While Barbie herself is produced in China and Indonesia, her home, the “Dreamhouse,” is made in Mexico. Manufacturing the Barbie doll in Asia is ideal because the production is intricate and requires careful handiwork that is well-established in the region. Moreover, the doll’s predictable demand, small size, and light weight make it easy and cheap to transport in bulk.
Barbie dolls are also free from U.S. tariffs, which ensures that these economic fundamentals persist and that American consumers gain. In fact, thanks to lower doll prices and significant U.S. income gains, working mothers can buy up to four times as many Barbies for their children compared to their 1959 counterparts.
On the other hand, Barbie’s Dreamhouse is three-stories high and heavy (over sixty times the weight of a single doll). Demand for Barbie’s humble abode is inconsistent but typically peaks around Christmas.
These factors make production of the accessory ideal for Mexico, where Mattel recently consolidated its North American operations into its biggest factory yet. Manufacturing the Dreamhouse in Mexico allows Mattel to save on transport-related costs. The company can plan logistics relatively late into the lead-up to Christmas, providing the company more time to gauge demand. Further, the proximity means they can ship to major American retailers within 48 hours.
And this quick turnaround would not be possible without the North American Free Trade Agreement (now the United States-Mexico-Canada Agreement), which streamlined customs procedures so that trucks can seamlessly move between the United States and Mexico.
However, even with a U.S. free trade agreement in place, there are risks associated with producing in Mexico. For example, the infrastructure is not as reliable as in other countries. Mexico’s electricity and water supply can be fitful, and it may not be able to keep up with new demand. As more companies are moving production to Mexico, the infrastructure could become strained, particularly as Mexico’s current administration is increasingly involved in the electricity industry.
The state’s role could undermine modernization of the sector, hindering efficiency improvements and the ability to increase electricity generation to meet heightened demand. Without reliable power supplies, costs for manufacturers will likely rise, jeopardizing opportunities for new investment in Mexico. Thus, for the time being at least, Barbie production remains in Asia.
This arrangement provides a perfect example of what “manufacturing” entails in the 21st century, despite the common misperception and political rhetoric. To make anything, pre-production design and innovation as well as post-production sales, marketing, and distribution is needed to sell the actual produced or transformed good.
These different aspects of the production process tend to occur in different places simultaneously, whether in different cities, states, or countries. Indeed, some parts of Mattel’s production process are “offshored” but the most innovative and successful American companies—like Mattel—operate transnationally to supplement, not replace U.S. workers and operations. Mattel has an important and significant presence in the United States primarily employing Americans—about 14 percent of their workforce—for the highest value-added jobs in design, marketing, sales, and finance. However, broadly, transnational firms employ millions of workers, more than half of which are employed in the United States.
Just as any one thing—beach, horses—did not define Ken’s success, the number of U.S. “manufacturing” jobs do not define the United States’ success. Policymakers should be careful to not change the diversity of American businesses’ operations, which is responsible for creating and maintaining the most Barbietastic companies in the world.
