Green toymaker goes extra mile – keeps it local

Environment

April 19, 2010|By Carolyn Said, Chronicle Staff Writer

Michele Fountain packaging children’s tea sets at the Green Toys contract facility in

San Carlos, Calif., on Wednesday, April 14, 2010.

Credit: Liz Hafalia

San Francisco’s Green Toys makes all its toddler tea sets, building blocks and toy trucks out of plastic recycled from milk jugs. It uses minimal packaging – just simple cardboard with no twist ties, shrink wrap or plastic bubbles.

But its biggest "green" feature lies behind the scenes.

Unlike most toymakers, the small firm carries out all its operations domestically.

"Everything we do from recycling through manufacturing, assembly and warehousing is in California, 99 percent in the Bay Area," said co-founder and President Robert von Goeben.

It’s "reverse globalization." Keeping the supply chain local is part of a new trend called onshoring, a push back against the offshoring and outsourcing that has sent jobs and manufacturing overseas, and gobbled up fossil fuels.

"You can’t be green if you’re shipping from China," von Goeben said.

The local flavor has other advantages, too. He can hop over from the company’s small San Francisco office to the plastics factory in San Leandro, the assembly plant in San Carlos or the warehouse in Hayward. The four-person firm contracts out for all those services to other companies. The actual recycling – turning milk jugs into plastic pellets – happens at a contract company in Los Angeles, the only step not in the Bay Area.

Niche expands

Last Christmas, when one customer sold out of Green Toys products in early December and ordered more ASAP, the company was able to ramp up and churn out the toys in just eight days. Overseas shipping would have added weeks to the turn-around time.

"Green Toys has been able to cut its lead time significantly by producing here, so that’s a strategic advantage," said Danny Grossman, CEO and founder of San Francisco’s Wild Planet Toys. Grossman has acted as a mentor to von Goeben, who started his toy career as an inventor and sold a couple of ideas to Wild Planet.

When von Goeben and fellow USC alum Laurie Hyman started Green Toys in 2007, "I thought we’d have a clubby little niche," he said. Its first sales were to mom-and-pop toy stores. But soon it started selling to upscale retailers like Pottery Barn Kids, Gap Kids, Whole Foods and Garnet Hill. It’s gotten lots of media attention, from Oprah magazine to the Today show.

The two partners bootstrapped their startup with $200,000 of their own money and haven’t taken any outside financing. Sales have grown 70 percent annually since the founding, and are now under $5 million. Green Toys has eked out a profit from the beginning, although most of the money gets plowed back into the company.

Taps into parents

Green Toys tapped into the next wave of consumer consciousness about environment-friendly products.

"Parents are treating toys like they treat food – they want to know what the materials are and where they come from," von Goeben said.

Still, it’s likely to stay small. It has just 20 different products and doesn’t have the resources to grow too quickly.

"It’s ahead of its time in terms of mass market, but it’s very well received in the appropriate market niches," Grossman said.

At The Ark, a small Bay Area chain of toy stores that has carried Green Toys’ products since the company’s inception, owner Gerald Johnson said the toys’ environmental focus is "the icing on the cake" for parents, but at core, a toy "has to have good play value; otherwise the child won’t want it and it won’t sell."

Marianne Szymanski, president of Toy Tips, an independent research group, said she gives the product line a thumbs-up.

"A lot of toy companies say they’re green, but this is one of the true ones," she said. "The products are durable, they can be washed easily. We’ve had them in the sandbox and they hold up well."

E-mail Carolyn Said at csaid@sfchronicle.com.

(C) San Francisco Chronicle 2010

Manufacturers Working To Save American Jobs
By Amanda Earing, News Editor
Manufacturing.Net – February 12, 2010

In an economy where manufacturers are struggling to stay afloat, some are also fighting to find ways to keep their workers employed. Save An American Job (SAAJ) is a branding and networking initiative designed to do just that.

Save an American Job, founded by Don Rongione, CEO and President of the Bollman Hat Company, is a proactive initiative to encourage more Americans to buy American-made products and help manufacturers prevent job losses in the industry.

Rongione created SAAJ as result of the painful process he’s experienced of having to lay off people that have been loyal to his company for decades.

“We’ve had to let go of employees that have been with the company for well over 30 years. We couldn’t be loyal in return because we didn’t have sufficient orders to support production levels — largely due to low-cost imports from foreign manufacturers.”

In fact, the loss of manufacturing jobs in the U.S. has a direct impact on the U.S. economy. According to the most recent Labor Department report, 27,000 U.S. manufacturing jobs were lost this past December, adding to the more than 5.5 million manufacturing jobs that have disappeared over the past decade.

It is written that for every one manufacturing job, there are at least five others lost from the chain of workers — truck drivers, accountants, R&D, maintenance, and others — who in some way support the manufacturing industry. As a result, over 30 million jobs have been lost over the last decade due to the manufacturing decline in the U.S.

SAAJ’s goal is to unify like-minded American companies through branding and consumer education on how and where to buy American, why it is important and what the rebuilding of a strong manufacturing base in the U.S. will mean in terms of not only saving jobs, but establishing long-term economic stability and independence.

Since its conception last July, the organization has been steadily attracting more companies to its membership. To become a member Rongione says that companies must be committed to saving jobs and keeping manufacturing in the U.S. A membership in the organization gives companies the use of logos that help promote their products as American made.

How is the Save An American Job logo different than using a “Made In USA” logo?

The FTC “Made in USA” standard requires that “all or virtually all” of the product is made in America. Rongione argues that in today’s global economy, it isn’t feasible for many manufacturers to make a 100 percent American made product. Instead, his focus is on keeping as much of the manufacturing in the U.S., thus saving American jobs.

“Save An American Jobs logos can be used on products in which at least 60 percent of costs are incurred, and final assembly occurs in the U.S. You might not be able to say ‘Made in USA’, but you can say you produce in the U.S. and comply with the Save An American Job standard,” says Rongione.

The Save An American Job organization even welcomes foreign manufacturers with U.S. factories as members — as long as they are producing in the U.S. and adhere to keeping jobs here.

In addition to full use of the SAAJ branding license that highlights a manufacturer’s promise to American jobs, other benefits to members include strength in numbers. The more manufacturers that become members, the more they’ll be able to build awareness of the cause. In addition, members will be able to network and exchange ideas on ways to remain cost-effective in a global economy.

Michael Araten, CEO and President of K’NEX, a manufacturer of children’s toys and a member of SAAJ, says that through networking he hopes to educate other manufacturers on the real costs of doing business overseas and help them bring jobs back to America.

“We joined SAAJ because we’ve been focusing on moving more of our business out of China and back to the U.S. We hope to share our own success story with others and demonstrate the true costs of doing business overseas compared with making the product here in America,” says Araten.

While the labor rate may be substantially lower in China — maybe 1/14 that of the U.S. — Save An American Job stresses that lead times, inventory tariffs, quality control risks, port fees and more can make the cost of doing business overseas much more expensive than manufacturing in the U.S.

“When you walk someone through the total cost of the finished goods from the supply chain standpoint, it can be up to 20 percent cheaper to build in the U.S. It has been very eye-opening for people we’ve been talking to,” says Araten.

Through networking with other companies in the Save An American Job program, Araten wants to share with others how moving business back into the U.S. can be beneficial to everyone. In fact, K’NEX’s finished goods will be up to 60 percent American-made by the end of 2010 and will increase jobs at its U.S. facilities.

There are other benefits to keeping jobs and your business in the U.S. as well.

“What we’re promoting is that not only does the initiative save jobs, but from a consumer perspective they are getting a superior product because it’s safer and more durable. It’s also more environmentally friendly as products produced in the States consume less energy when transported to market,” says Rongione.

The initiative also focuses on educating consumers to look beyond price. Rongione says manufacturers that are keep their business here have to distinguish themselves by quality, durability, craftsmanship, safety and energy efficiency.

“We’re unlikely to be a low-cost provider in the marketplace so we have to educate consumers that our product is superior and the value in the long run is greater for all those factors mentioned. Hopefully the ability to sustain the manufacturing base in this country, the middle class and jobs will also be a great motivator for consumers,” says Rongione.

But Rongione says educating consumers is a long-term process that will involve recruiting more manufacturers to become members as those companies will decide on the strategies for Save An American Job and help fund those initiatives.

For more information on Save An American Job, visit www.saveanamericanjob.com

Talking Points

America Needs a Manufacturing Strategy

February 3, 2010 |

In President Obama’s meeting with Senate Democrats today, Senator Sherrod Brown (OH) pressed the president on why the United States does not have a manufacturing policy.   Senator Brown was right to raise the question.

First, manufacturing is critical to the economy.

Largest multiplier. Manufacturing has the largest multiplier of all sectors of the economy. Every dollar in final sales in manufacturing products supports $1.37 in other sectors of the economy. By contrast, the financial services sector generates only about 50 cents for every dollar of activity.

Productivity powerhouse. Manufacturing productivity consistently outpaces productivity growth in other sectors of the economy. Between 1997 and 2005, multifactor labor productivity in manufacturing grew at an average rate of 4.6 percent per year. This was 60 percent greater than in the private, non-farm economy as a whole.

Good wages and benefits. Today’s manufacturing employees earn higher wages and receive more generous benefits than other working Americans.   On average, manufacturing employees earn 23 percent more than workers in other parts of the economy.

Diversified employment. Manufacturing employs workers at all skill and education levels. For non-college educated workers, manufacturing is a crucial source of good, often highly skilled jobs that pay above average wages. On average, non-college educated manufacturing workers made $1.38 per hour (or 9.2 percent) more than similar workers in the rest of the economy in 2006-07. Thus, manufacturing helps to reduce income inequality.

Source of innovation. The manufacturing sector is of vital importance in maintaining our innovative capacity. Manufacturers are responsible for more than 70 percent of all business R&D, which ultimately benefits other manufacturing and non-manufacturing activity.

Key to an improved trade balance.   An increase in the production of manufactured exports and import-replacing goods in the United States will be necessary to bring down our trade deficit to sustainable levels and to reduce America’s international debt burden.

Critical to other high value-added sectors of the economy. The maintenance of a strong and vibrant manufacturing sector is essential to other high value-added sectors of the economy, including design, telecommunications, and finance.

Second, the Great Recession has exacerbated worrying trends in manufacturing.

We are shedding jobs in the manufacturing sector faster than many other sectors of the economy. This is in part because of strong productivity growth, but it is also because we are downsizing our manufacturing capacity during the recession while other countries have a policy of maintaining capacity and employment.

In the absence of a manufacturing policy, manufacturing output as a percentage of U.S. GDP will continue to decline, as it did over the last decade.

The U.S trade deficit will continue to balloon.

And the U.S. share of world manufacturing will decrease as it has since 2001.

This calls for a strategy to strengthen American manufacturing.

Because of its importance to the U.S. economy, and because of these worrying trends, we need a strategy to strengthen manufacturing across a wide range of industries and product areas not just in the newest green technologies. Such a strategy would aim to lower the cost of doing business in United States while providing companies with the essentials for success. At a minimum, it would:

Infrastructure. Provide businesses with a world-class infrastructure suited for higher-value production and advanced business services by increasing public investment.

Low-cost energy. Reduce the cost of domestic energy and materials by taking greater advantage of the efficiency revolution, and by encouraging the expansion of the supply of natural gas, which is a principal energy source for American manufacturing.

Training of skilled workers. Address the shortage of certain skilled workers by establishing job-specific training programs that would prepare and retrain workers for specific skills for which there is great demand.

Reducing the tax burden. Lower the tax burden on companies locating investment and jobs in the United States by reducing the corporate income tax and the payroll tax, thereby reducing the cost of capital and the cost of labor—eliminating the current incentives in the tax code to move investment overseas.

Enforce U.S trade laws. Better use trade policy to protect American-based companies from unfair trade practices of mercantilist economies. In particular, the United States should do a better job of protecting American-based companies from supply surges from abroad and from the dumping of excess production during slowdowns in world economic growth, such as occurred after the 1997-8 world financial crisis and is occurring now.

Increase global demand. Encourage greater middle class consumption abroad, which would increase demand for American-made goods and services and relieve the burden on the U.S. market as a dumping ground for the excess production of other economies.

Fairly valued dollar. Seek an international understanding with America’s trade partners to prevent those economies from manipulating the value of their currencies to gain competitive advantage. Such an understanding should permit a decline in the value of the dollar to facilitate the reduction of the U.S trade deficit and to remove the competitive advantages American-based companies now face. A decline in the value of the dollar would help American-based manufactures by making U.S. exports cheaper and U.S. imports more expensive.