U.S. toy maker Mattel Inc. is closing its Mega Bloks factory in Montreal’s St-Laurent suburb in a move that will result in job losses for some 580 employees.
Production of the plastic snap-together sets will be shifted to other Mattel facilities in Mexico and China over several months starting in September, the Segundo, Calif.-based company confirmed Friday in an e-mailed response to questions. The business rationale is to better use the volume and capacity in the wider supply chain and cut costs, the company said.
Mattel, the maker of iconic toys like Barbie dolls and Hot Wheels cars, intends to maintain the Mega corporate office as well as design and brand functions in the city. Some 230 people work in those roles.
Story continues below advertisement
“Canada is sort of going the same route as the United States has gone,” said Lutz Muller, a toy consultant with Klosters Trading in Williston Hills, Vt. “Manufacturing facilities which are not in high-tech industries, with very high value per product, emigrate to equally-efficient countries with lower costs.”
Mattel bought Mega Brands for US$460-million in 2014 to gain a foothold in the construction-toys space, where it was desperately lacking a presence to compete with industry leader Lego AS. At the time, that segment of the toy sector was estimated to be a US$4-billion market for the United States and Europe alone.
Just four years ago, Mega was eyeing an expansion of its Canadian manufacturing operations and pushing to repatriate more production from China back to Montreal. At the time, the company produced slightly more than half its total output of construction sets in Montreal and was aiming for 70 per cent, a company spokesman said.
Mega's last investment in Montreal is believed to date back to around 2011, when it won both federal and Quebec financial backing for a three year, $30-million drive to add modern injection moulding and counting equipment to the plant.
Story continues below advertisement
Jean Boulet, Quebec’s labour minister, said on twitter Friday that staff in his department are “already identifying available positions” that meet the skills of employees that will lose their jobs.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.