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- Background
of Marx Toys
- Louis Marx &
Company was founded in 1919 by its namesake, Louis Marx at 200 5th Ave,
in New York City. Mr. Marx was a masterful salesman, he represented
certain toy companies such as F.J. Strauss & Company, one of the lagrest
mechanical metal toy companies, where Marx had received his early professional
education.
Following a dispute with the owner, Marx had enlisted in the army for
World War I. Honorably discharged after the Armistice, Louis Marx returned
to the profession that he knew and established his own Representation
company in a small office of the Fifth Ave. Building (FAB) as it was
known within the toy industry.
Marx represented
Strauss and a few other companies such as The Girard Model Works company
and the Vermont Wood Toy company. His positive personality made the
success of the business so that his younger brother David joined the
business. Once established in 1921, Louis Marx & Company purchased
the used tooling and product rights to two of the old Strauss products
that were thought to have run their course: The “Climbing Monkey”
and the “Mechanical Minstrel Singer”. Marx’s salesmanship brought these
two products back to life. Manufacturing millions of units in Erie,
Pennsylvania, the factory became known as the “Monkey Works” among the
residents of Erie.
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Successful Reintroductions
- Hot on the heels
of success, Marx observed young Philippine boys whittling wood to make
a toy that when wound up, would unwind and return again. This gave Mr.
Marx the inspiration to introduce an industrial version of the handcrafted
piece. In 1928, Marx began the production of 150 million yo-yos from
1928 – 1935. Following that “hit wave” Mr. Marx said in an interview
that he would put it away and re-release a new version about every seven
years. Marx felt that 7 years was the “generation” of the toy consumer.
It would be brand new again for the new generation of 6, 7 or 8 year
old kids.
During the height
of the depression, Marx had three factories: one in Glendale, West Virginia
and two in Pennsylvania (Erie and Girard). You can get more details
from Marx
Western Playsets, by Jay Horowitz.
Marx supported the
war effort in World War II by converting his toy factories to make munitions,
detonators, bazookas and other related war materials including the distinction
of participating in the Manhattan Project. Following VE Day,
General Dwight D. Eisenhower, the Supreme Commander of the Allied Forces
in Europe called upon citizen Louis Marx as the United States Industrial
Advisor. Later, while serving our country in Japan following VJ Day,
Mr. Marx is quoted by Fortune magazineas saying that “…the
Japanese are clever people. They do not have the wherewithal or the
technology, but if we provide the capital and know-how, they can be
an efficient source of product.” Late 1945, Mr. Marx began toy production
in Japan for U S consumption. Note – Marx executives went on
to industry leadership, such as Mr. Marx’s Japanese Office Assistant,
who decades later became the CEO of Tomy Toy.
Following the success
of “made in Japan”, and as prices rose, again Mr., Marx pioneered the
next frontier by establishing The Elm Tool and Die Company, managed
by David Yea in Hong Kong in 1952. Mr. Yea was destined to become owner
and CEO of Universal Matchbox Toys. Marx established his factory and
marketing company in the United Kingdom in Swansea, England about 1939.
Richard Beecham managed the business for Marx.
About the time of Hong Kong, Marx also established Plastimarx
to manufacture and distribute Marx Toys in Mexico, by shipping the tooling
to the downtown plant on Aviacion Street, in the Industrial section
of Mexico City. Marx was established with the Diez-Barreiro family.
By this time in the 1950s, Louis Marx and Company was operating 3 huge
manufacturing plants in the U S A. The Erie, Girard, and Glendale plants
employed over 8000 full time domestic workers. Marx also was producing
from plants in England, Japan, Hong Kong, and other countries. The sheer
volume of products manufactured and the international presence of Louis
Marx & Co. heralded its emergence as indisputably the world’s largest
toy company.
Louis Marx, (as
did Mr. Hershey) prided himself with high growth and profitability (he
never failed to take a discount), without spending frivolously (he said
that he had an advertising budget of $300) on advertising. This was
the 1950s.
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Booming 1960s
- During the 1960s,
Marx, picking up on the successful marketing by Mattel, Remco, and Ideal
began to accept TV advertising as a legitimate marketing tool. He came
in with a bang with one of the all-time great toy products “Rock-Em,
Sock-Em Robots”, and a TV Commercial featuring the Heavyweight World
Champion, Rocky Graziano (see TV Commercials).
Marx finished the decade in 1969 by releasing the all-time greatest
ride-on toy: THE BIG WHEEL. "By Marx" hit again!
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- Changing
Times
- When Mr. Marx
reached his 70s and his second generation had not taken over the company,
it was time to consider an exit strategy. He said, “Toys is a young
man’s business”. At that time, Mattel was quickly catching up with Marx
in sales. After flirting with RJR on the private sale of the company,
they quickly consummated a deal with Quaker Oats to sell the U. S.,
Hong Kong and Mexican divisions for the sum of 52.8 million dollars!
Marx disposed of the other branches privately. Following compliance
with the terms of the agreement, Mr. Marx remained available for consulting
for 6 months and then was honorably discharged.
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- At about the same
time, Quaker Oats purchased the smaller pre-school toy company known
as Fisher-Price and consolidated operations. What worked for one, did
not necessarily work for the other. It was the time of President Nixon,
Watergate and Viet Nam; Quaker did not feel that the Marx Military product
line fit in with the overall wholesome Quaker Oats image. By immediately
discontinuing the line, it cut Marx’s revenue without replacement. Furthermore,
the Quaker management raised the Marx overhead considerably. After 52
years of consistent profit, Marx Toys under Quaker took a loss. Quaker
never got the feel to manage Marx Toys, and after 3 years of mismanagement
put the company up for sale.
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- Poetically, in
1975, Marx Toys was sold to Richard Beecham, the British Marx manager
at a huge loss ($52.800,000 cash purchase, and sold for $15 million
LBO). They operated under the name Dunbee-Combex-Marx, and although
Mr. Beecham, with the talent of Larry Passick, Bob McDarren and Barry
Piels, tried hard to turn it around, it was too far-gone.
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- In 1980, Louis
Marx filed for bankruptcy in United States Federal Court, Southern District
of New York. During the legal procedure, the assets were awarded to
the Chemical Bank of New York as the preferred creditor in 1982. The
Chemical Bank hired David Strauss & Company as the liquidator, who in
turn contacted American Plastic Equipment, Inc. to purchase all of the
non-real and financial assets. American Plastic was interested in obtaining
the intellectual property rights and steel product molds, and therefore
purchased all of the assets in order to obtain the molds.
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