RETAIL TRADE: The Little King

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Robot Knock-Off. The gentle art of toy piracy consists of changing a competitor's successful design just enough to evade paying royalties to its originator. "When they copy you, it's piracy," cracks Lou Marx, who pays no royalties in the the U.S. "When you copy them, it's competition." When Marx "competes," he often cuts the price, but he always makes small improvements, e.g., when he "knocked-off" Ideal's bestselling mechanical robot, he put in a battery motor.

With the best idea in the world, a toymaker still takes a tremendous gamble. To put a new narrow-gauge train under Christmas trees two years from now, Marx will invest $500,000 in dies and materials. Unlike most toymakers, Marx finances his operation out of capital, thus can push a toy into production faster than anyone in the industry.

Marx is out ahead in other ways. His production lines are among the smoothest and most fully automatic in the business. Marx constantly analyzes machine layouts to cut wasteful operations. "When we find a machine that will do a 30-second job in 25," he says, "we'll scrap the old one, even if it's new." Marx was one of the first U.S. toymakers to switch to plastic. Though the first plastic toys broke too easily, he now makes most small toys of polyethylene, a durable material that can be turned out up to 64 times faster than metal. Unlike most toy manufacturers, who virtually close down for six months when the Christmas lights go off, Marx sells 90% of his output to the big chains, e.g., Woolworth and Walgreen's, which do a brisk year-round toy business, and Sears, Roebuck and J. C. Penney, which order in huge quantities early in the year. Thus he cuts costs, keeps his plants humming and most of his work force busy three shifts a day all year.

From Toys to Toynbee. When Marx goes off the day shift at 5:30 p.m., he switches from manual output to intellectual intake. In 1942, after his first wife died, Marx enrolled in a night course on Western civilization at the New School for Social Research. "I'd get to feeling morose," he explains, "and hit the bottle." He and Idella now attend five or six classes a week at the New School and New York University in such courses as "American Political Parties" and "Psychology of Religion." He finds that being a night-school student at N.Y.U. gives him a formidable fund of information with which to confound his friends, many of whom are experts in their own lines.

He is also quick to convert night-school theory into practical business use. Two department-store buyers who were moaning about discount-house competition in Marx's office one day were flabbergasted when the toymaker interrupted them: "It's like this guy Toynbee says. It's a question of challenge and response. These discount houses are the challenge that is going to make department stores into merchants again."