Economic Indicator: Toy, Doll & Game Manufacturing

Instead of planning a trip to the North Pole to spot Santa’s toy making operation – consider going to Washington State instead, or for you fellow Northeasterners, Vermont is much closer (and has a lot of craft breweries).

This time of year, you are probably flocking to stores (or to your laptop) to buy toys, dolls, and games to please all of your friends and family. But, when you’re shopping do you ever stop and wonder where all of the toys and games you are buying actually come from? Well, if you’ve ever read the “Made in” label, your first reaction is probably “Yeah, China!”, and you may not be wrong. About 99% of inputs to the toy, doll, and game manufacturing industry come from abroad, and of that 99%, nearly 88% of the imports come from China to support domestic manufacturers’ demand. However, this month’s indicator focuses on where toys, dolls, and games are manufactured specifically in the United States. Even if you’re not buying toys and games this holiday season, it’s undeniable that domestic manufacturing jobs are a political, hot-button issue, so we think this indicator will be interesting for Santa’s Helpers and Scrooges alike. We’ve also presented the data in a festive holiday infographic, because really, what screams “The holiday season is here!” more than a red and green bar graph?

We compared all 50 states in terms of their national location quotient for toy, doll, and game manufacturing. Looking at states by location quotient allows us to quantify how concentrated the industry is in that state compared to US as a whole.  If you’re not familiar with location quotient, it’s simply a tool we use to help compare industries in regions beyond jobs, job growth, and establishments. Location quotients (LQs) are calculated by comparing the industry’s share of regional employment with its share of national employment. For any given industry the LQ for the US is 1.00, for any region with an LQ higher than 1.00 it shows the industry is more concentrated, for any region with an LQ lower than 1.00 it shows the industry is less concentrated.

It turns out Washington and Vermont have the highest location quotients, by far, at 6.39 and 6.33, respectively. Both states have LQ estimates nearly three times higher than the following highest ranking states. With both states having LQs of over 6.00, it means that toy, doll, and game manufacturing is over six times more concentrated in Washington and Vermont than on average. 

 

After Washington and Vermont, the next three highest ranking states are Montana with an LQ of 2.54, then Massachusetts and Kansas both with LQs of 2.04, making the industry in all three states more than twice as concentrated than average. Not only are these the top five states in terms of LQ, they are the only states with LQ’s of higher than 2.00.

As mentioned, it’s important for us to compare states by location quotient instead of overall jobs and establishments because it accounts for higher economic activity overall in larger states. With that being said, California deserves some festive honorable mention (ergo why we gave it a hat). Despite not being in the top five (California ranks 7th with an LQ of 1.72), it is the state with the highest number of establishments by far at 114, and the highest number of jobs at nearly 3,000. The next two states with the highest number of establishments is 57 in Illinois and 55 in Florida.

Despite nearly 88% of toy, doll, and game manufacturing imports coming from China, the industry is still present in the US, making $1.3 billion in revenues in 2016, resulting in nearly $78 million in industry profits. However, industry revenues have declined by about 9.5% per year in the past five years and are projected to continue declining by another 2.4% per year over the next five years. But hey, enough with these gloomy data points, it’s the holiday season! And maybe instead of planning a trip to the North Pole to spot Santa’s toy making operation – you should consider just going to Washington State instead, or for you fellow Northeasterners, Vermont is much closer (and has a lot of craft breweries).

Sources:

1. IBISWorld Report, Toy, Doll & Game Manufacturing in the US, December 2016.

2. Emsi,  2016.4 Class of Worker Datarun

 

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