Mattel to Shut Paramount Plant, Its Last U.S. Factory

Mattel is closing its only remaining U.S. toy factory and laying off 250 employees who work at the plant in Paramount as part of an effort to reduce costs, the company confirmed Friday.

The Hawthorne-based toy company expects to save $4 million to $5 million a year by transfering its U.S. manufacturing operation to Mexico, where labor costs are lower. The factory made plastic toy parts that were then shipped to Mexico for assembly.

Employees learned of the layoffs Tuesday, and about 100 workers already have been let go. “We’re very unhappy and upset about it,” said Amy Ann Stratton, secretary of United Rubber Workers local 938, which represented the Mattel employees. “But the handwriting was on the wall.”

Mattel has been trimming its operating expenses--among the highest in the toy industry--partly to compensate for the sharp $250-million decline in sales last year of its Masters of the Universe collection of boys action figures and its Rainbow Brite dolls. This year, the company is counting on its Captain Power “laser” toy, although most analysts don’t expect Captain Power to fully compensate for last year’s sale drop.

Since May, Mattel has laid off 150 employees at its corporate headquarters and eliminated another 150 headquarters jobs through attrition, again to reduce overhead. As previously reported, Mattel expects to save $6 million this year and another $20 million next year as a result of those cutbacks, which affected a number of high-level employees, including 10 vice presidents.

Over the last few years, Mattel has closed two other U.S. factories to save money. Last year, it shutdown its East Los Angeles plant, and before that it closed a plant in New Jersey. Three years ago, about 400 worked at its Paramount plastic molding plant, Stratton said.

Mattel has 16 plants in 14 foreign countries.

The Paramount factory was acquired by Mattel when it bought the H&H; Plastics division in 1969. Stratton said the union was to meet with Mattel to discuss severance benefits, although the union contract doesn’t provide for any. She said most of the employees had worked at the Paramount plant for 15 years or longer.

John A. Sage, a Mattel vice president, said the plant would be closed down by the end of the year.