climate of economic malaise, desperate politicians are pointing the finger of blame anywhere and everywhere but at themselves. The nation is rightly disgusted with its banksters but is growing immune to the long and continuous public bludgeonings of their ilk. In search of another scapegoat the thundering congressional herd lurches eastward – “Blame the Chinese! – after all they don’t vote in our elections.”

Chinese workers have been striking (or just not showing up) and demanding higher wages. Frankly, good for them – they were being paid a pittance and many had pretty lousy living conditions. I’m all for an increase in the purchasing power of Chinese factory workers. That said, a dramatic upward currency revision, as many in Washington are calling for, could have all sorts of unintended consequences.

China is NOT sucking up as many U.S. jobs as is touted by the pandering vote grubbers. Low end (toys, sneakers, small appliances, et al.) manufacturing left our shores long ago and is not coming back. You can’t make these goods in the U.S. and still meet “the Wal-Mart price”. Even in these dire economic times no one will accept a wage low enough to make widespread U.S. consumer goods production feasible. Well, except maybe in Detroit. “What about cars?” you ask. “Building cars isn’t low end manufacturing.” Yes, they are building cars in China but they are not shipping them here. Those cars are for Asian consumption. By the way, part of “they” is “us”. U.S. auto manufacturers are building cars in China for Asian consumption as well.

If the U.S. political class is able to harangue China into a significant upward revision of their currency, it will cost U.S. jobs. American companies who have their products manufactured in China will have higher costs, and because it is very difficult to budge retailer’s price points, will therefore have smaller margins. An environment of diminishing margins is not likely to spur additional hiring. Companies will not be looking for additional sales marketing or product development staff. This is especially true of smaller private companies where owners tend to view the cost of each additional employee as coming straight off the bottom line – which translates to straight out of their pockets. A rising yuan doesn’t support these small businesses which are supposed to be the engines of American job growth.

In taking a country from the 12^th century to the 22^nd in the span of a mere fifty years, China’s leaders have to deal with far bigger problems than the U.S. Congress. They are going to move slowly and do what they think is right for them – whether what they think is right, actually is right or not. Them, of course, being the Communist Party, which is committed to maintaining power whether the country is communist or not. What we will likely see is a few small gestures such as the past two weeks 1% rise in the yuan in an attempt to mollify the situation until after the U.S. elections (now only six weeks away) when everyone’s attention will be focused elsewhere.

One of the factors that is really holding up job growth in the U.S. is uncertainty. Business owners like predictability. They determine what profit margin they want in order to make an enterprise worthwhile. Then they try to project sales (always tricky) and try to set costs at a level that will give them that margin or better. Costs are supposed to be the easy side of the equation to figure out. Unfortunately, we are currently in a situation where no one knows what health care costs will be or what climate change legislation costs will be. No one even knows what the tax rate will be. The tide may turn either for or against the business community but once we know what the rules are we can decide what to do about them. Until we know the costs we can’t even do the calculations, therefore many things are being put on hold . . . like hiring.

In the current economic climate it’s time to scrap blindly chanting ideology and focus on the pragmatic. Just so you know where this is coming from – I consider myself socially liberal and fiscally conservative but most of all a pragmatist. “People can believe in whatever they want, I want to do what works.” I know, I just painted a huge target on my back and expect to be pelted from all sides by Nerf missiles when I arrive in Dallas for the Fall Toy Preview. In any case, what seems to be pragmatic in that it would help the economy and can also actually be passed and signed into law is to extend all Bush tax cuts for a period of two years and then review them two years on. This is not the time for a 700 billion tax increase. I think it’s likely that is what will happen. Obama doesn’t have the votes to do what he wants and everybody realizes it will be disastrous if taxes increase for everyone at the end of 2010.

Upcoming tax certainty isn’t the only positive as the economy continues to slowly (very slowly) improve. There are other “reasons to be cheerful”. Despite the hot summer doldrums, retail sales for July and August slowly but steadily increased, coming in ahead of expectations. August saw an acceleration in manufacturing in both the U.S. and China. Growth was slow but again it was positive. However, we should temper our enthusiasm on this particular metric. It is completely natural for production to ramp up in July and August as seasonal goods are manufactured for late August/September pre-holiday delivery to retailers. While sell in is good, the ultimate question is sell through.

Average hourly earnings – which decide how much money people have available to spend – were up by 0.3 percent. There was also a rise in temporary employment which is often a prelude to the creation of permanent jobs. A better than expected 67,000 private sector jobs were added in August and there were upward revisions to data for the previous two months. True, the government shed 114,000 temporary Census workers but that was expected.

The September stock market has been strong and most economists are de-emphasizing the chance of a double dip recession. Warren Buffett last week stated: “I am a huge bull on this country. We will not have a double-dip recession. I see our businesses coming back almost all across the board.” After all the gloom and doom of the summer it seems that we find ourselves in a situation where the economy is not collapsing but rather heading in the right direction though at too slow a pace to drive unemployment down.

The toy industry has several things going for it. Most toy companies have focused this year on producing low cost goods. While retail sales have been creeping upward, shoppers have been hesitant to purchase big-ticket items like autos, furniture, appliances. In fact, electronics retailers are revamping their aisles to focus on handheld gadgets to try to excite consumers who have grown weary of their traditional big-sellers: televisions and personal computers. After all, how many big-screen TV’s do you need? Handheld devices are still pricey compared to toys. The toy industry may find itself in the pricing sweet spot for the 2010 holiday season.

The growth of Toys’R’Us pop up stores is also exciting. Last year Wal-Mart only had to deal with the competitive impact of 90 somewhat hastily assembled Toys’R’Us Express locations. This year Toys’R’Us is planning 600 express stores with 300 of the locations already up and operating. More locations, more shelves to fill and more competition for a Wal-Mart whose toy department will be 25% smaller this year, are all positives for toy companies.

As for toy company jobs, the annual late August/September hiring bounce has been somewhat muted for a number of reasons. Retailers continue to order late in an attempt to shift as much liability as possible onto toy manufacturers. The trouble is that factories have been relocating inland and north. It takes longer to get goods to the coast, there has been a shortage of shipping containers and also massive traffic jams on roads leading to the ports. Later ordering combined with longer lead times is not a recipe for success. Over my three decades in the business, I have noticed that toy companies feel better about themselves and start hiring once their goods hit the retailer’s loading docks. Later shipping has caused many companies to delay pulling the trigger on hiring decisions. Also, all of the uncertainty over government rules, regulations and taxes has been a considerable factor. Make no mistake about it some companies have begun hiring and we have begun a number of searches, but there are also a lot of companies talking about their staffing needs but dragging their feet rather than getting going. Like the economy, things are moving in the right direction but slowly, slowly.

Still Muddling Thru,

Tom Keoughan

P.S. Wow, sorry about the long tirade. There must have been some “pent up demand”. I guess the main difference between me and the Washington gasbags is that I have not yet learned how to talk in bullet points. See y’all in Dallas.

By ToyJobs|2020-11-20T08:51:04-06:00September 22nd, 2010|ToyJobs Blog|Comments Off

Washington Socks It to the Toy Biz

Just when you thought it couldn’t get any worse they’ve gone and devalued the yuan. Washington politicians may have scored a few points with an undereducated public but it is the consumer, and American import businesses, who will pick up the tab.

This year’s manufacturing contracts are already set so the effects may not be immediately apparent and although a 2% devaluation may seem like small change, many experts are forecasting a devaluation of between 8 – 11% over the next eighteen months. With Chinese factory costs for labor, electricity and everything else going up, coupled with continuing sky high resin and transportation prices that money is going to have to come from somewhere. In a “perfect world” those costs would be passed on down the line from factories to importers to retailers and ultimately to the American consumer; in other words – inflation. What will happen in the real world is likely to be just a little bit different.

With Walmart’s sales being pressured by high oil prices as well as owing to their generally rapacious nature, it’s an easy bet that they will not raise their price points. It’s a little difficult for me to believe that I would decide not to buy a shiny new widget if it cost $7.99 rather than $6.99, but I guess that’s why I still have to work for a living. All of those extra widget dollars eventually add up.

With major retailers standing firm it will be between the importers and the Asian manufacturers to battle it out for their already shrunken profit margins. This will lead them to (and this could be Walmart’s new advertising slogan) “Make do with less!” (Ahem – sort of like Walmart store employees.) The other course will be to remove pieces and features, use cheaper materials and thinner walls or move manufacturing to Northern China where labor and electricity are cheaper. For consumers this means less creative, shoddier products with more safety problems that won’t last as long. Thank you, Walmart!

An example of the new and improved World Friendly Walmart is seen in West Virginia where workers have been ordered to be available to work any shift at any time or face dismissal. This “open-availability” policy states that “workers who cannot commit to being available for any shift between 7 a.m. and 11 p.m., seven days a week, will be fired by the end of the week.” So much for daycare, elderly parents, little league games, doctor’s visits, dance recitals, families, communities and anything resembling life as we know it.

In our ever diminishing Department of Good News; California ports have extended their hours and weekends so that all of the goods imported through there should reach their destinations in a timely fashion. Unlike Walmart employees, dock workers belong to a union which will guarantee them monetary compensation for working odd hours as well as some semblance of a regular schedule.

My summer reading has included James Stewart’s book, Disneywar — although I’d be a little careful about carrying a copy around Southern California. An alternate title might be Unwarranted Arrogance and Self Puffery for Dummies. It seems that Disney’s success in creating enduring properties for children can at least partially be explained by the fact that the company is managed by children – very badly behaved children (and I’m talking senior management as well as past and present board members). For those who enjoyed this tome I’d like to recommend William Golding’s, Lord of the Flies, as further reading. An illuminating alternative analysis of Disney’s recent courtroom escapades which I copped from the Wall Street Journal editorial page follows.

The days are growing impeccably shorter and summer fun is almost over so it’s time to dust off your crackberry’s, buy new batteries for your laptops and cell phones and get ready to run another weary lap on too little fuel and too little sleep.

Fall Toy Preview is just around the corner.

See you then,

Tom Keoughan

By ToyJobs|2020-11-20T08:51:05-06:00August 24th, 2005|ToyJobs Blog|Comments Off