Letter From the President
LA Prosper Partners: Continuing the Work of RLA
Barbie and The World Economy
The Importance of Toy Design
New Games in Town
LA’s Toy Town Plays the Profits Game
Ebb and Flow: Toy Maker Has Seasoned Approach
Los Angeles becomes hot competition for the North Pole
Toying with a power play
RLA helps toymakers navigate Mexico trade maze
Toy companies animate industrial sector in eastern downtown L.A.
LA’s Toy Town plays the profits game
by Christopher Parks
Mr. Charlie Woo knows every wrinkle on his territory, a ramshackle patch of downtown Los Angeles with its permanent kerbside presence of the crazed, the hopeless, and the merely homeless. “Best lock the car doors here,” he warns. “The lady on the corner is likely to jump in. And she bites.”
This it Toy Town, and Mr. Woo its unofficial Mister Mayor. He runs Mega Toys, one of about 100 toy importers, exporters, and manufacturers which, in their diversity and entrepreneurial vigour, embody the vitality of immigrant ventures restoring economic life to LA’s inner city.
Clustered on the main rail and road links minutes from the twin ports of Los Angeles and Long Beach, the mainly Asian-owned businesses sit at the geographical centre of LA County’s fast growing toy industry.
Although dwarfed in financial terms by world leader Mattel in nearby El Segundo, there are now at least 520 toy companies in the county, employing 6,000 people and generating annual sales of $4.4 billion.
Recognizing the potential, LA’s respected Otis College of Art and Design has instituted a bachelor’s degree in toy design, and opens its first four-year course in September.
The giant US market, plus Mexico and Canada, thanks to the North American Free Trade Agreement, provide the growth drivers. Asian immigrants form the link with manufacturers and traders across the Pacific. Toy Town provides low-cost premises, and cheap labour is plentiful thanks to the largely Hispanic local population.
This potential economic mix is now being consolidated by the newly founded Toy Association of Southern California (TASC), which combines the clout of Mattel executives with the ambitions of people such as Mr. Kwang-Sik Im, president of soft toy shipper A&A Plush. Not forgetting the ubiquitous Mr. Woo.
TASC is one of the embyonic successes of Rebuild LA, a non-profit urban regeneration initiative launches after the 1929 riots, which dedicates much of its energy to encouraging networking within indigenous industries.
Fostering co-operation is not the simplest proposition in a multicultural business community where many, including Korean-born Mr. Im, have limited English.
But RLA has succeeded by focusing on common issues which range from easing local traffic curbs to advising on customs and safety and representing the region’s interests in faraway Washington.
Mr. Im, the association’s vice-president, opened his business in 1992, and in 1993 sold $1M worth of polyester bears. Last year A&A was ranked sixth biggest importer of soft toys, and is heading for revenues of at least $17M in 1996. With staff and stock tumbling around his ears, Mr. Im is preparing to move into new premises three times as big as A&A’s present home.
But growth has also demanded investment in skills needed to link A&A into the mainstream of the US retail market where Wal-Mart, K-Mart, Toys R Us and Hallmark gift shops dominate.
A sales manager has been lured away from Daiken, best known for the marketing success of toys modeled on the brat-cat Garfield character. The company’s experienced Korean designer has been joined by a white colleague “to help us keep with American taste,” says Mr. Im.
Such luxuries as A&A’s integrated management and spacious premises are rare a few minute’s drive away in the heart of Toy Town, where Mr. Tony Lam runs Tack Cheung Corporation.
He employs an independent sales company to negotiate contracts with retailers, and says he would have been glad of TASC’s advice had it been available on one occasion when safety authorities targeted one of his products, landing him with laborious form-filling.
“There are some guys doing well in business here who didn’t even know enough to open a bank account when they started,” says Mr. Woo.
[ Reprinted from the Financial Times, July 10, 1996 ]
Los Angeles becomes hot competition for the North Pole
Otis College offers only bachelor degree in toy design in the West
LOS ANGELES — Santa arrived early at the Otis College of Art and Design today with the announcement the college will offer the West Coast’s only bachelor degree in toy design. Toy design students will be accepted from the 1996 applicant pool for enrollment next fall.
“Otis offers students the kind of education that inspires their natural creative energy at the same time we prepare them for some of the top design jobs in the country.” said Otis president Neil Hoffman. “The toy industry employs thousands of designers. Of course these numbers don’t include the Elves,” he added.
“This new degree program comes at an opportune time for Otis, soon to be a neighbor of Mattel when the school moves its new quarters near the Los Angeles International Airport,” according to Hoffman. Today, Otis design graduates are employed by Mattel working on Barbie — a $1.1 billion dollar product and the top selling toy, according to Plaything Magazine’s 1995 holiday season list. “The fact that the Los Angeles toy industry is a $4.3 billion dollar business was relevant to our decision to link toy design to Otis,” he added.
The school’s vice president of academic affairs, Mark Salmon, (who also sports a long, white beard) said, “potential toy designers participate in a one-year foundation program followed by a three-year course of study that focuses on the technical and professional aspects of toy design as well as psychological and developmental issues relating to children and play.” Salmon added, “Otis faculty are working designers and artists, and the new toy design faculty will be drawn from the industry. We have an exceptional pool of talent in L.A., but oddly enough, we’ve heard from a number of designers in the North Pole who are interested in relocating.”
Students also will work on package, graphic and product design.
Otis will be moving to its nerw campus at 9045 Lincoln Boulevard in West Los Angeles in time for the 1996 academic year. The new facility includes a 100,000-square-foot, seven-story building that was once used as IBM’s regional headquarters.
Enrollment is projected to expand from 700 to 1,200 in the near future.
Otis is an accredited four-year college whose graduates include painters John Baldessari, Carlos Almaraz, Lita Albuquerque and Billy Al Bengston; sculptors James Melchoir and Minedo Grimmer; muralist Kent Twitchell; costume designer Edith Head, as well as noted fashion and graphic designers, cartoonists, ceramists and photographers.
Toying with a power play
With civic help, a local industry could gain global prominence
by James Flanigan
Most Californians would be surprised to learn that there are 487 toy companies in the Los Angeles area. And the true count might be 600 or more, says Charlie Woo, head of Mega Toys, Inc., a prime mover in the industry of toy importers, distributors and manufacturers near downtown Los Angeles that has grown like a bird’s nest, twig by twig, in the last decade or so. The industry is a living example of the unpredictable benefits a community reaps from ambitious people and global trade. Woo and his family started put in 1979 importing toys from warehouses from their native Hong Kong. Their customers were “people who worked in restaurants and other jobs, who would buy toys wholesale to sell at weekend flea markets,” Woo explains. “Then their business grew. I bought four warehouses, and my customers became my tenants and my competitors,” he says, driving past storefronts and warehouse buildings-and-derelicts-on Wall and Winston streets in Downtown’s bleak Skid Row.
The small companies that have set up business in these unpromising surroundings employ more than 5,000 people and do about $1 billion in sales a year, sending toys throughout the United States and into Mexico and South America. They represent one part of a local toy industry that, with support from city and county government, could bring further global prominence to Los Angeles. El Segundo-based Mattel, the world’s largest toy company at 21,000 employees and $3 billion in annual sales, is the giant of the local scene. Other companies range from Applause Inc. in Woodland Hills, a leader in stuffed animals that employs 600, to A&A Plush in Compton, the U.S. arm of a Seoul teddy bear supplier, with 20 employees.
Imperial Toy, housed in Henry Ford’s 1913 car factory near Downtown Los Angeles, supplies soap bubbles, marbles, jump ropes and makeup kits to children the world over; Bandai America in Cerritos distributes Mighty Morphin Power Rangers, today’s hottest toy.
In fact, more than 60% of the $12 billion in toys sold in U.S. retail stores last year were probably distributed from Southern California. Yet most southland toy companies must struggle to get on the radar screen of big retailers like Toys R Us and Kay-Bee. When the Toy Manufacturers of America hold their 1,600-exhibit Toy Fair in New York next month, the Southern California contingent will be looking for recognition. It will be trying to persuade toy vendors to hold a future trade fair in Los Angeles. But the competition is stiff: Toys R Us, the largest retailer, is now ordering suppliers to show their wares at its facilities in Dallas.
“Los Angeles City Hall should mount an effort; they’ve got a convention center to fill,” says Woo, who came here in 1968 to study physics at UCLA.
The present is a crossroads for many local toy companies. They need to learn more about customs and consumer product regulations; international customers from Mexico to Argentina account for roughly half their business. And they may have to manufacture more goods locally, because Mexico – which needs jobs for its low-wage labor – is balking at importing U.S. toys that originated in low-wage China.
Fortunately, help is available – from RLA, which arranges educational meetings for entrepreneurs with government officials, and from Mattel, which helps keep them up to date on forms and regulations.
Fermin Cuza, Mattel’s vice president for international trade, sees helping small competitors as gaining allies. “When I go before trade and customs officials, I can speak for groups of companies rather than Mattel alone,” he says.
The local industry also has many things going for it, notably geographic location and the ports of Los Angeles and Long Beach. Local companies can get toys from Hong Kong into a customer’s hands anywhere in the United States in 14 to 16 days; it would take 25 to 30 days for goods to move to the East Coast. When the Alameda Corridor is completed, goods will move even faster through Los Angeles.
Above all, the local industry has knowledge and adaptability. In a grimy area on East 4th Street, Tai Tung International receives customers in a well-lighted showroom filled with brightly colored dolls and toy trucks. “We sell to companies that have truck stops across America and they buy trucks,” says May Fong of Tai Tung, which manufactures in Hong Kong and has another outlet in Jersey City, N.J.
In a Compton warehouse, A&A Plush receives an Argentine gift shop owner who wants to order their furry animals, manuy now made in Qingdao, China. “Wages in Korea got too high,” explains marketing manager Allan Kim, “so production moved to Qingdao.” Qingdao, in northern China, is across the Yellow Sea from Seoul, so trade has cut a new route leading through Los Angeles to Buenos Aires.
Yes, but does an industry based on imports and distrubution make good jobs in the community?
Sure, beginning with business for bankers, accountants, customs brokers and lawyers. “The Chinese-American banks, Cathay Bank and Far East National Bank (led respectively by Wilbur Woo and Henry Hwang) knew how to finance the toy trade first,” says Charlie Woo. “Now Bank of America has learned how to do it.”
It also makes jobs for warehouse workers and, in the new age, for higher-paid employees who can work with electronic data interchange. Imperial Toy Executive Vice President Jordan Kort – son of Fred Kort, who survived the Treblinka death camp and founded Imperial 25 years ago – explains. “we and our customers are linked on-line so inventory is updated constantly,” Kort says, standing near a line of bubble mix containers that already have preprinted labels and prices for the Walgreen’s chain in the East. “Today’s just-in-time distribution demands a more technically competent person. It’s more than putting a box on a pallet,” Kort says. “And we’re proud of people who come in unskilled and grow into the position. You see them take on responsibility and become motivated. It’s very positive.” The lesson of the toy business’ growth is very simple: Drive and hard work can build a life, an industry, a great city.
[ Reprinted from the Los Angeles Times, 1/25/95 ]
RLA helps toymakers navigate Mexico trade maze
Exporting toys south of the border proves cumbersome
by Kara Glover
An RLA program is helping L.A. County’s small toy companies export their products to Mexico by teaching company officials how to navigate the necessary mounds of paperwork and regulations.
El Segundo-based toymaking giant Mattel Inc. is playing a pivotal role in the program by disseminating to the smaller companies the knowledge it has about exporting toys to Mexico, sources said.
RLA officials last summer interviewed dozens of officials at L.A. County-based toy companies with anywhere from four to 600 employees, not including Mattel. They found that an issue of utmost importance to many company officials was learning how to export their wares to Mexico, said Linda Yeung, director of economic development at RLA.
All the toy companies interviewed by RLA are located in what RLA officials consider neglected areas of L.A. County. The mission of RLA – a private, nonprofit organization based in downtown L.A. – is to revitalize neglected areas of L.A. County.
Southland toy companies ship most of their exports to Mexico because of its proximity to California, Yeung said. So, to educate company officials about the regulations they must follow and steps they must take to export there, she organized meetings with Mexican government officials, as well as a trip tot he border. Once there, some toy company officials got a first-hand look at the Mexican customs process.
Speakers at the first meeting, held last August, included officials from Mexico’s Department of Commerce and from its customs operations. These officials explained to the 30 toy company representatives in attendance how to prepare a certificate of origin, Yeung said.
A certificate of origin is a document stating where a product was made. Officials at toy companies often have trouble knowing how to prepare such documents because the Mexican government is continually changing the regulations concerning their preparation, Yeung said.
Major toy corporations can afford to open an office in Mexico or to hire representatives there to keep tabs on changing customs regulations, said Charlie Woo, CEO of Megatoys, a downtown L.A.-based toy manufacturer, importer and exporter. But small toy companies don’t have such resources and lack vital trade information, he noted.
Many times smaller toy companies are left in the dark because laws are changing in Mexico so fast, added Maniel Min, former sales manager at BMI America, a stuffed-animal manufacturer based in downtown L.A.
In the weeks following the August meeting, Mattel gathered together some of their own information about how to prepare certificates of origin for toys being exported to Mexico, as well as information about how those toys should be labeled, Yeung said. They gave the information to RLA, which then mailed it to about 40 companies.
Then, in October, the regional administrator for customs in Mexico, Jorge Rojo Deschamps, met with officials from three L.A.-based toy companies. These were Woodland Hills-based Applause Inc., downtown L.A.-based Megatoys and Mattel.
At this meeting, labeling laws and safety standards for goods being exported to Mexico were discussed, in addition to certificate of origin rules, Yeung said.
In November representatives from Megatoys and Mattel traveled to he Mexican border to meet with customs officials. The officials talked about how the toy companies should prepare paperwork for customs properly.
The toy company representatives relayed what they had learned to the smaller companies at another meeting held by RLA in December.
RLA acts as a “go-between” between the larger toy companies, such as Mattel and Applause, and the smaller ones, Woo said. Applause, which imports and exports plush toys, is one of the largest toy companies in L.A. County.
Also at that December meeting, international trade attorney Marjorie Shostak discussed how tariffs on toys would be reduced under the General Agreement on Tariffs & Trade. That agreement, which calls for the lowering of tariffs worldwide by more than a third, is expected to become effective Jan 1.
[ Reprinted from the Los Angeles Business Journal, January 2, 1995 ]
Toy companies animate industrial sector in eastern downtown L.A.
by Morris Newman
Downtown’s Toy Town district does not look like a hot real estate market upon casual observation.
Visitors to the area – which is roughly bounded by Third, San Pedro, Fifth and Los Angeles streets – often find themselves stepping gingerly over homeless people stretched out on the sidewalk. Others are greeted by panhandlers.
“When I go there, very often somebody will ask me for some money to guard my car. Often, I give them the money, because I need my car,” said Arnold Luster, president of Major Properties Inc., a Los Angeles Based industrial real estate brokerage.
Notwithstanding, Toy Town is arguably the hottest and fastest-growing industrial real estate market in downtown. Less than 10 years after toy merchants first set up shop in the area, vacant space is hard to find, and some buildings have waiting lists of new businesses eager to enter the area.
“The toy industry, combined with the import-export business, is the most dynamic on the east side of downtown right now,” said Doug Hinchliffe, a principal of Lowe Enterprises. “Measured by any criteria, these guys are head and shoulders above anything” else in the downtown industrial area, he added.
“Toy Town has grown up in that neighborhood, in spite of itself. It’s kind of amazing,” said Tracy Lovejoy, president of the Central City East Association, a group representing downtown industrial businesses and property owners.
Perhaps he most impressive testament to the economic power of Toy Town is a project of Lowe Enterprises, one of downtown’s largest property owners. The project involves 650,000 square feet of new and rehabbed industrial space at Alameda and Bay streets. Lowe plans to construct several new build-to-suit structures and rehab the existing 100,000 or so square feet of industrial buildings on the site.
Those buildings and the parcels on which they sit are to be sold to the owner-users.
Lowe had earlier planned a multi-building for the garment trade, on the same site, but failed to find financing. Now, toy wholesalers and import-export businesses are the expected buyers.
On a separate site nearby, at the intersection of Olympic Boulevard and Alameda Street, Los Angeles-based Dynamic Builders Inc. is currently constructing a 10-building, 235,000-square-foot industrial complex. Dynamic Builders has already pre-sold six of those buildings to toy wholesalers.
Ideal case history
If an economist were looking for an example of the triumph of capitalism and market forces over planning and policy issues, Toy Town would be a good case history. The toy district took root in a neglected area without economic incentives, except low property values. The merchants are primarily immigrants from Taiwan, Hong Kong, and Mainland China.
Currently, between 600 and 900 toy wholesalers and import-export businesses can be found in Toy Town and surrounding areas, according to a study prepared by Lowe Enterprises. The dense concentration of wholesalers and warehouse operators in the area is due to what Major Properties’ Luster called the “homing pigeon effect.”
“These people tend to cling together,” he said. Luster explained that most of the merchants are immigrants who instinctively tend toward the center city, and then relocate to the suburbs when they become prosperous.
Toy Town is an “umbilical cord” for new businesses, said Ken Jackson, sales manager for Dynamic Builders. “When they become big enough to sever that umbilical cord, they leave the neighborhood, because there is a limited amount of large space downtown. The same pattern holds true of the garment industry and produce,” he said.
Despite the downtown toy industry’s economic vitality, the city government was slow to embrace Toy Town. Some toy wholesalers say they had felt snubbed by City Hall, because the Los Angeles Community Redevelopment Agency had earlier marked Toy Town in the early 1980s as a catchment area for housing and social services for the homeless population. When toy wholesalers began streaming into the area in the mid-1980s, the CRA initially opposed the incursion, according to some merchants.
But today, less than 10 years later, the area’s aging buildings are virtually full, with a low turnover rate. Toy Town has become a business incubator. Successful expanding businesses often move south to larger buildings on Alameda Street, or farther still to Vernon Avenue.
‘Mayor’ sets pace
The unofficial “mayor” of Toy Town is Charlie Woo, who claims to have been the first toy merchant in the area. Ten years ago, Woo opened ABC Toys on Third Street and began buying a succession of buildings and leasing them to other wholesalers and exporters.
Why? “Basically, it was affordable. There were lots of older warehouses not being utilized,” Woo said. His shrewdness in real estate has served Woo well. Buildings in Toy Town cost only $10 to $20 a square foot in the mid-1980s, he recalled. Today, comparable buildings with heavy foot traffic can sell for $150 to $200 a square foot, he said, and enjoy rents that, at their best, approach those on Santee Alley, the legendary hot spot of the garment wholesale trade.
Life is hardly perfect in Toy Town, however. Many toy wholesalers, who actively export to Mexico and South America, have been blindsided by the peso devaluation, creating a crisis in an industry that thrived during the recession. “The peso has put a short-term dent in the industry,” Woo said.
Back at home, merchants are still at odds with the many homeless people in the area, and say they are unhappy that the city supported the relocation of the Union Rescue Mission to Fifth and San Pedro – the heart of Toy Town.
Last September, the CRA apparently acknowledged the importance of Toy Town as well, by agreeing to fund a $25,000 study on the feasibility of setting up a Business Improvement District in the area, to provide graffiti removal, clean sidewalks and extra security.
Woo said he is pleased by the study but far from satisfied. “We have been continuously putting pressure on City Hall to come up with more practical solutions for the homeless problem,” he said.
What gripes Luster, the industrial broker, is that so few Toy Town landlords call on the services of professional brokers. “We don’t get much action” from the area, he said. “If there are vacancies, the owners got people lined up. What do they need a broker for?”
[ Reprinted from the Los Angeles Business Journal, April 24, 1995 ]
Barbie and the World Economy
By RONE TEMPEST
TIMES STAFF WRITER
BEIJING – A Barbie doll is for sale at the Anaheim Toys “R” Us store in a bright cardboard-and-cellophane box labeled “Made in China.” The price is $9.99.
But how much will China make from the sale of the pert fashion doll marketed around the world by Mattel Inc. of El Segundo?
About 35 cents, according to executives in the Asian and American toy industry – mostly in wages paid to 11,000 young peasant women working in two factories across the border from Hong Kong in China’s Guangdong province.
“What China is mostly exporting is its cheap labor.” Said David A. Miller, president of Toy Manufacturers of America in New York.
China’s cut of the Barbie doll is important because it touches one of the main political strains between China and the United States today: the growing, lopsided trade deficit in favor of Beijing.
China contends that the U.S. Commerce Department’s calculation of the deficit, estimated to reach $36.2 billion by the end of the year, is distorted and unfair. U.S. political leaders view the deficit with alarm, proclaiming it America’s next No. 1 trade issue, eclipsing the long-standing wrangle with Japan.
But tracing Barbie’s peripatetic, multi-country path from her raw material source in a Saudi Arabian oil field to aisle 12-C of a Southern California toy store raises even bigger questions being debated in business and academic circles:
How relevant are traditional bilateral trade calculations – a baseball-type scorecard of winners and losers – in an era of increasing globalization of products?
If such calculations are relevant, should the deficit with China, a developing country where most exports are still labor-intensive “processed products,” be placed in the same category as the deficit with Japan, a fully industrialized country that has systematically targeted key American industries?
In the end, what does the label “Made in China” – or “Made in U.S.A.” or “Made in Japan” or “Made in Mexico” – really mean?
“The America-China trade issue is a red herring,” contends Arjun Appadurai, a professor of cultural anthropology at the University of Chicago who has written extensively about the international flow of commodities. “It fails to take into account a much more complex set of values, of energies, of labor and of nationalism congealed into a package that carries the emotional label ‘Made in China.’”
Appadurai, editor of a pioneering 1986 book, “The Social Life of Things (Commodities in Cultural Perspective),” argues that the traditional model for calculating trade relations no longer is valid.
“The whole issue of bilateral deficits works within a framework that has been in question for some time, both in business and in government,” Appadurai said in a telephone interview. “Today’s forms of production are elusive and highly flexible. It is very difficult to localize a product like Barbie. But the political side can only accommodate two-player games, played between nation-states.”
New Games in Town
Wholesale Toy Mart Featuring Small Manufactures Opens in L.A.
By VICKI TORRES
TIMES STAFF WRITER
Adding another building block to downtown Los Angeles’ burgeoning toy industry, a Taiwanese businessman has opened a wholesale toy mart showcasing small manufacturers.
The three-story building at 11th and Flower streets has 150,000 square feet of space – room for 150 manufacturers to display products. So far about 50 manufacturers have signed on a tenants, including Taiwan-based Gigo, Philadelphia toy train manufacturer Bachman Trains and B Dazzle, a small game and puzzle maker in Redondo Beach.
Last week, workers were still painting the walls and building a showroom fountain, hurrying to open the center in time to catch buyers from two gift shows at the nearby Los Angeles Convention Center.
The L.A. Toy Manufacturer Center is the brainchild of Bruce Wang, whose family owns a toy business overseas. The center plans to help companies design new products with computer systems, and to assist with exporting, warehousing and distribution, said Tony McKnight, the center’s marketing director.
“We’re trying to create a one-stop shop for small manufacturers by offering everything from toy inception to store-door delivery,” McKingiht said.
Economist Jack Kyser said the center is another sign of rapid growth in the region’s toy industry, dominated by Mattel Inc. in Torrance, with 1995 sales of $3.6 billion, and Toytown, an eclectic network of Asian American wholesalers and distributors who sold $1 billion worth of imported products out of downtown Los Angeles last year.
More than 6,000 workers are employed in the local toy industry in more than 500 companies, but less than 50 of those companies are manufacturers, according to U.S. Census data.
The new toy center, which plans to sell to buyers in higher-end independent shops, would likely not compete with Toytown, whose customers are largely Latino and Asian store owners from ethnic neighborhoods and Latin American and Mexican retailers, Kyser said.
Meanwhile, there are plans for another wholesale toy mart downtown. Garment industry veteran Stanley Hirsh is trying to create a toy mart in two 13 story, 2000,000-square-foot buildings he owns.
Fermin Cuza, president of the 2-year-old Toy Assn. of Southern California, said the centers would help the toy industry here mature and grow. The 35-member group, which includes Mattel, Toytown’s Megatoys and major movie studios, promotes the region’s toy industry.
Ebb and Flow
Toy Maker Has Seasoned Approach
As many as two-thirds of the sales made by stuffed animal maker A&A Plush Inc. revolve around three holidays: Christmas, Valentine’s Day, and Easter. Company owner Kwang-sik Im and director of operations Allen Kim Have developed strategies to minimize the risk of running seasonal business and have learned how to take advantage of the slow periods. Kim was interviewed by Karen Kaplan.
We sell stuffed animals to mass-market and gift stores. At Christmas we sell teddy bears wearing Santa hats, and for Valentine’s Day we have teddy bears with hears that say, “I love you.” At Easter, we sell lots of bunnies and lambs.
During the slow period, our monthly sales are less than $500,000. But in September and October, our sales in the $1.7 million to $2- million range.
Because seasonal items are limited to a certain holiday, we run the risk of getting a overload of inventory. If we don’t sell all of the items, we have to hold on to them for a whole year, and that’s pretty risky because it’s expensive to store things in the warehouse.
We try to forecast our sales for each season. It’s pretty tough, but we use historical sales data as a guide. We try to minimize our leftovers while at the same time trying to order as many items as we think we can sell. Part of the risk is that we can lose some sales if we underestimate the demand for an item and run out when our customers still want to buy more. We generally try to order a little bit conservatively because it is easier to get more supply than to have a lot of leftover inventory.
We prefer to take orders in advance because then we know how much our customers want, and we don’t have a keep as much inventory. Our mass-market customers order in advance, but sometimes they insist that if they can’t sell everything they order, we have to take it back from them and sell it at close-out. That means we don’t want to sell them any risky items because it’s our risk, not theirs. Still, if we didn’t guarantee their sales, we would lose some of our customers.
IF we have a product that isn’t moving, we first try to get rid of it by reducing the price. If that doesn’t work, we will sometimes hold on to it for another year if we think we can sell it then. Otherwise, we try to sell it at close-out prices. If you lower the price enough, you can sell almost anything.
We are pretty slow from April to July, and we use that time to catch up. We think of ways to improve our operations and discuss possible new procedures for the next season.
We would like to just be a steady business. That way we could budget more efficiently. During the busy season everyone has to work overtime, and we hire temporary employees who are not as efficient because they don’t know the company as well.
We are trying to come up with different items besides plush toys that we can sell all year, such as coffee mugs. We want to bring down the proportion of seasonal items. We are also trying to add items for the summer since that is our slowest period.
LA Prosper Partners: Continuing the Work of RLA
By THOMAS TSENG
RLA (Rebuild Los Angeles), formed in the wake of the 1992 civil unrest, dissolves its operations following a four-and-a-half year campaign aimed at revitalizing neglected communities of Los Angeles. Staying true to its original five year mandate, the non-profit economic development organization concludes its affairs by transferring its work to a heir, ensuring that RLA’s post-riot strategies continue to move forward. In partnership with LA Prosper, the economic development arm of the Los Angeles Community College District (LACCD), and the Community Development Technologies Center (CDT Center), RLA’s assets and databases will merge into LA Prosper Partners (LAP2). LA Prosper Partners was formed to build and expand upon RLA’s economic development strategies targeting businesses throughout the Los Angeles region.
Denise Fairchild, President of the CDT Center, assumes the role of the President at LA Prosper Partners and brings with her 25 years of experience in community economic development and affordable housing development. Linda Griego, President and CEO of RLA, steps down two years after taking over the organization in 1994 when she refocused RLA’s strategies toward economic development. Under Griego, RLA’s industry-targeted development strategies have led to the creation of such groups as the Southern California Biochemical Council (SCBC), the Food Industry Business Roundtable (FIBR), and the Toy Association of Southern California (TASC). TASC, incorporated in the early part of 1996, is now almost one year old.
Growing out of a series of forums conducted by RLA with members of the local toy industry, TASC is composed of a broad segment of toy importers, distributors, and manufacturers in the greater Los Angeles region. By coming together, the local toy industry stands to benefit tremendously by collectively addressing issues of common concern. Networking, mutual learning, and collaboration represent the means by which members of the toy industry can become collective beneficiaries under the framework of TASC.
LA Prospers Partners will continue to support economic development strategies within the local toy industry. The viability of TASC remains a critical component of LA Prosper Partner’s work with local industries as the organization enters into a third phase of revitalizing the local Los Angeles economy.
Letter From the President
It has been my genuine pleasure to serve as President of the Toy Association of Southern California for the past year. I want to sincerely thank the organization and its members for the tremendous efforts undertaken to promote the interests of our local industry.
With great pride I can say that 1996 was a great year for companies importing toys and dolls into the U.S. With toys, dolls and games now unconditionally free of duty and with U.S. Customs’ new focus on informed compliance and attention on sensitive commodities, the toy industry has recognized significantly lower import costs and administrative burdens. This year, we are optimistic that the International Trade Commission (ITC) will adopt our industry proposal to simplify Chapter 95 of the tariff schedule.
Nonetheless, we had our share of challenges exporting to overseas markets in 1996. For example, in Brazil, prohibitive tariffs were imposed on toys which thwarted trade to that country. Also, Mexico imposed onerous new testing certification requirements. Challenges aside, make no mistake that the international arena is where the future of the toy industry lies.
With less than four percent of the world’s children residing in the U.S., there is a tremendous market outside our borders for toys, dolls and games. With the proliferation of regional free trade agreements, such as APEC and the Free Trade Agreement of the Americas, we can look forward to a future of improved trade facilitation and reduced customs tariffs worldwide.
I urge the Tot Manufacturer’s of Southern California to actively participate in the negotiations of these agreements in order to lower customs and trade barriers.
Unquestionably, there is still much to accomplish internationally, and our organization can make an important contribution to this end. Recognizing the evolving nature of toys, with toy sets now incorporating specialized computer hardware and software, as well as other high tech equipment, the time has come for our industry to appeal to the World Customs Organization in Brussels to update the nomenclature of the harmonized tariff schedules to include provisions in Chapter 95 for toys utilizing the latest modern technology.
In addition to supporting the specific interests of our industry, we should endorse broader goals such as the adoption of the Customs Guidelines developed by the International Chamber of Commerce. Many of the practices recommended in these guidelines are currently in place in the U.S., such as pre-entry classification, post-entry audit procedures, and electronic entry filing provisions. Expansion of these practices is very important to our industry’s growth.
It has been my sincere pleasure to serve as President of TASC during its first year of operation and I look forward to continuing Mattel’s strong support into the future.
Very Best Regards,
The Importance of Toy Design
By Mark Salmon, Ph.D.,
Vice president for Academic Affairs, Otis College of Art and Design.
Well, you’re grown up now. You’ve put kids stuff behind you. After all, you’re starting to take things seriously, and then there’s your future to think about. Things like college, and then a career – hopefully a creative career – are on your horizon. So why are we talking about toys?
Toys and Society
People often take toys for granted. Or worse, they disregard them a trivial component of our cultural landscape. A closer examination, however, reveals that toys and their use through play are cultural mechanisms that link children to society.
While toys appeal to children’s desire for fun, they serve a deeper purpose by helping to advance their cognitive, emotional, social and physiological development. Toys can impact a child’s ability to interpret situations, solve problems, think creatively and develop imagination. Children can also learn to control and appropriately express the various complex emotions they typically experience in play situation.
Similarly, children can also learn the important behavioral nuances of competition and cooperation within the social context of a play group. And finally, children can also develop their bodies, as well as their minds, as a result of the skills and abilities they apply to the physical challenges required of them in play. These aspects of child development occur for all age groups and at all levels of play. This fact suggest the need for design leadership in the toy industry. Future designers must insure that the toys they create promote child development, and that they reflect the highest aspirations and most fundamental values of our society. Toy designers will therefore, play and increasingly important role in determining the kind of cultural lessons children learn thought their use of toys.
The Toy Design Industry Today
In addition to its cultural significance, the toy design profession should be taken seriously for economic reasons as well . Toys are an $18 billion a year industry in the United States alone. There are over 500 toy companies nationwide, including such major household names as Mattel, Fisher-Price, Hasbro, Tyco, Milton-Bradley, and Parker Brothers. These companies have made a huge impact on the consumer market. The ever-popular Barbie from Mattel, for example, accounts for over $1.2 billion in annual sales. On average, girls in the United States own 7.3 Barbie dolls, which may help to explain why there are more Barbies in the United States than there are actual people.
Toy companies employ thousands of designers who create products for an international retail market which sells through giant chain stores including Toys R Us, Kmart and Sears. Toys have become important merchandising components of the movie industry featuring such block-buster hits as Batman, lion King, Pocahontas and Toy Story. They are also used as merchandising components of children’s television venues such as Nickelodeon and Sesame Street, and as part of promotional campaigns for such well-known restaurants as McDonalds, Burger King and Subway. For years, a wide variety of toys have been used as educationally specific teaching and learning aids in public school systems throughout the United States.
There are essentially four institutional contexts in which toy designers work. First, designers work as salaried employees doing a wide range of design work for toy companies such as Mattel, Fisher-Price and Hasbro. Second. They can also work as freelance designers doing assignments at the request of toy companies. Third, they can work as toy “inventors” for companies that create new toy ideas and then sell those ideas to toy manufacturers for a royalty. Fourth, they can also work as independent free-lance inventors who sell their own ideas to toy companies for a royalty. While there are many salaried positions in toy companies, the market for independent free-lance toy inventors and companies is very active and rewarding.
Toy Design as a Profession.
Being a professional toy designer means creating toys that maximize the positive impact they can have on children and, therefore, on society. But toy designers must also understand the many technical, professional, and aesthetic aspects of the field. Creating a toy involves an integrated design process that begins with ideation (creating an idea for a new toy) and then moves on to sketching the basic design concept, preparing marker renderings to show the surface characteristics of the toy such as texture and color, and constructing models that show what the toy will look like and how it will function in finished form. In addition, designers must be aware of various production methods and materials because these have an impact on product appeal and safety. Production issues are also critical to the cost of bringing the toy to market. Toy designers must also understand the current social and cultural trends that will have an appeal not only to children, but to their parents as well. This involves various types of market and focus-group research to determine what kinds of cultural trends appeal to parents and children, what toy features attract the consumer’s eye and how children actually play with their toys. Information about these issues can affect basic design decisions.
There are also product divisions within the toy industry based on age, gender and the materials used in production. Companies, or divisions within companies, will specialize in boys or girls toys, and toys for different age groups. In addition, some companies make a product-line distinction between “plush” toys made of fabric, foam or other soft material on the one hand, and hard toys typically made of plastic or wood on the other. Designers with occupational flexibility will have experience in several of these areas.
What to look for in Toy Design Programs.
Traditionally, toy designers have had an educational background in either fashion or product design. Fashion is useful for people who work on plush toys because of the use of fabrics and need for pattern drafting. Similarly, an industrial design background is useful for designers who work with hard toys as particular kind of product. Graphic design or illustration have also sometimes provided an educational entree into toy design, but these are largely two-dimensional media and thus are of limited value for an industry that produces three-dimensional toys. The disadvantage of such educational backgrounds, however, is that they do not focus on the specific requirements of the toy industry.
Recently, however, specific educational programs in toy design at the college level have begun to emerge for people interested in this growing field. Undergraduate programs that grant the Bachelor of Fine Arts degree in Toy Design provide a thorough grounding in the professional, technical and aesthetic aspects of toy design.
These degree programs are typically organized into three basic curricular areas. The first area involves what are called “studio classes.” These are the courses that focus on the various technical and professional processes involved in designing toys. These include creativeity and ideation, design planning, sketching, marker rendering, model making, technicl illustration and computer-aided design. In addition, toy design courses should include a focus on the methods and materials of production, product safety, as well as package design, marketing, economics and business law.
The second curricular area involves liberal arts (academic) courses. The liberal arts should support the toy design program by having content that is directly relevant to the subject matter of the studio courses. These courses might include such subjects as child psychology, childhood and society, and children’s literature. What is important is that these coureses enable toy design students to understand the impact of toys on children in a social and cultural context.
The third area is art history. As with the liberal arts, art history courses should be relevant to the concerns of the toy design profession. Students need to learn not only the specific history and evolution of toy design, but also the cultural patterns of toys and their use in other cultures around the world. By so doing, students will begin to appreaciate the patterns and traditions of toys in the broadest context possible.
Toy Design and You
We have now come full circle. We are back to you and your future. How do you know if toydesign is right for you? Ask yourself a few questions. Did you like toys when you were a kid? Is there some part of you that will always be a kid? Do you like cartoons, or do you like to draw cartoon or super-hero characters? Do you like to make or build things? Are you interested in a creative career? Do you like the idea of helping shape future generation? Do you want to be at the center of a growing segment of the American economy? If you answered “yes” to a number of these questions, then you might want to “toy around” with the idea of this exciting new educational and career option.
Remember, you can’t be a grown-up all your life!