Why Hasbro Selling Board Game Factories Was Inevitable…
Hasbro announced this week the sale of their board games factories in East Longmeadow, USA and Waterford, Ireland to Cartamundi.
Much has (already) been written about this and the reasons for it and various sources have attributed this to grand strategy along various lines. However, the number one reason why these plants were sold is because Hasbro has not been in the business of owning/running board game factories for a long time. Those manufacturing plants which could most easily and prudently be closed and production sent to China felt this effect way back e.g. exiting from the historic Kenner location in Cincinnati back in 2000-2001, or Hasbro’s other European manufacturing plants in Leeds, England and Valencia, Spain which are now effectively ancient history.
There are two reasons why Hasbro had retained East Longmeadow & Waterford for so long despite the overall strategy of focusing on development, distribution and marketing while leaving someone else to worry about the grind of production management:
1. These two factories have done a great job over time of delivering quality product at affordable cost with guaranteed capacity levels.
2. It’s very expensive to close factories down – if we look back at the closure of the Cincinnati location, reported costs of closure were between $70m-$170m! That’s a big chunk of money to take a hit on in any year.
(See this link for reference of costs of that closure) http://www.enquirer.com/editions/2000/10/13/fin_hasbro_exits_home_of.html
So it’s not that Hasbro have suddenly changed direction/set in place a grand strategy that hasn’t been seen before or observed by outside analysts, rather this is the culmination of an exit strategy from manufacturing that started in their Toy business way back in time.
In hindsight, Cartamundi are one of only a very few candidates who could have taken these two sites on having the size to manage/finance the transaction and ongoing business, as well as being strategically committed to board game manufacturing. Additionally, as stated by Hasbro’s releases, the two companies do have a history of working together and have a similiar ethical approach to doing business.
On a personal note, I’m delighted that these two gods of the board game industry are going to be taken forward in the right way. If you were to look at how many classic games these two factories have manufactured over time, the numbers would be staggering. I’m going to guesstimate that it could be in the billions of copies of much loved games that have come from these plants. Viva East Longmeadow & Waterford games manufacturing!
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by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com, a leading Consultancy to toy, game and kids entertainment companies around the world, which helps companies find the right toy & game factories, consumer research test their products with kids and parents and secure export distribution/market entry around the world