President Trump’s on-again, off-again tariff decisions have rattled the global economy.
Here in the US, sectors ranging from aluminum to footwear have felt whipsawed by decisions made and remade in the White House. The latest industry is a big one: toys.
Earlier this week, the president delayed a new 10 percent tariff on some Chinese imports, from September 1 to December 15. That gives toy manufacturers some breathing room, before and during the make-or-break holiday season.
Westport has an important dog in this hunt. Melissa & Doug was founded in 1988 by Doug and Melissa Bernstein, in his parents’ garage on Guyer Road. Over the past 31 years it’s become a highly respected creator, manufacturer and distributor of educational toys, including wooden puzzles, arts and crafts products and more.
Bernstein breathed a sigh of relief at the tariff delay. But, he said yesterday, the larger question is the entire concept of a “trade war.”
“Wars are not good,” he said. “They cause casualties: human, social and economic. Calling this a ‘war’ is not a good thing.” He would prefer to see trade policy discussed “amicably.”
Like most American toy companies, the vast majority — 85 to 90% — of Melissa & Doug’s products are made in China.
This founders did not set out to manufacture overseas. Years ago, Bernstein said, he brought prototypes to factories across in the US. No one wanted the job.
The issue was not price. Rather, it was the “massive amount of handiwork” that goes into each Melissa & Doug item. “They can’t be stamped out” — and American factories could not do it at a price that would be reasonable for consumers.
Over the years, Melissa & Doug built strong relationships in China. Today, around 200 or so employees oversee quality and inspection there. “They work for us,” he said. “They’re not 3rd-party contractors.”
While other companies talk about moving production to other parts of the world — Vietnam and India are often mentioned — Melissa & Doug worries about losing quality control.
“We have 3 tenets,” the co-founder says. “We make educational products for children; we make them with the absolute best quality we can, and we price them as affordably as possible. We don’t want them accessible only to kids who grow up in a place like Westport.”
So — even with higher tariffs — Bernstein and his wife are committed to “not passing on higher pricing to consumers. Other companies say that if the tariffs take effect on December 15, they’ll have to raise prices by 10, 20 or 25% in 2020. We’re working very hard not to do that. We would probably absorb most, if not all, of the cost.”
They’ve already been tested. In addition to toys, Melissa & Doug produce items like chalk and markers. They’ve already been hit with several million dollars in tariffs — and have not raised prices.
Bernstein sounds a hopeful note, though. “Honestly, I didn’t think the tariffs would happen on September 1. And I think there’s a high likelihood they won’t happen on December 15. This is a game of chess, and we’re pawns. No one gains from a trade war. I think agreements will be reached.”
Besides chess, Bernstein uses another analogy to describe the last few months.
“We’ve been on a roller coaster,” he says. “It would be one thing if there were transparent discussions. But for us — and everyone in the industry — it’s been up and down, on and off, 10%, 25%, September 1, December 15.”
That’s one game the Westport toy manufacturer has no desire to play.