Will Toy Factory Closures Shut Down Santa's Workshop?

Not even our youngest consumers seem to be safe from the economic downturn these days.  A Chinese toy factory was forced to shut down, laying off about 6,500 workers, due to decreased demand from the U.S./st1 :place> /span>

Smart Union, a major toy manufacturer in Chinas GuangdongProvince/st1 :place>, closed earlier this week, since the company could no longer remain profitable.  Smart Union only produced toys for the U.S.market, and cited the slowing U.S./st1 :place> economy, rising costs of labor and raw materials, stricter safety standards, and the higher valuation of the RMB as the primary reasons for their closure./span>

In the midst of this closure, workers didn't go down without a fight.  About a thousand protested outside the factory, and some are even homeless as a result of unpaid wages.  Government officials have also offered to pay workers through August, but this will hardly make up for future lost income./span>

While this is Chinas first private company to go bust as a result of the financial downturn, China/st1 :country-region>'s state media estimates that 3,651 toy manufacturers have gone out of business this year, which is about 53 percent of the total toy makers.   Most of them were smaller companies, selling less than $100,000 annually.   /span>

Not surprisingly, toy orders from the U.S./st1 :country-region> have decreased accordingly.  One manufacturer told the Economic Observer Online that last year, Christmas spending in the U.S./st1 :country-region> averaged about $200 per child, but this year many families will probably spend about half of that.    /span>

For those parents and grandparents who still want to pamper their children with extravagant toys, even in this economic climate, you could have a better selection, due to other shoppers spending less money.  On the other hand, with higher production costs and fewer imported toys, the competition to get the best toy could be especially fierce.  It might not be the worst idea to prepare early for the Christmas rush./span>