Toymaker Mattel expands Mexican plant in ‘nearshoring’ push

By Kylie Madry

MEXICO CITY (Reuters) – Top-selling Mattel Inc toys like Mega Bloks will now be made in Mexico, as the U.S. toymaker becomes the latest company to move its supply chain closer to home after coronavirus pandemic-fuelled slowdowns in Asia.

Mattel announced in mid-March it had spent around a billion pesos, or $50 million, on expanding a plant in the northern Mexican state of Nuevo Leon, prioritising production in Latin America’s second-largest economy over hubs in China, Vietnam and Malaysia.

The plant in Monterrey, close to the U.S. border, is now Mattel’s largest at 200,000 square metres (2.25 million square feet), employing close to 3,500.

“Being able to have product close to your consumer and not having to transport it from Asia, that’s going to be more profitable and more competitive when you take costs into account,” Mattel Latin America Managing Director Gabriel Galvan told Reuters.

The expansion was first pitched in 2020, Galvan said. Mattel closed two factories in Asia in 2019 and more recently shuttered a plant in Canada and another in Mexico ahead of expanding the mega-factory.

Galvan said the toymaker’s move was just the latest instance of how worries about over-extended supply global chains are generating fresh interest in “nearshoring” from industries like textiles and even automaking – already a mainstay of Mexican manufacturing.

Mexico’s finance minister similarly told local media recently the demand for industry parks in northern Mexico was booming.

The toymaker plans to double its investment in the plant over the next five years, Nuevo Leon state said in a press release.

“It’s a big opportunity (for Mattel),” Galvan said, due to the plant’s proximity to its Dallas-Fort Worth distribution center, the company’s second-largest in the United States. “We can be there in 24 hours, so for us it’s really convenient.”

(Reporting by Kylie Madry; Editing by Christian Plumb and Kenneth Maxwell)