Toymakers fret despite record year Trade friction, consumer critics pose threats

February 09, 1993|By Ian Johnson

NEW YORK -- As they kicked off their 90th annual trade fair yesterday, U.S. toymakers reported that 1992 was a record year but fretted that future growth might be limited by trade wars and strident consumer groups.

The figures released yesterday showed that toy shipments topped $11.4 billion, a 12 percent jump over 1991's revised figure of $10.1 billion. If sales of video games, which grew 46 percent last year, were included, toy shipments leaped 20 percent, to $15.3 billion.

"Given the state of the economy -- both U.S. and worldwide -- we are collectively, and in most cases individually, delighted," said Harry J. Pearce, chairman of the Toy Manufacturers of America Inc.

As if to back that up, two toy companies reported increased sales yesterday. Hasbro Inc., the world's largest toy company, said fourth-quarter earnings rose 46 percent, to $65.6 million, while sales increased 9.2 percent, to $831.3 million. Lewis Galoob Toys Inc. said its fourth-quarter earnings increased nearly 700 percent, to $967,000, while sales increased 4.4 percent, to $47.4 million.

Despite the optimism surrounding the American International Toy Fair, Mr. Pearce said some issues clouded the coming year.

Most pressing was whether Chinese products were slapped with a punitive tariff in retaliation for Chinese human rights violations, Mr. Pearce said. The higher tariffs, which would result if China lost its most-favored nation (MFN) trading status, would result in significantly higher toy prices because 25 percent of toys sold in this country are made in China.

"With a new president in the White House, the outlook for unconditional most-favored nation status for China remains uncertain. The industry remains actively supportive of unconditional MFN for China," Mr. Pearce said.

But while pushing for MFN, industry officials balked at answering why they felt China deserved this status.

"I don't think this is the appropriate place to discuss this. This is politics," said the association's president, David A. Miller.

One reason for the industry's championing of China's MFN status might be suggested by the rise of video games, which are locked in a price battle with the traditional toys made by the Toy Fair's participants.

After stagnating in 1991, when advanced video games were still being introduced, video sales soared last year to $3.9 billion from $2.6 billion and now account for 25 percent of toy sales.

Most toy makers, however, still make the traditional dolls, games and vehicles that rely on low prices for sales. Toy manufacturers boasted yesterday that their industry boomed last year -- a time of slow economic growth -- because most of their products were priced between $5 and $30. Video games, by contrast, cost many times that amount.

Punitive tariffs in China, however, would jack up the price of toys, losing much of their price edge with videos and shattering the peaceful coexistence between the Mario Brothers of videoland and the G.I. Joes of the traditional toy world.

"Consumers have let us know that they were willing to part with their hard-earned dollars for toys, but that they wanted high-quality, reasonably priced toys," Mr. Pearce said.

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