For those of us residing in Suwannee County, the global trade war between the US and China has impacts closer to home than we might initially think. It affects even the familiar household names that we grew up with, such as G.I. Joe and My Little Pony. The manufacturer of these beloved toys, Hasbro, has found itself squarely in the crosshairs of this turbulent trade war.
More than 50% of the physical toys that Hasbro produces are made in China. Understandably, this has had significant effects on how they conduct their $2 billion business. Gina Goetter, Hasbro’s chief financial officer and chief operating officer, shared her insights during a Fortune COO summit event hosted by Boston Consulting Group.
Operating Amidst Uncertainty
Goetter’s motto to respond has been simple: don’t overreact, operate in facts, and avoid analysis paralysis. She applies this thinking to both her internal responses at Hasbro and when explaining the company’s strategies to Wall Street investors. The ongoing tariff wars and the resulting counter-tariffs have made this approach essential.
Moreover, the level of economic uncertainty that COOs must confront today is potentially greater than during the Great Depression, the 2008-2009 Great Recession, and 2020’s COVID pandemic. Despite this, Goetter and her peers on the panel agreed that many of the lessons they learned about resiliency during the pandemic can be applied to current geopolitical events.
Scenario Planning and Its Impact
Laura Giuliano, a managing director and senior partner at BCG, highlighted the importance of scenario planning in today’s uncertain business landscape. BCG has encouraged clients to embrace this strategy to better prepare their businesses as they face three primary uncertainties today:
- Geopolitical conflicts and tariffs
- Generational shifts in labor
- Technological advancements like artificial intelligence and automation
By implementing scenario planning, businesses can map out the potential impacts they may face with tariffs as low as 5% or as high as 200%. Giuliano stressed that scenario planning has proven to be an effective method to prevent decision-making paralysis, a common reaction when faced with significant uncertainty.
Embracing Agility and Flexibility
One company that has embraced scenario planning is Land O’Lakes. They have created a “war room” to understand the impact of tariffs on the pricing of goods, supplies, and the dairy cooperative’s capital. These skills were developed during the pandemic when supply chain disruptions significantly impacted pricing for farmers, retailers, and suppliers.
Brett Bruggeman, executive vice president and COO of Land O’Lakes, shared that their organization is continuously learning and adapting. This agile approach has helped them navigate these unprecedented challenges.
Shifting Manufacturing Strategies
Hasbro is actively working to diversify their manufacturing away from China. CEO Chris Cocks recently told CNBC that Hasbro aims to source about 40% of its global production out of China by the end of 2026. However, he believes they might achieve this goal much earlier.
Each business division at Hasbro has a team dedicated to figuring out ways to speedily diversify their manufacturing. Goetter also mentioned that the U.S. could and should play a role in Hasbro’s long-term manufacturing footprint.
If more manufacturers follow Hasbro’s lead, it could potentially benefit companies like Link Logistics, established by investment firm Blackstone in 2019 as an operator of last-mile logistics real estate.
Adapting to Rapidly Changing Business Decisions
Sonya Huffman, chief administrative officer at Link Logistics, shared her observations on the rapidly changing business decisions. She noted that Asian third-party logistics companies were leasing a lot of space in West Coast warehouses in anticipation of tariffs hitting their goods. Huffman also highlighted the lessened appetite for signing longer-term, multi-year warehouse leases due to the constantly evolving business decisions.
Eyeing Talent Development Trends
The panelists also shed light on talent development trends. If more manufacturing returns to the U.S., companies will need to rethink how they hire and attract talent for that work. Generational trends are also a complicating factor, with Gen Z shaking things up.
Both Land O’Lakes and Hasbro are evolving their talent management approaches, spending more time co-developing career plans with top managerial talent. They aim to create a culture where employees understand their career development plan and see the company as more than just a place to work.
As Suwannee County locals, it’s clear that the impacts of these global events can reach our doorstep. Understanding these changes can help us better navigate the evolving economic landscape. After all, we’re all in this together.
