That is not true (sorry to disagree with you) as I run a company dependent on the price of oil to survive. To fill our tank that refills the trucks can cost up to $15,000.00 a month if the oil prices skyrocket. We can only buy so much at a current price because if you bought to much into the future, we could put the company we bought it from out of business. I have discussed this with someone in the toy manufacturing industry that I fully trust and after listening to him, I believe this to be one of the many problems involved, but it can be a major one. This would also explain why DST sent out so many preorders at the first of the year when oil prices dropped. DST does not have the size to buy plastic in sufficient quantity to lock in a price. Nor do they have the storage room for it to buy it now and hold onto it.
Don't be sorry FHC!
I understand what your saying. And I completely agree when your talking about fuel cost. We both know that fuel actually has a shelf life so yeah, you can't really control something like that when your trying to cost out a toy line 18 mos in advance. Unless... you run a FOB operation, in which case it's the distributers responsibility to ship the product. But DST doesn't do this, so yeah I agree the cost of shipping makes a difference.
Now, I too have talked with people that have actually manufactured toys, and what they tell me is that a typical contract locks in things like a unit price, which includes all the raw materials, such as plastic. Usually that contract specifies a specific window when the factory will make your product. If you miss that production date due to your fault, the per unit price may change, but I digress. All the real money seems to be in the Tools and Shipping... not in the actual cost of the plastic... or even the labor really. For example I had a discussion about the cost of DC Direct (DCD) toys, a product that typically retails for $18 ea at B&M's, and I was told that actual cost to manufacture each was ~$3. That includes tooling, labor and all raw materials... but I don't know about shipping!
See it's not DST that has to buy the raw materials, it's the factory. The way I understand it, is that it's sort of like a group health insurance... the factory wants to keep running and keeping making product, but they have to deal with a number of (smaller) companies, like DST, so to be efficient they sell each a manufacturing slot, and bundle the cost of the raw materials together for them all. Of course if you can't commit to a slot, then you can't get the benefit.
All this may lend directly to what your saying... see if DST waits on all these little runs and does them all at once, then they can leverage the scale of the raw materials better... also it may be that there just aren't enough smaller companies making toys right now to be able to fill enough slots to make it worth the factories time!
In the end, I guess what I'm saying, is that, while yes cost of oil impacts the price in the short term for any product (via shipping), I don't agree that it impacts raw materials like plastic short term. Long term, absolutely! Also it's obvious that there are many more complex issues with regards to the over all costs... franchises fees, etc... and I'm sure I'm misdirected on some of these. Also it's hard to be able to really intelligently discuss something that we aren't privy to, i.e the actual terms of the contracts that DST gets from a typical factory.
