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Mattel Closing Factories in Cost-Cutting Effort

Toymaker Mattel closes two factories in Asia and will shutter another in Canada in an effort to reduce costs.
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Mattel Inc. (MAT) - Get Free Report has closed two factories in Asia and will shutter another in Canada as the maker of Barbie dolls and Hot Wheels attempts to reduce costs, a media report says.

The El Segundo, Calif., toymaker closed manufacturing sites in China and Indonesia last year and will close a facility in Montreal this year, The Wall Street Journal reported. 

Mattel had previously said it planned to close and sell a factory in Mexico.

Closing the Montreal plant, which makes Mega Bloks, would affect about 580 workers, a  company spokeswoman told the paper. She declined to say how many jobs were affected by the Asia closures.

The China factory made finished goods while the Indonesia plant made tooling gear used in other factories. The manufacturing will be moved to other Mattel facilities.

Mattel employs about 35,000 workers during peak manufacturing periods.

Weak sales have exposed inefficiencies in Mattel's manufacturing network and led to some factories being underused, the Journal said.

The manufacturing overhaul is part of Chief Executive Ynon Kreiz's plan to turn around and stabilize Mattel, the Journal said.

The company has struggled in recent years from both weak sales in large divisions such as Fisher-Price preschool toys and American Girl dolls from and the upheaval caused by the liquidation of Toys "R" Us.

Roberto Isais, Mattel's chief supply-chain officer, said the changes have turned the toy maker's supply chain into a competitive advantage.

"We are continuing to optimize our manufacturing footprint, increase the productivity of our manufacturing infrastructure and achieve efficiencies across our global supply chain," he said, according to the Journal.

Both Mattel and rival toy company Hasbro (HAS) - Get Free Report are scheduled to report earnings this week.