A MARTÍNEZ, HOST:
We have a follow-up conversation about the price of toys. During the summer, a toy industry group warned that the president's Liberation Day tariffs would put Christmas at risk. Well, the holidays are now upon us, so we've called back Jay Foreman, the CEO of Basic Fun! That's the home of Care Bears, Tonka trucks, Lincoln Logs and Lite-Brite. Jay, so it might sound like we are completely obsessed with the price of a classic steel Tonka truck, but I got to ask again - what is it going to cost this year?
JAY FOREMAN: Well, this year, it's going to cost about 40 bucks, given the tariffs and general inflation. Last year, it was 30 bucks, and the year before, it was 25. So things are really accelerating in the toy space.
MARTÍNEZ: And these price hikes - what does that do to your sales? Are Tonka trucks so classic that people are just going to buy them anyway, or are you seeing a slowdown?
FOREMAN: Well, we're seeing sort of two different effects. The first effect was that we lost about eight weeks of shipping in the middle of the season, as well as this sort of uncertainty about what the tariff level would be sort of stunted the traditional pattern of buying from the retailers. So we got a lot less orders this year than last year. So whether the consumer shows up or not, there are going to be less Tonka trucks in the market. The other aspect, of course, is the consumer sentiment. We are really now starting to feel the consumer is noticing that prices are up and affordability is becoming an issue.
MARTÍNEZ: So I was looking at a report from the market research group Circana, and they say U.S. toy sales have been up by 7% this year. How do we square what they say and what you're reporting?
FOREMAN: So there's really two factors there. One is if you increase the price of toys anywhere from 10% to 30% because you've got a 30% tariff, then your gross sales are going to go up regardless. But the other thing that's skewing the sales data is there's a huge trend right now in the toy business, which is collectible trading cards, which aren't really toys. They're as much as a publishing item as they are toys, but they're sort of tracked by Circana in toys. And things like Pokemon cards, NBA cards, Major League Baseball cards, Magic: The Gathering trading cards - they're on fire right now. And the toy industry might be seeing some increase in sales, but it's in a very narrow band of categories and with a small group of companies. The smaller or medium-sized companies are really hurting pretty bad this year over the tariffs.
MARTÍNEZ: The last time we spoke, too, we talked about maybe considering where you manufacture things. Has enough time passed for you to make some kind of call, or maybe at least be leaning in a certain direction when it comes to where you manufacture your toys?
FOREMAN: Yeah. I mean, we held fast here at Basic Fun! and we kept our production primarily in China. It's just the most reliable supply chain. When you start to move the supply chain and set up new manufacturing, there's a big learning curve, not to mention a huge cost. We also kind of bet on the fact that there will be a recognition by the administration at some point that China is a very important trading partner. Almost, we have a symbiotic relationship with them, and while they can joust with each other, at the end of the day, they've got to play ball. And while we'd love to bring toy manufacturing back to the U.S., it's not really practical. We don't have the type of labor here. We don't have factories set up. We don't have the ability to finance the development of factories. So we're an industry that's generally not really going to be coming back to the United States, like some other industries might have a better opportunity to. So we've stuck it out in China, and so far it's paid off for us.
MARTÍNEZ: We mentioned back in the summer, too, that toymakers were saying that Christmas was at risk. Was that hyperbole, or is that maybe more of a reality now than ever before?
FOREMAN: Well, I mean, it was not hyperbole when, you know, tariffs were 145% and it was a de facto embargo on importations, not just from China but from other markets. You know, remember, India's tariffs are 50% right now. You know, I always say that consumers can always find products to buy. Stores will never be empty. It's all about the stuff you really want, and is that available when you want it, or are you going to get the next best item? So Christmas will come. It always comes. It will be full of a few less of the more desirable types of products, and consumers will have to, you know, be satisfied with sometimes the next or the third best thing on their list.
MARTÍNEZ: That's Jay Foreman, CEO of the toy company Basic Fun! Jay, as always, thank you.
FOREMAN: All the best. Happy holidays, everybody. Transcript provided by NPR, Copyright NPR.
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