Toy maker Hornby has warned that it is unlikely to make a profit in 2012, according to a BBC business report. One of the key reasons for this is that their supply chain broke down, due to their reliance on one key manufacturer in China, who made 75% of their products. This manufacturer engaged in a plant rationalisation plan, which lead to them being unable to meet Hornby’s orders – so Hornby has switched to other suppliers in order to diversify their supply base.
On top of this, the company won the contract to manufacture Olympic merchandise and toys, such as a Scaletrix type ‘velodrome’. The sales of these products proved to be not as popular as forecast, so customers cancelled orders.