Hasbro Aims to Reduce China Reliance by 40% by 2026 Amid Trade War

Hasbro, a prominent toy manufacturer known for brands like G.I. Joe and My Little Pony, faces significant challenges due to the trade war between the U.S. and China. Over 50% of Hasbro's physical toys are produced in China, placing the company directly in the crosshairs of the ongoing trade tensions. Gina Goetter, Hasbro’s chief financial officer and chief operating officer, highlighted the impact of President Donald Trump’s tweets on the company’s $2 billion business. Goetter’s approach to navigating this uncertainty involves not overreacting, operating based on facts, and avoiding analysis paralysis. This strategy is applied both internally within Hasbro and externally when communicating with Wall Street investors.

The current level of economic uncertainty in the U.S. is potentially greater than that experienced during the Great Depression, the 2008-2009 Great Recession, and the 2020 COVID pandemic, according to an Economic Policy Uncertainty index. However, Goetter and her peers believe that the resilience lessons learned during the pandemic can be applied to current geopolitical events. Laura Giuliano, a managing director and senior partner at a consultancy firm, emphasized the importance of scenario planning to prepare businesses for uncertainties such as geopolitical conflicts, generational shifts in labor, and advancements in technologies like artificial intelligence and automation. Scenario planning allows businesses to map out potential impacts, whether tariffs end up being 5% or 200%, and helps prevent decision-making stalls.

Land O’Lakes, a dairy cooperative, has embraced scenario planning and established a “war room” to understand the impact of tariffs on pricing, supplies, and capital. These skills were developed during the pandemic when supply chain disruptions affected pricing for farmers, retailers, and suppliers. Brett Bruggeman, executive vice president and COO of Land O’Lakes, noted that the war room has helped the organization build agility. Goetter also emphasized the need for action and a “no regrets” mindset. Hasbro aims to reduce its reliance on China for manufacturing, with CEO Chris Cocks stating that the company aims to get about 40% of global sourcing out of China by the end of 2026. Each business division at Hasbro has a team dedicated to diversifying manufacturing away from China, with a belief that the U.S. could play a significant role in the long-term manufacturing footprint for Hasbro.

If more manufacturers follow Hasbro’s lead, it could benefit companies like Link Logistics, which operates last-mile logistics real estate. Sonya Huffman, chief administrative officer at Link Logistics, noted an increase in manufacturing interest in the middle part of the country. However, she cautioned that allocating too much time to war rooms and scenario planning can have downsides, such as distracting decision-makers and affecting the leasing of warehouse space. Leaders also highlighted the importance of talent development trends, with Giuliano noting that a return of manufacturing to the U.S. would require companies to rethink hiring and attracting talent. Generational trends, such as the impact of Gen Z on the workforce, add complexity to talent management.

Land O’Lakes has evolved its talent management approach by co-developing career plans with top managerial talent. Goetter mentioned that Hasbro is investing more time in creating a culture where employees understand their career development plans, recognizing it as a gap that needs to be addressed. The panel leaders agreed that while the current economic uncertainty is significant, the lessons learned from the pandemic can be applied to navigate the challenges posed by geopolitical events and technological advancements.