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About 85% of products for the toy industry are located in China – and each day, supply chains see new virus-related problems

‘Every single leg of the supply chain has exposure to disruption.’ Photograph: Reuters

“It feels like a rollercoaster, but the dip down is followed by another dip down,” said Jay Foreman, chief executive of Basic Fun, a toy distributor in Boca Raton, as the coronavirus outbreak started to play havoc with his business. “We’re waiting for the carriages to start going back up, but I think we’re going to have to wait a little longer.”

Like many US businesses, Basic Fun is reliant on China for its manufacturing. Each day, Foreman receives updates from his vendors in China, where about 85% of products for the $80bn global toy industry sources are located. And each day, supply chain problems related to the global outbreak of Covid-19 mount.

At this time of year about 400 million Chinese workers should be returning to factories after the lunar new year, but this year there’s no sense that even if they do, Chinese vendors will have materials or transportation to restart production.

“There’s challenges with truckers getting through provinces to the ports, there are too many containers and not enough boats, or too few containers and not enough boats. There’s upheaval and uncertainty, and everyone is on pins and needles until we understand the significance of this.”

For the time being, US toy consumers – children – have little to fear. This is a slow period for the industry, and stocks are plentiful. But come May, when summer demand picks up, or into the holiday season, when it peaks, the story could be very different.

With toy manufacturing centered in China, opportunities to reconfigure global supply rapidly are limited, said Steve Pasierb of the New York-based Toy Association. “The story is changing day to day but fortunately we’ve still got another 40 to 60 days before it becomes a crisis.”

Jessica Alcalde, a product sourcing consultant in New York, echoed that sentiment. “If it keeps going on through July and August it will become a serious concern for a lot of people.”

According to Foreman, Chinese vendors may be open for business but production lines aren’t necessary running. Many factory owners, he said, report that their workers will need to be quarantined before starting work, but it’s unclear where that quarantine is taking place except in what Chinese authorities describe as “special places”.

With 100 employees in the US, 85 in Hong Kong and 10 in China, Basic Fun will have little choice but to trim expenses and jobs if the supplies dry up. Nor can the company simply pivot to other toy-producing nations, since most get their components from China.

“If we can’t get product, we’re going to be upside down, and if we’re upside down, there’s only one way to stabilize the balance sheet and that’s by cutting costs,” Foreman said. “We’re in uncharted territory, that’s for sure.”

This story is being told across industries, with every type of consumer product, from bridal dresses to mobile phones, cars and luxury products to pharmaceuticals, looking at potentially severe disruption over the coming months.

A trickle of warnings about supply chain issues earlier this month has become a cascade of alerts. Almost no globally integrated industry appears immune, triggering US stock indices to register their worst US weekly drop since the 2008 financial crisis, down about 12%.

It’s too early to predict the full impact of the crisis on the US economy. The rout in stock markets suggests it could be serious but could just as easily evaporate if the Covid-19 outbreak wanes. But already Federal Reserve officials are signaling they are open to an interest rate cut if the outbreak worsens.

And global supply line interruptions, like those experienced by Basic Fun, are one of the clearest indicators of economic damage.

“Every single leg of the supply chain has exposure to disruption,” said Richard Wilding OBE, professor of supply chain strategy at Cranfield University. The disruption, Wilding said, is governed by unintended consequences. “With Italy, for example, they stopped trains going into Austria. As soon as that happens, you’ve got to ask if freight is also stopping.”

Even if production in China is restored, transportation may remain seized. Shipping containers are stacking up in Chinese ports, leading to shortages in other parts of the globe.

More tonnage of container ships is idled now than during the global financial crisis, according to Alphaliner, a shipping data service. Charter rates for tankers and bulk freighters have plummeted more than 70% since early January, according to Hong Kong-based Mandarin Shipping.

The knock-on to industry is already apparent. Credit agency Moody’s predicted global auto sales volume could drop 2.5% year-over-year, with Chinese sales sinking 2.9%. On Wednesday, Microsoft shares fell 2% after the company said it doesn’t expect to meet the quarterly revenue guidance.

Apple, with nearly 290 of 800 Chinese component suppliers centered in Wuhan, has said it does not expect to reach its own quarterly revenue guidance as a result of impact from Covid-19.

The luxury goods industry, affected by virus outbreaks in northern Italian production centers and by a sharp drop in Chinese consumer spending that accounts for 30% of global sales, could be more severe.

Global luxury manufacturers have taken a $25.5bn stock hit, with sector leader LVMH Moët Hennessy – Louis Vuitton accounting for over half of that decline, as dozens of other industry leaders have issued missed earnings warnings.

For the time being, the resilience of supply, production and transportation systems remains key to mitigating economic damage.

Still, interruptions to global supply chains are often not easily or quickly countered.

American Axle & Manufacturing, an auto parts maker based in Detroit, has said it expects about $25m in lost sales during February and early March as car manufacturing slumps in China. Tesla, which recently opened a Shanghai factory to build models for Chinese customers, said last month it expected the disruptions to “slightly impact” profitability.

With nearly 1,600 cases of Covid-19 reported in South Korea, and community transmission outbreaks reported in Germany and the US, supply chain issues may intensify, said Wang Tao, chief China economist at UBS. Businesses discounting potential disruptions because of the yearly disruption of lunar new year “are awakening to the fact that there will be delays from China but also new areas”.

A recent report from Fung Business Intelligence worried that nations newly affected by the virus might not be able to deal with a coronavirus outbreak as efficiently as China, where the rate of new infections appears to be dropping.

“For a number of reasons, be it political or economic, these countries might not be able or willing to take containment measures as stringent as China, which could doom their efforts to contain the Covid,” the report said.

“The Covid-19 is no longer a China issue or an Asian issue, but a global issue,” it added.

NEW YORK (AP) — From Baby Yoda to eco-friendly stacking rings, toymakers displayed an array of goods last week that they hope will be on kids’ wish lists for the holiday 2020 season.

The four-day Toy Fair, which ended last Tuesday, comes as the U.S. toy industry has been whipsawed by a number of obstacles. The liquidation of Toys R Us in 2018 has hurt impulse buying of toys. Then the escalating trade war between the U.S. and China has added costs to manufacturers’ supply network. And now, a spreading new virus is threatening to delay product launches and may result in some shortages of seasonal toys starting in May.

Such challenges are on top of the pressures that toymakers face to create playthings that will excite kids who increasingly favor smartphones and other electronics.

Toy companies are hoping for a better year. U.S. toy sales fell 4% to approximately $20.9 billion in 2019 from the year before, according to NPD Group Inc., a market research firm. That followed a 1% drop from the previous year.

Many toymakers are counting on a slew of little Baby Yodas — the breakout character of the Disney+ streaming series “The Mandalorian.” Hasbro Inc., Lego Group Inc., Mattel Inc. and Funko are among the toy companies highlighting various versions of the doll, from plush to animatronic.

Here’s a primer for parents on toy shopping:

HOW WILL COVID-19 IMPACT TOY SHOPPING: The new virus has caused factories in China to remain mostly idle and shut down design and development offices. Just about 30% of the workers needed are at the toy factories in China, according to Steve Pasierb, CEO of the trade group Toy Association. And many companies, from Basic Fun to MGA Entertainment, the maker of the popular L.O.L. dolls, warn there could be fewer seasonal toys on shelves starting in May.

Zuru Toys Inc., the maker of the hit toy Mini Brands, said it’s been forced to postpone the fall launch of a key plush toy. Get ready for delayed launches from other toymakers, analysts say.

China represented 84% of U.S. toy imports in 2019, says Panjiva, a global trade research company. And many executives say there aren’t many alternatives outside of China that can offer the same kind of expertise.

“This is the crisis of the day for toymakers,″ said Marc Rosenberg, an independent toy consultant. He believes that Hasbro will fare better than others since it has been moving beyond toys into entertainment with its purchase last year of Entertainment One Ltd., a British entertainment company that produces “Peppa Pig,” and other animated shows for preschoolers.

Overall, Jim Silver, editor-in-chief of TTPM.com, a toy review site, says parents should put things in perspective.

″There are going to be plenty of toys,” Silver said. “Some things will be sold out, and a child may not get one of the hottest toys he or she wants, but they can pivot to something else.″

GREEN TOYS: Up until now, parents had limited options when it came to buying eco-friendly toys. But now major companies including MGA, Mattel, and Hasbro are jumping into the green trend, following smaller toy rivals that specialize in eco-friendly toys like Green Toys and Wish Bone Inc.

Mattel’s Fisher-Price’s Rock-a-Stack is made from sugarcane-based plastics and packed in 100% recycled material. It’s part of the company’s goal to have 100% recycled, recyclable or bio-based materials in both its products and packaging by 2030.

Privately-held MGA Entertainment unveiled a biodegradable ball as part of its L.O.L Surprise! Doll line. MGA also unveiled a new product line from Little Tikes which is made from a blend of recycled resins. Founder and CEO Isaac Larian said that the resin compound has been in development for two years, and he hopes to patent it and share the technology with other toymakers.

Both Mattel and MGA said the green toys will cost similar to previous, non-green versions. For example, Fisher-Price’s Rock-a-Stack will retail for $6.99.

“Consumers want eco-friendly, but they also want the lowest possible price,″ said Silver. He estimates that fewer than 10% of overall toys are currently eco-friendly, but that number should increase in the next few years.

SURPRISE TOYS FOR BOYS?: When the L.O.L. Surprise! doll was launched in 2016, it became one of the industry’s biggest hits for girls and has so far amassed several billions of dollars in sales. The toy is a glittery, half-sphere container that includes plastic charms and L.O.L. Surprise! dolls that are revealed when kids peel off layers of packages. It spurred a big industry trend where girls unwrap an item to find all sorts of surprises. Zuru’s Tiny Brands, which is a package of surprise realistic miniatures of iconic brands like Dove, Skippy and Airheads, proved to be a holiday 2019 hit.

Now toy companies are trying to come up with a collectibles hit for boys who haven’t flocked to anything similar since Pokemon trading cards in the mid-1990s, says Rosenberg.

One company, Super Impulse, is trying with Wacky Packages Minis, inspired by Topps baseball stickers. They’re humorous fake product packages like Dr. Pooper and Weaklies that come in a box of five that are revealed only when opened.

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Crocheted virus amigurumi toy

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Crocheted microbe made to order.

It measures around 12 x 12 cm. Crocheted using high quality yarn in smoke free and animal free house. It was stuffed with hypoallergic polyester filling and I used safety eyes. Please note that the size might slightly vary due to handmade purposes.

The microbe body comes in solid color (all colors are available). The glycoprotein spikes come in different colors (see the picture above for the options available). Please indicate the color combination you prefer during checkout from the image provided.

Please allow 3 weeks for hand making.

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