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U.S. toy makers expect strong holiday season

Recalls of products made in China pave the way to growth.

By Malika Worrall, FSB contributor

FSB magazine -- China's misfortune may turn out to be Sue Dennison's holiday gift. The co-owner of Roy Toy (www.roytoy.com), in East Machias, Me., has seen website sales and wholesale orders for her log-building sets soar in the past few weeks, and she's shipping to U.S. retailers that are further away than ever before. "We've written more orders over the last few days than we did for the first and second quarter of 2007," says the manufacturer, who is going to add colorful "Made in the U.S.A." stickers to her packaging to ensure that every customer knows the origin of her toys.

With plans to triple production over the next few weeks Roy Toy, which sells its wares through retailers such as L.L. Bean and small specialty stores, is gearing up for a strong holiday season. To do this, Dennison needs to find more workers so she can increase her packing team from 10 part-timers to 40 full-timers. "I don't know how easy that's going to be in Washington County, Maine!" she says.

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Major recalls of toys made in China have raised consumer concerns about the origins of children's products.

Dennison is one of many specialty toy manufacturers who expect to see a bump in sales because of increased customer demand for playthings made in the U.S. The lead-contaminated paint recently found on recalled, Chinese-made products from toymaker giants such as Mattel Inc. and RC2 Corp., has left consumers worried about children's safety. And big retailers are paying attention. Kathleen Waugh, a spokeswoman for Toys 'R' Us, says that the chain plans to include an expanded assortment of American-made toys in its inventory for the coming months. "And that will be a larger proportion than last holiday season," she says.

To be sure, few small manufacturers expect to take over the market. "It's always hard to know whether an issue that is deemed so compelling right now will seem so important in November or December," says Jamie Seeley Kreisman, president of Beka Inc. (www.bekainc.com), a St. Paul, Minn. maker of toy furniture and carts. There were more than $22 billion worth of toys sold in the U.S. last year, according to the market research firm NPD Group in Port Washington, N.Y. But the Toy Industry Association (http://www.toy-tia.org), a trade group in New York City, reports that 70-80% of the playthings on the market here originated in China.

Toys 'R' Us commits to more safety checks

But that hasn't stopped entrepreneurs from making the most of an opportunity to seize market share. Uncle Goose (www.unclegoose.com), an educational toy maker based in Grand Rapids, Mi., has seen a "dramatic" rise in orders, says Pete Bultman, CEO. and president. The company is inserting a pamphlet with information on its extensive product testing into every package, and plans to make the "Made in the U.S.A." label more prominent on future packaging. "I've had calls from Toys 'R' Us," says Bultman. "They're nervous. They want to promote American manufacturers, because right now it's a great marketing tool." However, Bultman is not interested in mass market retailers, and has chosen instead to continue focusing on his relationships with specialty stores.

Poof-Slinky (www.poof-slinky.com), a Plymouth, Mich., company that manufactures in the U.S., will be introducing new counter display units to incorporate the "Made in U.S.A" label for its flagship product, the Slinky, says Ray Dallavecchia, C.E.O. and president. "We did this because consumers are contacting us: they want to be sure that the products are clearly marked," says Dallavecchia.

After the first recalls in June, Dan Sullivan, co-owner of Smart Monkey Toys (www.smartmonkeytoys.com), a maker of cardboard building blocks in Wisconsin Rapids, Wis., paid for the first time to have his website appear as a sponsored link when anyone typed "Made in America toys" into a Google search. He has also been sending letters to retail clients to inform them that his products are made domestically, and he plans to add extra stickers to the packaging to reinforce this. "Three months ago `Made in America' was a pride thing," says Sullivan. "I don't think the average consumer took much notice of it." Now, he says, `Made in America' is perceived as a label of assurance. He has seen a significant increase in interest from retailers who are actively seeking domestically-made toys, and is anticipating higher sales this holiday season.

Whittle Shortline Railroad (www.woodentrain.com), a Louisiana, Mo. maker of toy trains, has seen such a boom in sales that owner Mike Whitworth has had to recruit an additional five members of staff a week. When the recalls began he had a team of 26. By the end of October he expects to have a workforce of 60. WIth his website stating that his toys are made in the U.S. using lead-free paints, Shortline's August sales neared the level of his revenue for all of 2006.

American toy makers aren't the only beneficiaries of the recalls. Rivals in Europe with similar safety and product-testing standards are also ramping up production. "Buyers are more interested in `Not Made in China' than in `Made in America,'" says Linda Coucher, independent specialty toy sales representative for the retailer Toys2000 (toys2000.com) in Spring Hill, Fla. Coucher says that there's been a particular increase in demand for European brands such as Haba, which is made in Germany.

Similarly, Kim Semancik, owner of the online retailer WillowTreeToys.com, has been seeing an increase in demand for specialty wood or fabric toys made in both the U.S. and Europe. Since the recalls she has received so many phone calls and e-mails asking her where her toys were made that she has inserted a new category on her website: Toys made in the U.S.A. and Europe. "We've seen a 25-35% increase in sales in European- and U.S.- made toys," she says. Semancik knows that growth won't continue forever, but, like many in her field, she is happy to seize the moment. Top of page

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