Updated Monday, October 11, 2021 – 09:44
The rising cost of raw materials and transport, particularly from Southeast Asia, among other factors, have raised the costs of manufacturers
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The rising cost of raw materials and transport, particularly from Southeast Asia, among other factors, have raised the costs of toy manufacturers up to 40%, which makes them anticipate an “inevitable” increase in retail prices. This is calculated by the Spanish Association of Toy Manufacturers (AEFJ), whose head of Foreign Promotion, Oliver Giner, has explained that until July the companies in the sector have endured a average rise in variable costs between 20% and 40%.
“The toy is suffering the same problems” as the rest of the sectors, explains Giner, although he warns that the toy makers in Spain “have tried to anticipate” these problems, because when manufactured in summer “they have already been supplied in January raw material”. Regarding the rise in the price of raw materials to make toys, the AEFJ has given as examples some of the polymers that have doubled their price (100% more); to the pwc (35% ms); polyesters (90%) and polyamides (45%); iron tubes for tricycles or bicycles (30%) or cardboard (25%).
The container, five times more expensive than a year ago
Regarding the maritime transport of these materials, the sector is paying from the main ports of Southeast Asia to Valencia 400% more than a year ago for a so-called large container (40 feet). According to the employer’s data, a loaded container of the largest size was paid $ 3,000 in 2020, while now the price has shot up to $ 15,000 on average.
Delays in the supply chain have been quantified by the sector in approximately double, from the 4 or 5 weeks it took for an order to arrive from China to Spain last summer to the current 9 or 10 weeks.
Giner has emphasized that this problem, which has been added to the high price of energy in Spain, “has caused the perfect storm” in the sector.
On whether this situation will affect prices, especially with a view to the Christmas season, Giner has commented that “it will depend on each company”, but has ensured that the catalogs “will be available and within the reach of the consumer.”
“It is very complex to say now if all this situation will affect prices and we will only see it in a few months”, added the head of Foreign Promotion of the AEFJ, who has pointed out that in any case it seems clear that with these averages in costs variables, the manufacturer “is going to have to transfer that extra cost” to the product.
In this first month of autumn the increases in the price of the toy “have been very small” in terms of the manufacturer’s rates to the store, “and in many cases the store has assumed the extra cost,” he added. Another “possibility” that the AEFJ has valued is the possible job loss given the increase in production costs, although Giner has said in this regard that “it is difficult but it is not ruled out, even if it is in reduction of working hours”.
In this sense, he has opined that if a company in the end cannot pass on the extra costs to the product “it will have to take measures.”
Market researcher NPD Group reveals that toy sales in Spain in 2020, the year of the outbreak of the pandemic, were reduced by 7% compared to the previous year, up to 929 million euros.
Brexit brings down the British market
In the chapter on exports, the employers have advanced that international markets have grown between January and July 25% compared to the same period in 2020, which has been described as “historical” data.
Relative to toy exports to the UK, a market that is in the top 10, has fallen by more than 60% as of July compared to the same period last year.
The effect of Brexit “is very evident” that is behind that collapse in the United Kingdom, Giner has said about a market that last year grew 50%, “perhaps because last year and in anticipation they stockpiled merchandise”, has added.
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