In their recent earnings announcement (Q2 2019) Hasbro reconfirmed their committment to moving to 50% of their manufacturing being outside China. They highlight a significant chunk of their manufacturing being from within the USA, but India remains a key part of their outside China manufacturing strategy.
Our business has been working to help toy companies find manufacturing in India since 2014. And it has been quite an exciting if occasionally challenging journey.
India itself is an amazingly vibrant but seemingly chaotic country. There are just so many people! On my first visit to India I found myself in a city I had never even heard of which had a population of 6 million people! I had been told to expect roaming dogs in the streets, crazy traffic with crazy driving to match as well as extreme poverty…all of which I have seen. However, what I hadn’t expected or been informed about in advance of visiting was the other side of the coin, the extremes of wealth that can be found in India and perhaps most pertinently for this article – the very advanced, high end manufacturing I discovered. On my first visit to India I drove past a vast Mercedes Benz plant, and knowing that company I knew inside would be a plant running to typical German standards of efficiency and effectiveness. I also visited food standard toy factories where you could literally eat your dinner off the floor – not something you can normally say of toy factories!
Since that first visit, I have visited dozens of factories across India, from Pune to Kolkata, and from Nasik to Aurangabad and Bengaluru. I’ve seen super high end facilities and super low end facilities, and my overall opinion is that you can find manufacturing to any level you require in India. The only gap I have found is experience – you can find all the engineers you would want, and can normally find someone to manufacture anything, the challenge is in experience of quoting, costing, designing, engineering and designing toys. This experience based has grown significantly though since we first started working with Indian toy factories in 2014 and today, as Vietnam’s established toy factories sit at full capacity, India remains the toy industry’s only mid to long term alternative to the super low cost manufacturing which is becoming harder and harder to find in China as China goes from being a developing country to being the world leading economy.
India is a major automotive manufacturing hub – with all of the following car makers having plants in India: Mercedes Benz, VW, Fiat, GM, Tata, Piaggio, John Deere, JCB, BMW, Ford, Honda, Hyundai, Renautlt Nissan, Toyota etc. And in case you think these are all for domestic Indian supply, around half of all cars manufactured in India are exported around the world – India exports around 12.5 million cars each and every year!
The automotive sector is really important to India’s toy manufacturing sector, because so much of the supply chain and indeed so many of the toy factories come from a background of automotive supply chain manufacturing. When you look at the interior of a modern day car you can see that most of the interior is made from plastic, as such there is a significant plastic supply chain in India accordingly. If you consider these factories are making a component to fit in a machine with 10,000 or more additional components, and work together without causing a crash, then producing a toy with 5-10 components is not going to be that difficult!
I have also investigated other materials being produced in India – the packaging suppliers in India are top notch, in fact when I toured the Head of Sourcing of a top global toy company around a toy packaging production plant in India they themselves told me that the standard of packaging being produced was at least on a par with if not better quality as packaging in China.
An additional area of expertise in India is Plush. There are a number of high end/competitively priced Plush toy fatcories across India supplying toy companies who are then shipping into Walmart, Target, Argos, Tesco, Carrefour etc. around the world.
Anyway, back to our learning journey in India. The funniest/most exhausting India experience I had was following a visit to a rubber factory about 4 hours drive North of Mumbai. Just before the return drive to Mumbai airport, the factory owner insisted on having a drink to celebrate a successful visit. Needless to say ‘a drink’ became about 10, and as my mind got less and less lucid, I eventually had to insist on leaving to give me a chance of making my late flight from Mumbai to Kolkata. On the way back to Mumbai, the driver became increasingly concerned about the time of my flight and was driving at speeds which India’s roads and the volume of cars, people, animals and other things were not meant to experience. About half way there just as it seemed like we might make it, the monsoon started. In case you haven’t experienced the monsoon, it is a heavy seasonal downpour which can lead to deep water and floods sitting on the road. The last hour of the journey was completed at breakneck speed through about 6 inches of standing water on the road – terrified does not even come close to explaining my emotions. Anyway, we arrived at the airport & I made a dash into the terminal just in time versus the scheduled departure.
Shortly after I arrived back at the airport we had an announcement that the airport was closed – due to the monsoon a plane had skidded off the end of the runway, and I believe the passengers were evacuated by emergency slides! As time dragged on into the night it became more and more obvious that flights were going to be cancelled. I then booked onto an early morning flight as a precaution, which gave me a headstart as soon after the flights were cancelled and chaos arrived. I then sat in the airport for 6 hours before getting the early morning flight once the monsoon abated, eventually arriving at my hotel in Kolkata, checking in, having a shower, then checking out 30 minutes later to go onto visit the next factory!
Thankfully most of my travels within India have been much easier than this with very cheap internal flights e.g. a 2,000 mile flight across India can cost as little as $70. I have also benefited from eating some amazing Indian food along the way – my favourite experience being a visit to a Thali restaurant, where around 15 waiters wandered round each dishing out some different exotic Indian dish or accompaniment. I even on one visit managed to rack up 21 Indian meals out of 22 in a week, which is a personal record I’m not sure my innards would ever thank me for repeating as the amazing spices and flavours eventually took their toll on my western body which is so used to bland food!
Anyway, back to work – to date we have introduced around 60 toy companies to toy manufacturing in India. Many customers have saved money, some have made once unviable lines viable again. Typically, with it’s low labour rate, India offers around 10% savings vs China based on current pricing. The recent trade/tariff spat between Trump’s USA and China have accelerated interest and transfer of manufacturing to India. Whereas we spent the first three or four years working with India on a hard sell job persuading toy companies of the merits and strengths of India, we are now in a position where some of the established Indian factories are turning away work.
Our policy is only to introduce our clients to tried and trusted suppliers, so currently this has cut down the potential list of suppliers as the major corporate companies accelerate their plans to move at least some production out of China they have filled much of the available experienced capacity. However, there is still some capacity with plastics manufacturing (for now) where we have good relationships with long established factories.
For those looking for an insurance option outside of China, or just looking to save money on manufacturing, we will be happy to advise on the options if you want to get in touch with us via the Contact Us page on this site: http://www.toyindustryjournal.com/?page_id=11
For more about our business and experience in sourcing from India: www.ToyTeamIndia.com