The Hard Economics of Making Plush Toys in New Hampshire

Mar 28, 2017

Scott Clarke, president of Keene's Douglas Company, with one of its signature products, a realistic stuffed dog.
Credit Todd Bookman/NHPR

This week, NHPR is digging into New Hampshire’s manufacturing sector: what’s been lost, and what could be regained in the years ahead. Today, we’re going to look at how one company, a toy maker in Keene, has navigated 60-years of change in that industry.   

This is the second story in our series On the Line: Manufacturing in New Hampshire.  

In 1957, Penny and Bill Clarke took a leap of faith.

“They answered an ad in the Wall Street Journal, actually, which is pretty funny. It said, ‘Do you want to come help run a toy company?”’ says Scott Clarke, president of Douglas Company, and the youngest son of Penny and Bill.

“So they flew to Keene, bought half this business, and bought a house the same week. It’s a neat story.”

Douglas, with Penny and Bill at the helm, would grow quickly, selling its stuffed animals to toy shops around the country.

“They did very well in the 60s and 70s,” says Scott Clarke, who would eventually take over management of the business from his parents. “They had a thriving business.”

By the late 1970s, the company employed more than 80 people, including teams to cut, stitch and stuff the plush toys.

Penny and Bill Clarke, in the early 1960s, at a major trade show.
Credit Courtesy

But by the 1980s, the company watched as their competitors moved manufacturing operations overseas, where they could pay workers less. Suddenly, Douglas’s toys were more expensive than everyone else’s.

“Once one person makes the jump, you don’t have a choice,” says Crystal Rokes, a former stitcher who now leads the company's design department. “Douglas held on as long as we possibly could to a stitching floor here, but eventually you either sink or swim.”

Douglas decided to swim, completely reshaping how they did business. The company scrapped its own production floor and moved its manufacturing to Indonesia and China.

Today, sales are ten times higher than they were, but the company only employs half the number of people. Manufacturers around the country have had to make this same tradeoff.

“It would be nice if they kept their employment up at 80, and provided those jobs for others,” says Douglas Irwin, a trade economist at Dartmouth College. “But if the alternative is losing those 80 jobs because the whole firm goes out of business, well, that’s not a good outcome.”

Douglas outsources production of its stuffed toys, but manages logistics, along with design and marketing, at its headquarters in Keene.
Credit Todd Bookman/NHPR

Irwin says Douglas adapted successfully to a globalized economy in a similar way to another company - one you many not associate with plush toys: Apple.

“So you might think there could be nothing further than two products, one being an iPhone, which is incredible technologically sophisticated, and a teddy bear, which is just a stuffed animal,” he says. “But the production process and...the globalization of production is exactly the same in the two cases.”

Apple doesn’t manufacture its iPhones in California, he explains, but it designs and develops there because that’s where the talent is.

Same goes for Douglas: it’s responded to the changing marketplace by keeping its higher paying skill-based work, such as design, marketing and logistics, in Keene. But it’s moved its assembly line work (cutting, stuffing and stitching) overseas.

For most manufacturers in New Hampshire, it only makes financial sense to make a good locally if it's what economists call “high value added.” That is, something that require skills not just to design but also to physically produce, such as precision medical devices and high-end aerospace components.

Credit Sara Plourde/NHPR

The math just doesn’t add up when you’re talking stuffed animals.

“This is a gorgeous dog,” says Clarke, picking up a toy German shorthaired pointer. “And you can see all the different color fabrics that are in him. All the parts that the design room put in him. He’s just a gorgeous piece.”

You get the impression that Clarke is a sensitive man. He does not speak lightly about what it was like to lay off his stitchers, even three decades later. But he’s also not afraid to brag a bit about Douglas’s ability to navigate the manufacturing landscape.

“If you can’t get there one way, you’ve got to find another path to success,” he says. “So we’ve managed to survive and be quite successful, with just another business model.”

This is the second story in our series On the Line: Manufacturing in New Hampshire.