Toy maker Hedstrom folds, 800 jobs lost

Crain's Chicago Business ^ | October 12, 2004 | Bill Bregar

[Willie Green]

For education and discussion only. Not for commercial use.

Illinois-based toy maker Hedstrom Corp. has discontinued operations, shutting down six plants — including a rotational molding operation in Ashland, Ohio, and a swing-set factory in Bedford, Pa., that does blow molding.

Hedstrom said it could file for Chapter 11 bankruptcy for the second time in four years. Meanwhile, local managers at the Ashland plant are interested in buying the rotomolding operation, said Martin Irvine, Ashland economic development director.

“They´ve been in discussions with several different investment groups. Over the last week or so they have made offers to buy the company and been turned down,” he said.

Jim Braeunig, vice president and general manager, who is based at the Ashland rotomolding plant, did not return a telephone call for this story.

Companywide, Hedstrom makes a range of children´s products, including tubular metal swing sets, trampolines, play balls, sleeping bags and those big balls kids sit on to bounce around the yard.

In the plastics industry, Hedstrom is a major U.S. rotomolder. Its $40 million in rotomolding sales tied it for the No. 7 spot on Plastics News´ ranking of North American companies this year. Hedstrom employs 100 people in rotomolding, running 22 machines, most of them in Ashland. The Bedford plant also had a small rotomolding operation.

Hedstrom reported $250 million in corporate sales last year. The firm is privately held.

Hedstrom discontinued operations Oct. 6 and laid off more than 800 employees. Workers in Ashland had no warning, according to local news reports.

The company issued a statement from its headquarters in Arlington Heights, Ill., saying it was planning a Chapter 11 bankruptcy filing.

In the statement, Hedstrom Chief Executive Officer B.B. Tuley said the company could not obtain additional funding to keep operating while it pursues a turnaround strategy. The company cited several reasons for the shutdown, including higher raw material and energy costs, and a drop in sales this summer, which led to tighter lending requirements, according to the Associated Press.

Hedstrom was founded in 1915 to make bicycles. It became a major supplier of play balls, which were rotomolded in Ashland. The company also molded plastic rocking horses, an iconic toy.

When Hedstrom filed for Chapter 11 protection in 2000, it blamed poor sales at its Amav subsidiary, which makes children´s games such as pool tables and air-hockey sets.

Hedstrom bought Amav in 1997 when it bought its parent company. The deal doubled Hedstrom´s size, but Amav fell into debt and Hedstrom closed the operation.

At the time, Hedstrom fought back from bankruptcy. In Ashland, community leaders and employees held an open house in 2001 to celebrate Hedstrom´s winning the Vendor of the Year award from Toys “R” Us. The factory showed off a five-axis router and other new equipment.

Hedstrom was back in the news in 2002, when the company began to outsource ball molding to China — a move officials said was necessary for survival. The balls are molded, inflated to check for defects, then deflated and shipped to several facilities near retailers, where they are inflated again.

Despite the China outsourcing, Hedstrom invested money in the Ashland plant and focused on custom molding.

“This has been the only one of the three divisions at Hedstrom that´s made money over recent years,” said Irvine, the economic development director.

Companywide, toys are still the major market for Hedstrom.

That´s a tough business, according to Peter Mooney, an analyst who studies rotomolding and other plastic processes. Mooney said resin prices, fierce competition from Asian imports and retailers that want small, high-profit toys have squeezed toy makers.

Society has changed, too.

“Today, kids are inside at the computer or at video games. So the whole idea of appealing to kids today is different than in the past,” said Mooney, who runs Plastics Custom Research Services in Advance, N.C.

[Slyfox]

I guess aborting one-third of our children would not be a factor here.

[freeangel]

I wonder how many edwards type suits were filed when kids got "hurt" after playing on their toys.

[js1138]

I wonder how many edwards type suits were filed when kids got "hurt" after playing on their toys.

Don't know, but there used to be a company calle "Creative Playthings" that made really durable things out of solid wood. Some years ago a kid died after getting his head stuck in one of their ladder gym toys. End of company.

[BJungNan]

Hedstrom discontinued operations Oct. 6 and laid off more than 800 employees. Workers in Ashland had no warning.

This is standard procedure in a chapter 11 bankruptcy filing. No one can know until the day of the filing. Not your bank, not your creditors, and not the employees. That is just the way it has to work.

If this company is manufacturing toys in the U.S., of course the problem is a very strong toy manufacturing industry in China.

[Area51]

It's Bush's fault...

[BJungNan]

Product recalls may have contributed.

Headstron Trampoline Recall

Backyard Products Star Cruiser and Rocket Rider Swing Sets

[BJungNan]

It's Bush's fault...

No, it's Kerry's fault. Read on!

Kerry Led Outsourcing Trade Mission to China.
Ties to Boston Company Boasting Over 70 Outsourcing Projects
GoGov.com (August 15, 2004)

John Kerry, who has made opposition to corporate outsourcing of U.S. jobs to places like China a major part of his presidential campaign, appears to have had major involvement with a Boston, Massachusetts company specializing in outsourcing of U.S. manufacturing and jobs.

During the late 1990's, Kerry led at least one of the company's outsourcing trade missions to China, appearing for photos at a banquet in Beijing with representatives of Boston Capital & Technology and unidentified Chinese trade representatives. The exact date of the trip is not given on the company website but appears to have taken place between 1996 and 1998.

Some of the projects undertaken by Boston Capital & Technology include setting up tool & die manufacturing in China, high technology transfers to Chinese telecommunication companies and transfer of highly specialized commercial software utilized in computer aided manufacturing. The company also set up manufacturing in China for an infant gifts company with 12,000 U.S. retail outlets and manufacturing for a company supplying the US home healthcare market.

John Kerry attending BCT
banquet in Beijing, China.

It is not clear how many jobs previously held by U.S. citizens have been transferred to China through Boston Capital & Technology outsourcing projects or how many, if any Kerry's lead involvement at the Beijing meeting has had. In one event that could have long ranging effects in the battle with China over U.S. jobs, Boston Capital & Technology did hold a US/China Symposium at Tsinghua University, a university referred to as "The "M.I.T. of China".

President of Boston Capital & Technologies, Paul Marcus, declined to be interviewed. Marcus said "I am not doing an interview with you, and please don't call me again," when contacted by Insight On The News, an on line news source that first broke the the Kerry Outsourcing story.

Information obtained from the Boston Capital & Technology website, however, indicates that the company provides investment and advisory services to US companies wishing to establish or expand manufacturing operations in Mainland China.

The company has participated in what it calls significant U.S.-China investment, partnership, and technology transfer opportunities using both American and Chinese staff. The company has offices in Beijing and Shenzhen, China, in addition to its headquarters in Boston, Massachusetts. It provides local access in China and teaches Chinese companies in Western business practices. The company claims to have completed over 70 projects in China involving investment, manufacturing, set up of U.S. wholly owned enterprises in China, set up of U.S. and Chinese joint ventures and technology transfers to China.

Boston Capital & Technology President Paul Marcus lives with his Chinese-born wife in the Beacon Hill district of Boston, the same district where one of Kerry's mansions is located. The Kerry campaign refused to answer questions about Kerry's relationship to Marcus or the details on Kerry's trade mission to Beijing, China.

[AGreatPer]

I pass the Bedford, PA plant all the time. It was noticeable all summer how there was little stock in their yards. This could be seen coming.

This will devastate the Somerset, Bedford, McConnelsburg area. Even the JLG (lift truck) plants closed in Bedford and Somerset. Oh well, they still have skiing at 7 Springs.

[avg_freeper]

It looks like "Creative Playthings" is alive and well:

Wooden Swing Sets Wood Swing Sets & Wooden Play Gyms by Creative Playthings

[js1138]

I imagine they went out of business after the lawsuit and sold their assets to someone else. That's the usual way.

[Malsua]

Just because I was curious...

Creative Playthings Recall

The replacement program was conducted in cooperation with the U.S. Consumer Product Safety Commission which advised the firm of the death of a two-year-old California boy on February 9, 1982, in an accident associated with a Creative Playthings Indoor Gym House.

...snip

The space between the upper rung of the ladder and the platform was small enough for a child's head to be inserted and become entrapped creating a potential for strangulation. The replacement ladder that had been offered by the firm was redesigned to reduce the likelihood of head entrapment.

The Creative Playthings company that conducted the recall no longer exists. The replacement ladders are no longer available, and consumers should discard or destroy the ladder if they have the product.

[avg_freeper]

It looks like js1138 was right. There are plenty of trees that have branches capable of strangling a child. Should we recall trees? Amazing.

And I was a big time tree climber back in the day. (hard to do growing up in Kansas, believe me!)

[js1138]

I remember the recall very well, because I had one of those gymsets, and still do. I think the failure of that company pushed me down the road to conservatism. This was the ultimate hippy-dippy, Ben and Jerry kind of company. If they could be killed by liberalism, anyone could.