For more than 60 years, whenever American pre-schoolers fashioned something from Play-Doh, their parents could legitimately claim it was made in the U.S.
The modeling putty itself, however, has been made overseas since 2004. Toymaker Hasbro's return of at least some production of Play-Doh, one of its most lucrative brands, to the U.S. this fall shows how companies are adapting to the Trump administration's carrot-and-stick approach to creating American manufacturing jobs.
Within the past year, Trump and his Republican allies in Congress have enacted a law that trimmed the top corporate tax rate to 21 percent from 35 percent, and the White House has imposed tariffs on foreign imports including steel, aluminum, washing machines, and $250 billion worth of Chinese goods, forcing businesses to raise prices, alter global supply chains, or simply live with lower profit margins.
Hasbro's decision on Play-Doh, made long before the tariffs were announced, is part of its overall reduction in manufacturing in China — which will shrink to about 60 percent of supply for the company's global market from 70 percent over the next two years, Chief Executive Officer Brian Goldner told investors on Monday.
Play-Doh, created in the 1930s to remove soot generated by coal-burning stoves from wallpaper, was reinvented as a colorful children's toy in the mid-1950s, sold by retailers including Macy's and Marshall Field's, according to the Rochester, N.Y.-based National Museum of Play. Until 1991, every can was made in Cincinnati, according to the Cincinnati Enquirer.
About a quarter of Hasbro products, which range from board games like Monopoly and Clue to Tranformers action figures and Magic: The Gathering playing cards, are now made in the U.S., which places the Pawtucket, R.I.-based company among the leaders "in committing to make product here," Goldner added.
At the same time, Hasbro "is effectively working through a disruptive year," the CEO told investors after reporting a third-quarter profit of $1.93 a share, significantly lower than the $2.23 average estimate from analysts surveyed by FactSet.
Sales slumped 12 percent to $1.57 billion in the three months through September — despite gains in core brands like Play-Doh and Monopoly — as the company contended with obstacles from "challenging macroeconomic environments" to the shutdown of Toys 'R' Us, the retailing giant that had been among Hasbro's top customers, the CEO said.
Hasbro responded by winning a "significant number" of new retail customers, but the tactic requires the company to ship smaller quantities — which makes the process more expensive — and to send high-demand toys later in the holiday shopping season.
"While the Toys 'R' Us bankruptcy has created strong temporary headwinds, we believe other retailers will pick up the slack and think Hasbro will aggressively work to improve margins," said Christopher Muir, a CFRA Research analyst who reduced his 12-month share-price target for the company by 6 percent to $108.
Hasbro fell 3.1 percent to $95.01 in New York trading on Monday, paring its gains so far this year to 4.5 percent.