What Happened

Mattel (MAT), the Hot Wheels toys and Barbie dolls maker will close its Mega Bloks factory in Montreal, Canada. The factory will be shut down in 2021, but before that, the company has plans to consolidate its two manufacturing facilities in Mexico.

Mattel had purchased Mega Brands for $460 million in 2014. Mega at that time was the No. 2 player in the $4 billion construction buildings sets category.

In a statement Roberto Isais, the chief supply chain officer at Mattel said, “Over the past year, we have worked to transform our global supply chain which we believe is becoming a competitive advantage. We are continuing to optimize our manufacturing footprint, increase the productivity of our manufacturing infrastructure and achieve efficiencies across our global supply chain.”

Why It Matters

Shutting down of the manufacturing facility located in Montreal’s St-Laurent suburb will lead to 580 job losses. The company will, however, retain the Mega corporate office, as well as the design and brand functions in Montreal, which employ nearly 230 people. 

The move by Mattel is in line with other toy manufacturers, such as Hasbro Inc. (HAS), which has been diversifying its manufacturing operations since 2012. Hasbro is in the process of shifting its manufacturing out of China and is exploring other opportunities in Mexico, Vietnam, and India.

Price Action

Mattel shares traded 0.57% lower at 14.00 in the after-hours session. On Friday, Mattel shares had closed 1.61% lower at $14.08.