BTHA chairman's address

If I may, I should like to take just a few minutes to recall some of the issues and challenges faces by the BTHA in the past 18 months and some of the industry and BTHA challenges going forward.
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From a financial standpoint f/y 2008 was a poor year for the BTHA with significant losses made in our portfolio due to the dire performance of the stock market as the world entered the worst recession that I can remember.

To ensure its long term stability the BTHA requires a strong financial base, its dependence upon the performance of the stock market is a threat to that stability and in future a safer investment strategy needs to be identified. However now is not the time, but it is a task that has been identified by council to be addressed in the not too far and distant future.

The good news on the BTHA financial situation is that the performance of the portfolio has become no worse and the success of the 2009 Toy Fair has eased budgetary concerns for 2009. With Toy Fair 2010 almost sold out the financial forecast for Toy Fair 2010 is excellent, although the association is committed to return 50 per cent of profits to the exhibitors who also support the 2011 Toy Fair

As an industry 2008 could not have been more difficult, the administration of Youngsters in April was challenging enough for many of our members, but the repercussions of the administration of Woolworths have still not subsided and are unlikely to, at least until 2009 is well past.

The changing landscape of retail in the UK is and will continue to be a challenge to our members for some time to come but our industry will as ever change and adapt to what will continue to be an ever changing economic and retail environment.

Children will always want toys, our task is to produce toys that are of high quality, are well marketed, innovative, inspirational, offer excellent play value to our consumer and are of course safe. Providing that we produce and sell toys that meet this exacting criteria the long term success of our industry is assured.

The ultimate and particularly the untimely demise of Woolworths was brought about by the decision to withdraw credit insurance, by one of the worlds largest credit insurers. The current difficulty to obtain credit insurance and its escalating cost will bring about its ultimate end, as we know it.

After all what is the point of paying premiums for credit insurance for many years only to find it withdrawn when it is required.

The weakness of sterling versus the Euro and more particularly the US Dollar has challenged all of us that are dependent upon importing the toys that make up over 90 per cent of our market. The credit squeeze will have affected us all if not directly then most certainly indirectly.

These many difficulties have led to the UK becoming the worst performing toy market in the developed world when compared with 2008. But we face a further difficulty, lower turnover leads to lower marketing spend which leads to lower sales, we are in a downward spiral that we need to reverse.

A greater challenge faced by our industry is that we appear to have lost our ability to connect with girls to the historical levels of the past, as girls represent at least 50 per cent of our potential market this is something that as an industry we need to reverse and the sooner the better.

Our industry does not just face commercial challenges, it faces considerable issues on safety, marketing to children and the environment and it is currently these three issues that are top of the agenda for the BTHA.

The new European Toy Safety Directive in its original form would have taken the European Toy Industry back to the dark ages, we would not have been able to sell battery operated products in any form to children under the age of 14 and that was only the start. Thanks to the excellent work of the BTHA together with the other European Toy Associations, Hasbro, Lego, Mattel and the TIE, the totally impractical aspects of The Toy Safety Directive were modified.

As an industry we need to accept that we will have to make toys to ever more exacting standards and the materials we use will become more and more restricted. Through our associations and technical committees, we need to continue to work closely with the legislators, not to challenge them but to aid them in improving good toy safety legislation.

We need to stop “tilting at windmills”, our futile efforts in defending phalates in plastic in the manufacture of toys was time consuming, expensive and futile. The moment a politician or respected NGO mentions, children, toy and cancer in the same sentence without overwhelming evidence to the contrary we are fighting a losing battle.

Another issue we all face is to become greener, this is not by the way a choice but it remains an opportunity. As an industry we need to keep ahead of the legislators, we need to reduce the amount of packaging we use, we need to reduce box sizes and we need to stop shipping the not so fresh air from China to Europe.

But much more than that will be required, we will need to use recyclable materials in the manufacture of our toys and built in obsolescence will not be acceptable.

We have a third challenge, which relates to the many NGO’s who wish to restrict or even ban marketing to children, they consider our industry irresponsible. I have already mentioned the threat to our industry due to the reduced expenditure on marketing, the threat of no marketing is unthinkable.

As an association we are in a strong position to take the offensive in all of the fore mentioned issues but we can only do this by taking the higher ground.

On toy safety, it is imperative that our members use only ICTI registered factories in China, this is a condition of BTHA membership, our next step is to sign up to date certain which will further strengthen the position of the ICTI care process, I should like the BTHA to agree to a date certain of January 1st 2010.

Every Member of the BTHA must meet the criteria required to use the Lion Mark, the BTHA has held workshops to this end in 2008 and 2009. By not attending these workshops members put their continued membership of the BTHA at risk.

On marketing to children, ICTI has adopted a voluntary code of practice which will be forwarded to members in the near future, it is imperative that we adopt the code as a matter of urgency.

As an industry we all consider toy safety to be paramount, but our challenge is not only to make safer toys from acceptable materials and components, but to make them greener and to market them responsibly.

Not only do we need to do these things, but we need to promote what we are doing, fighting proposed legislation is pointless and expensive. Assisting in the improvement of impending legislation is productive and cost effective and that is one of the key tasks of the BTHA moving forward.

The BTHA has excellent relationships with Legislators, Trading Standards and key NGO’s, where members encounter problems or need advice on the issues that I have mentioned this morning, or require any other non commercial advice, the BTHA is here to help. Please make more use of the assistance we are able to give.

2010 will be a new start for our industry, the administrations of Youngsters and Woolworths will be behind us, we have a rejuvenated Toy Fair at Olympia that is already almost 90 per cent sold. As an industry we will be starting from a lower base and we need to grasp the opportunity this will offer us with both hands.

Finally I should like to express my heartfelt thanks, to Roland, Natasha, Simon and all the staff at the BTHA for their unstinting efforts on behalf of our industry.

Thank You.

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