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Mon, Nov 29, 2004 - Page 12 News List

Toymakers in Europe foresee a blue Christmas

COMPETITION The gulf between the `new' toy industry and the more traditional sector is set to widen, sending many firms further into the red

AFP , FRANKFURT

With their products cast aside by children in favour of video games or television, the makers of traditional toys are facing a miserable Christmas.

Toy makers in Europe say they are increasingly finding their market eroded by shrinking attention spans and intense competition from Asia.

An electric train set for instance was once top of every little boy's Christmas wishlist, but no more. The world leader in electric toy trains, the German firm Maer-klin, announced in October that following several years of declining sales it was laying off 400 staff in Germany alone.

The company, based in Goeppingen, near Stuttgart, has a long and distinguished history, having started business 140 years ago by producing miniature lead soldiers before diversifying into train sets in 1891. But Maerklin has learned that tradition counts for nothing.

"Today, we really are faced with extinction," said the company's chief executive Paul Adams.

The German doll maker Zapf is also facing a lean future after seeing a spectacular collapse in demand. The company warned this month that it could no longer meet its annual target of 190 million euros (US$238 million) turnover in the first nine months of this year, pre-tax profits were down 40 percent on the corresponding period last year.

Some even bigger names in the toy world are faring no better.

Lego, the Danish maker of the renowned multi-colored building bricks, is facing the biggest loss in its history this year, of between 1.5 million and 2 million Danish kroner (US$268 million to US$356 million) before tax.

"A number of factors have made the market a difficult one, starting with a change in mentalities," said Sean MacGowan, a toy industry analyst at Gerard Klauer Mattison and Co bank.

"There are far more distractions for children these days," he said. "And we are seeing childhood effectively shortened, with children interested in new technology from an earlier age."

So television, the Internet, video games and mobile telephones have taken a heavy toll on toys that require an element of concentration. But another factor in the demise of the traditional sector is the sales policy of toy superstores whose power has risen steadily since 1980.

"In the last 20 years, Europe has gone from a economy built on small shops to superstores specializing in knockdown prices," MacGowan said.

"It means manufacturers have been forced into producing at lower prices without really being prepared for it," he said.

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