KC firm benefits from stimulus spending

You can find some of the jobs that have been saved or created by federal stimulus spending in the Grandview, Mo., headquarters of U.S. Toy/Constructive Playthings, the 56-year-old, Jewish-owned firm that was humming Monday with last-minute Christmas-season orders.

Co-CEO Jonathan Freiden said his business, like the overall economy, was bad up until Congress passed and President Obama signed the American Reinvestment & Recovery Act in mid-February. U.S. Toy/Constructive Playthings experienced its first annual operating loss in 2008.

Jonathan Freiden and his brother, co-CEO Seth Freiden, responded like many other business leaders in the current environment: they ordered two rounds of layoffs (the company’s first non-seasonal layoffs ever), across-the-board salary reductions and a freeze on their 401(k) plan matching contribution. They dramatically cut in spending in every aspect of the business.

“Earlier in the year, it looked like there was little if any hope for a meaningful turnaround in our business or the overall economy,” said Jonathan Freiden. “However, since the passage of the American Reinvestment & Recovery Act in mid-February, our business has steadily improved. Over the past few months, ARRA funds, specifically funds dedicated to improving early-childhood education, have made a notable impact on our current and future business. We are now excited about the future and, we as a company, can help not only improve early-childhood education, but create jobs and economic activity throughout the company.”

Increased demand
Jonathan Freiden said U.S. Toy has a “core group” of about 320 to 400 employees at its local headquarters and warehouse and at its eight stores across the country, with additional, short-term employees added during the busy fall and winter seasons.

“We have been able to add back positions as the economy is improving,” said Jonathan Freiden. “The stimulus has helped us. Consumers are not so fearful, and they are more willing to buy holiday toys.”

Jonathan Freiden said that from mid-September 2008, when the stock market went into the tank, to the end of last year, “everything trended downward” at U.S. Toy/Constructive Playthings.

“This year, we are seeing more consumer demand,” he said. “Sales in November were up over 10 percent over 2008.”

Jonathan Freiden noted that most of the orders being processed this time of year come from individual customers of the U.S. Toy or Constructive Playthings catalogs or Web site. But he also had on his desk Monday a multi-page, $20,000 order from a school district in suburban Pittsburgh. It is the latter type of order that the ARRA stimulated.

Jonathan Freiden was so excited to see orders like that he contacted the White House and asked to be part of a group of small-business leaders meeting with President Obama to discuss the outcome of federal stimulus spending. A meeting scheduled for last month was postponed, and Freiden is still waiting to hear if he’ll be invited back to D.C.

“There is good news,” he said, “and good news needs to get out.”

Double whammy
Jonathan Freiden said that, although the fourth quarter of 2009 will have been a good one for U.S. Toy, the challenges of the first part of the year leave him “positively optimistic for improved results over last year.”

Because it imports most of its products from manufacturers in Asia, Jonathan Freiden noted, U.S. Toy faced a double whammy over the past year as a result of the impact of the new Consumer Product Safety Improvement Act. That was the act passed by Congress in 2008 after concerns were raised during the Christmas season of 2007 over the use of lead-based paint in certain Asian-made toys.

As a result, Jonathan Freiden said, U.S. Toy had to write off “millions of dollars worth of inventory” and restock its shelves with products that meet the stringent, new standards.
Even so, he said, the company has not only hired its usual complement of seasonal workers, it has added a couple of core positions.

“We are actually adding some sales and higher-level positions now that were not in the mix previously as we plan our growth for the next year,” Jonathan Freiden said.

Third generation running U.S. Toy
Jonathan and Seth Freiden are the third generation of their family to own and operate U.S. Toy/Constructive Playthings. Frances Gershon and her then-husband, Elvin Klein, founded the company in the living room of their President Gardens apartment in south Kansas City, Mo. A former teacher, she helped pioneer the emerging educational-toy business geared toward preschools, day-care centers and the like. Now, Jonathan Freiden said, it’s one of three full-line distributors that dominate the American market.
Frances and Elvin’s son, Michael Klein, ran the company as president for four decades, but recently he has reduced his involvement as his nephews, the Freidens, have taken on the roles of CEO.
The company’s products are sold via catalog, call center and online at www.ustoy.com www.constplay.com.

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