Wednesday, March 13th, 2013

Wall Street Journal: Why Rodon/K’Nex Reshored Its Plastics Molding

An October 11th article in the Wall Street Journal (WSJ; subscription publication) gave extensive coverage to how toymaker K’Nex Brands, one part of SPI member company Rodon Group (Hatfield, PA), has returned production of most of its plastic construction toys from China to its Pennsylvania factory, and why it did so.

Last November 30th, President Obama chose Rodon Group/K'Nex to speak about U.S. manufacturing.

Last November 30th, President Obama chose Rodon Group/K’Nex to speak about U.S. manufacturing.

Joel Glickman, chairman of K’Nex and the custom plastics molding business of the Rodon Group told the Journal, “In the long term, it’s much better for us to manufacture here.” The reasons why are several. For one, K’Nex says it can react faster to shifts in demand for various toys. For another, it gives better control over materials and quality, a vital factor relative to safety issues.

K’Nex also reshored production to the U.S. due to the rising cost of labor and transportation within China. However, K’Nex said that, so far, it has not found it possible to produce 100% U.S.-made toys, which is its goal. The decline in American manufacturing that took off during the nineties shrunk the overall number of American suppliers notably, whereas China now has a nearly limitless number and variety of supplier companies.

K’Nex still imports small battery-powered motors for its toys because it can’t find a competitive U.S. supplier. Michael Araten, the CEO of K’Nex, told the Journal, “In China, you can go over with just a drawing and say, ‘I need a million of these.” And that has had a huge effect: In 2012, China’s exports of toys, games and sporting goods was worth $33.5 billion, which is about three times what America exported in those sectors.

Although the WSJ article focused on the K’Nex toy business, it also gave a well deserved shout-out to the custom molding Rodon side of the business. When the U.S. economy cratered in 2008, demand for the company’s products fell sharply, and there was not enough work for the workers. Wanting to avoid major layoffs, the Glickman family, which owns both K’Nex and Rodon, decided to move production back to Pennsylvania.US-made-emblem-HmPg

They were confident Rodon’s well developed, highly automated plastics production technologies would result in competitive costs, despite higher U.S. labor costs for needed manual assembly. Further, to lower that assembly cost certain toys were modified. For example, roller-coaster tracks that were put together in China with hand-inserted pins, were redesigned to snap together.

Added to its plastics manufacturing expertise that could enable competition with China, Rodon had another major, though intangible, resource. Let’s call it Attitude, with a capital A. The Journal article says Rodon’s slogan is “Cheaper than China.” But it’s not just a slogan, it’s an attitude.

Rodon-website-clip-ChinaThe image on the left is prominent on the home page of Rodon’s website, and the “We Beat China Pricing” message is on display around the rest of the website, as well as around the 260,000-ft2 Hatfield production facility. That kind of competitive, winning attitude is what coaches work hard to instill in their teams, and business, as many have noted, is very much a team sport.

Video spotlight on Rodon’s custom injection molding capability…

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