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Published: Wednesday, 12/13/2000

Ohio Art confirms move of Etch A Sketch to China

BY JON CHAVEZ
BLADE BUSINESS WRITER

BRYAN - The head of the Ohio Art Co. said yesterday the company will discontinue production here of its world famous Etch A Sketch three days before Christmas.

William C. Killgallon, chairman and chief executive officer, said the familiar red drawing toy has been made at the company's Williams County plant and at a plant near Hong Kong.

The move, as The Blade revealed in a story last week, is to save production costs. Since 1960, when Ohio Art introduced Etch A Sketch, the northwest Ohio plant at One Toy Drive has made nearly 100 million of the age-old favorite.

``Our decision to cease production was extremely difficult in light of the longevity of many Ohio Art employees and given Ohio Art's significant presence in the Bryan community,'' Mr. Killgallon said. He said the change is a strategic one to keep the tiny toymaker viable in a competitive industry.

The China plant, which supplies Etch A Sketch to the international market, will step up production and will supply both the international and domestic markets. Halting production Dec. 22 in Bryan will affect 50 workers, according to Local 5-0701 of the Paper, Allied-Industrial, Chemical, and Energy Workers union, which represents hourly employees at Ohio Art.

The company and the union have been involved in talks for weeks about how phasing out domestic production of the Classic Etch A Sketch will affect workers, Mr. Killgallon said.

News reports last week forced the firm to make the decision more rapidly than expected, Mr. Killgallon said, declining to elaborate. Jerry Kneipp, company chief financial officer, told The Blade last week that the company probably would wait until January to decide about Etch A Sketch production.

The company has been under pressure by lenders to reduce overhead costs, a top union official said. The firm this year trimmed 10 white-collar positions and eliminated a third shift in its lithography operations, which print colored art images on an assortment of metal containers.

In the last two years, the company has had substantial financial problems, including defaulting on a loan that resulted in delayed financial reports to regulators and ultimately a few months' suspension of its stock from trading on the American Stock Exchange.

Concentrating all Etch A Sketch production in China will not be difficult, Mr. Killgallon said. Besides Classic Etch A Sketch, the traditionally sized drawing toy, Chinese factories produce travel and pocket-sized Etch A Sketch versions and this year's new Etch2O and Jelly Etch A Sketch.

The company's other toys, including its Betty Spaghetty mix-and-match fashion doll, are made in China.

After Dec. 22, the Bryan factory will make only an Ohio Art brand toy drum and will continue its metal lithography operation. Mr. Killgallon said he could not say whether toy production will remain in the plant, however.



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