#629 – The Ups and Downs of Made in the USA

We love to share stories of manufacturers reshoring, or bringing back, product production to the U.S. If you have children or grandchildren, or were once a child, you are undoubtedly familiar with Lincoln Logs, Tinkertoys, and K’Nex.

The Ups and Downs of Made in the USA
Laura Putre, 2017-01-30, IndusryWeek

For many companies, the 2008-09 recession was a time to scale back. But for Michael Araten, CEO and president of the toy company K’Nex Industries, it was a time to rethink and regroup.

K’Nex, which makes Tinkertoys and Lincoln Logs as well as its eponymous brightly colored building sets, followed the trend of offshoring in the late 1990s, and by the early 2000s had outsourced most of its toymaking to China.

But by the time Araten arrived at the company in 2005, the long lead time required to ship toys to the United States—coupled with high demand only three months out of the year—was becoming a strain on the business. Catering to the changing tastes of 8-year-olds is a dicey proposition, and product decisions made in January could be yesterday’s news nine months later when the ship pulled into port.

With machines idling at K’Nex’s manufacturing affiliate, Rodon Group, a plastics manufacturer in Pennsylvania, Araten saw an opening to bring the toy production back home. “We were looking to keep our people employed,” he said. (Until 2016, Rodon Group and K’Nex were sister companies; Araten is a principal and on the board of both.)

Today, 90% of K’Nex toys are manufactured in the United States. But that shift didn’t happen overnight. Araten and his team quickly learned that U.S. wood manufacturers weren’t set up to make components as small as Tinkertoys or Lincoln Logs.

Tinkertoys made the switch to plastic fairly quickly; they are now produced at the Rodon facility. But plastic Lincoln Logs didn’t pass muster. “We did some focus groups [on a plastic prototype] and people said, ‘Yeah, it’s kind of a cool toy but it’s not Lincoln Logs because Lincoln Logs have to be wood,’” Araten said.

Thus began a four-year search to find a U.S. manufacturer who could handle the tiny timbers. “We thought it would be a lot easier,” said Araten. “We thought, ‘All right, we’ll go to the furniture makers in North Carolina, and they’ll make Lincoln Logs. How hard could it be? It turns out it was really hard.”

A search led them to Pride Manufacturing in Maine, maker of golf tees and cigar tip holders. Pride was willing to make some modifications and add another production line to make the logs.

“It was figuring out, how do you do the staining, how do you do the drying,” said Araten. “How do you get the wood dry at the right time and temperature, and the actual amount of automatic saws that you need, and how many was too many to make at once. At first we were running them through so fast that they would be splintering.”

At K’Nex, some highly decorated parts and toy motors are still made overseas. “Our view of the world is to do as much as you can here and try to do more here—and if you can’t get to 100%, because some things are in some cases just impossible to find, that’s OK,” said Araten.

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