PlayMobil taps McKinsey to help turnaround the business

The famous German toy maker PlayMobil is not playing games after a streak of tough circumstances resulted in revenue loss. McKinsey & Company has been engaged to help the company change course.

The famed toy maker Playmobil has been losing revenue from their products as well as from their theme park, located in the Bavarian town of Zirndorf, just outside the city of Nuremburg.

CEO Steffan Höpfner announced on 20 July that he would leave his position as head of the parent company of Playmobil, Brandstätter Group, effective beginning in August. Playmobil also disbanded an entire department, affecting around 50 workers, with others fearing the same to their departments.

“A transformation process triggers uncertainty – but it's about making the company future-proof,” said company spokesman Björn Seeger in comments to German media.

Playmobil has lost significant ground to their main competitor, Denmark’s Lego, in what has turned out to be a failure in capturing a larger adult client base, as Lego has successfully managed to do. Other difficulties stem from inflation, a rise in the cost of plastic, and costs resulting from the decision to keep production in Europe (with a factory in Malta) rather than outsource to the cheaper far East.

Another important dimension of the internal turmoil at Playmobil appears to be related to labour conditions and unhappy employees. Playmobil’s German workforce is unionised and had lodged formal complaints against the management of the now-former CEO Höpfner. Among the allegations were difficult working conditions and moves from management that appeared to urge certain employees to resign.

The strategic analysis and game plan from McKinsey & Company is expected to be ready in September this year. Though the consultants certainly seem capable of turning things around for the German company, some employees are still fearful they may face big changes, including layoffs.

The recent difficulties at Playmobil might seem out of left field considering the company has done well for decades, creating toys for generations of kids going back to the 1970s. The company has leveled up significantly over the years with a theme park, video games, and even a partnership with the European Space Agency just earlier this year.