Made in America makes sense again, K’nex Brands CEO says

The maker of K'nex toys has long manufactured many of its products in America, and it pushed that as a key marketing message in 2007, after safety concerns arose about toys made in China.

But the family-owned company in Montgomery County decided it needed to do more as the U.S. economy slumped, and it chose to move one of its key operations from China to the United States.

"It started as a moral decision," K'nex Brands L.P. chief executive Michael Araten told the 375 people who attended a "Made in America" program presented by the Greater Philadelphia Chamber of Commerce at the Hilton Philadelphia City Avenue on Wednesday morning.

Repatriating $100 million in foreign investment back into the United States was based on sound business reasons, Araten said in an interview after the program. Though he would not disclose the dollar value of K'nex's annual sales, he said it was up 10 percent from 2010. Through April of this year, it is up 22 percent, he said.

"If you looked at our profit-and-loss charts for the last three years, you would say, 'What recession?'?" Araten said.

Today, 95 percent of the parts that go into K'nex construction toys are made in the United States, with most emanating from the company's Hatfield factory, where it employs about 200 people.

Moving the operations led to a 25 percent increase in K'nex's local workforce, Araten said, and also required the company to hire a number of vendors in a 100-mile radius who could do "things we're not great at." He estimated the employment ripple effect of K'nex's decision to be several thousand jobs.

Joining Araten in a panel discussion were the entrepreneurs behind Devon-based Independence LED Lighting L.L.C. and Center City-based S.V.A. Holdings Corp.

Independence LED brought the manufacture of its energy-efficient LED tubes, designed to replace fluorescent lighting, back from China to a highly automated factory in Boyertown in summer 2010. Charles Szoradi, CEO of Independence LED, said that put it closer to its commercial customers in the Washington-to-New York corridor.

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Contact Mike Armstrong at 215-854-2980 or marmstrong@phillynews.com, or @PhillyInc on Twitter. Read his blog, "PhillyInc," at www.phillyinc.biz.