Strombecker Corporation

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Strombecker Corporation

600 North Pulaski Road
Chicago, Illinois 60624
U.S.A.
Telephone: (773) 638-1000
Toll Free: (800) 944-8697
Fax: (773) 638-3679
Web site: www.tootsietoy.com

Private Company
Incorporated: 1876 as The National Laundry Journal
Employees: 350
Sales: $72.7 million (2001 est.)
NAIC: 339932 Game, Toy, and Children's Vehicle Manufacturing

Strombecker Corporation is the leading maker of bubble blowing toys and cap guns in the world, controlling about half of each market, and also makes other basic toys like die-cast metal cars, wood blocks, and dish sets. The company's best-known brands are Tootsietoy, Mr. Bubbles, Hearts 'n Home, and Hard Body Die-Cast, and it also makes items using characters or designs licensed from Disney, Looney Tunes, Pfaltzgraff, General Motors, and Ford, among others. Strombecker is owned by the Shure family, which has run the company for four generations.

Origins

The roots of the present-day Strombecker date to 1876, when a trade paper called the National Laundry Journal was started on the West Side of Chicago. Its publishers, brothers Charles O. and Samuel Dowst, later began to make small laundry accessories like die-cast collar buttons and cufflinks. In 1893 Samuel Dowst saw a Mergenthaler Linotype machine at the Chicago World's Columbian Exposition, which made metal type for printing by injecting hot lead into molds. Realizing it could also effectively produce metal buttons, he convinced the company to purchase one.

Dowst soon began producing more metal items, including die-cast promotional trinkets for clients like the Flat Iron Laundry Company, which bought them to give away to its customers' children. These items, which included a flatiron, a top hat, a Scottie dog, and a candlestick, would much later be adopted for use as tokens in the board games Monopoly and Clue. In 1906 Dowst introduced the world's first die-cast toy car, and several years later began making one patterned after the Model T Ford, which went on to sell more than 50 million copies. The firm's toy vehicles were known as "Tootsietoys," after company founder Charles O. Dowst's granddaughter "Toots." Their popularity was such that automobile manufacturers paid for creation of the molds so they could be included in the company's line.

One of the firm's competitors was the Cosmo Manufacturing Company, which had been founded in Chicago in 1892 by Nathan Shure. Cosmo's niche was making small prizes for inclusion in boxes of Cracker Jack, which was made by another Chicago-area firm. In 1926 Cosmo bought Dowst, and the merged companies took the name Dowst Manufacturing Co. Together they would make a variety of die-cast toys like train sets, doll furniture, airplanes, cars, and trucks, as well as Cracker Jack prizes and game tokens. By this time the firm had abandoned its publishing operations.

Dowst's business continued to grow despite the hardships of the Great Depression and World War II, during which the company turned to producing detonators for grenades and mines, as well as belt and parachute buckles. Because of severe restrictions on the use of metal, Dowst Manufacturing's only wartime toys were made of paper.

After the cessation of hostilities, the company returned to full-time toy production. Dowst soon added new items like western-style cap gun sets, which would prove popular in the late 1950s. By that time control of the firm had passed to Nathan Shure's grandsons Myron, Richard, and Alan.

Slot Car Boom, and Bust, in the 1960s

The 1950s had seen the emergence of a number of new electronic toys, including slot cars, motorized size plastic vehicles that could be raced against each other on an electrified track. The cars, which were replicas of actual models made by the likes of Jaguar and Ferrari, quickly became popular with youngsters, especially boys. To cash in on the trend, in 1961 Dowst acquired the hobby division of manufacturer Strombeck-Becker, hired 14 designers, and retooled its factory to facilitate production of the car-and-track sets. Sales of the toys, which were marketed under the name Strombecker, jumped from 20,000 to 500,000 sets by 1963, making the company one of the industry's leaders in this category. With the cars now comprising the firm's main source of revenue, Dowst Manufacturing changed its name to Strombecker Corporation.

For several years the company rode high on the slot car fad, but then sales plunged in the latter half of the decade. When the firm's largest customer, Sears, Roebuck & Co., canceled orders and tried to return all of its inventory, Strombecker faced financial ruin. The firm, which had recorded profits of $3 million at the peak of the boom, suddenly found itself facing annual losses of more than $6 million. As a consequence, Myron, Alan, and Richard Shure were forced to personally guarantee the company's loans, and to avoid bankruptcy they decided to return to the more traditional toys with which the firm had earlier found success. At this time Alan Shure left to run a business that made small electric motors, leaving Myron and Richard to run the company.

Strombecker bounced back with the introduction of the "Jam-Pac," a set of ten die-cast cars that sold for a dollar. Placed by the counter at supermarkets throughout the country, it became "the world's best shutter-upper," according to Myron Shure's son Daniel, as parents in the checkout line could buy it for a child in order to keep them quiet. The Jam-Pac sold ten million sets in its first year, and continued to do well thereafter.

During this same period Strombecker acquired exclusive rights to manufacture Kewpie Dolls, which had been created in the early 1900s by Rose O'Neill. The firm hired Jean Cantwell, secretary-treasurer of the Rose O'Neill Club, to act as spokesperson. The venture was not a major success, however. By the mid-1970s Strombecker's annual sales were a relatively modest $6 million.

1979: Bringing Mr. Bubbles to the Firm

In 1979 the company bought Chem-Toy, which made soap bubble toys under the Mr. Bubbles name in a variety of formats and sizes. Helped by the new acquisition, as well as by an increase in sales of toy guns as the antiwar sentiment of the 1960s and early 1970s faded, Strombecker's revenues grew to approximately $30 million by 1983.

When Richard Shure died in 1988, Myron Shure began seeking a partner to help buy out his and Alan's shares. Although Myron's three daughters were not interested, his youngest son Daniel was, and the latter moved back to Chicago from Hong Kong to become the firm's president. This period also saw the company redesign its packaging, putting the Tootsietoy name on its entire line of more than 100 products.

Under Daniel Shure, who had earned his M.B.A. at Cornell and later worked for Proctor & Gamble, Strombecker began a round of strategic acquisitions. In 1989 the firm bought Sandberg Manufacturing Co., a producer of wooden toys for preschoolers under license from Sesame Street. Later, a company that made paper roll caps was acquired, as well as another that produced small plastic action figures.

By 1993 Strombecker had 450 employees and was operating showrooms in Dallas, New York, and Hong Kong. Manufacturing was done at two plants in the Chicago area, as well as at others in Amsterdam, New York, in Durant, Oklahoma, and in Canada. Starting in the 1980s the company had begun contracting out production of most of its toy cars to manufacturing firms in China, and this outsourcing grew to account for 40 percent of the firm's total output. The Shures had taken this step reluctantly, as they were strongly committed to their employees, who were, in large part, residents of the impoverished West Side of Chicago. Many had worked for Strombecker for decades, and in some cases for generations.

A key to the firm's success was its image as a low-overhead, no-frills operation. The company's basic toys were not advertised, but generated steady sales year after year due to their classic nature. They were popular with major retailers like Toys 'R' Us and Wal-Mart because of their high profit margins, typically 45 to 50 percent as compared with the 17 to 20 percent for heavily advertised toys. Most of Strombecker's items retailed for less than $5, with the most expensive priced at $30. The company offered hundreds of different items, and each year introduced new ones like a 12-inch plastic crossbow that emitted bubbles when fired, or plastic baseball bats and tennis racquets that created hundreds of bubbles when waved through the air. The firm was now producing some 70 percent of the bubble solution sold in the United States.

Realistic Toy Gun Issues in 1994

In 1994 Strombecker suffered a setback when news reports about children who had been shot by police while brandishing toy guns led several retail chains, including Toys 'R' Us and Kay-Bee, to pull authentic-looking toy weapons from their shelves. Strombecker had control of 60 percent of U.S. sales in this category, and 30 percent of the firm's revenues were derived from it. Although deals were quickly made to offset the cutbacks by boosting orders of the firm's other products, and some guns were redesigned to make them less realistic, the company announced that it would lay off 20 in the fall. Strombecker was able to keep most of its U.S. workforce of 500 on the job, however, with the most drastic cuts made to orders from China. Sales of handgun and assault weapon toys were affected the most, while demand for western-style pistols and rifles fell off less sharply, though they too were banned by at least one retailer.

Company Perspectives:

Tootsietoy is a combination of Samuel Dowst's original vision, Nathan Shure's business sense, and the current Shure family's promise to continue making classic, affordable toys. From its die-cast Model T Ford at the turn of the century to the highly detailed vehicle replicas today, Tootsietoy products continue to evolve and improve.

The company was able to recover from this setback, however, and by 1996 revenues had rebounded to a record level of approximately $50 million. That year saw Strombecker make two acquisitions and form a joint venture with Daisy Manufacturing Co. to license and distribute Daisy's line of toy guns. The firm also introduced its first toys aimed solely at girls, which included tea sets and play cosmetics.

The late 1990s saw Strombecker's bubble toy market share drop below 50 percent, but this climbed back to 54 percent during 2001. Sales of toy guns also went up late in the year following the September 11 terrorist attacks on the United States. The company was still the market leader in this category in the United States, with sales of its guns, bubbles, and other toys also strong around the world.

In December of 2002 board chairman Myron Shure passed away. In addition to his many years in the toy business, Shure had amassed a collection of so-called "Outsider Art" and served as director of Intuit: The Center for Intuitive and Outsider Art near Chicago.

After more than 125 years Strombecker Corporation had found its niche as a leading maker of basic toys like bubbles, guns, wooden blocks, tea sets, and cars. The Shure family, which continued to own and manage the firm, kept it on track for further growth through strategic acquisitions and new licensing deals.

Key Dates:

1876:: Charles O. and Samuel Dowst start The National Laundry Journal.
1892:: Nathan Shure founds Cosmo Manufacturing to make toys.
1893:: Dowst Bros. buys a linotype machine to make die-cast buttons and trinkets.
1906:: Dowst introduces the first die-cast Tootsietoy automobile.
1926:: Dowst and Cosmo merge to become Dowst Manufacturing Co.
1930s:: Dowst toys are used as tokens in the newly created Monopoly game.
1940s:: Dowst makes detonators, buckles for the U.S. war effort.
1950s:: Nathan Shure's grandsons take control of the firm; toy guns become strong sellers.
1961:: The Strombeck-Becker hobby division is purchased; Dowst later is renamed Strombecker.
1960s:: Sales of slot cars boom, then bust; Strombecker returns to making basic toys.
1979:: The acquisition of Chem-Toy adds the popular Mr. Bubbles line.
1980s:: The firm moves most toy car manufacturing to China.
1989:: The firm purchases Sandberg Manufacturing, maker of Sesame Street wooden toys.
1994:: Major chains remove toy guns from shelves; Strom-becker lays off 20.
1996:: The company rebounds, posting record sales of $50 million.
2002:: Board chairman Myron Shure dies.