Editors’ Note

In his current post since 1989, Alan Hassenfeld began his career with Hasbro, Inc., in 1970. A graduate of the University of Pennsylvania, he has served as Vice President of International Operations, Vice President of Marketing and Sales, Executive Vice President, and President. An active philanthropist, Hassenfeld serves as the Chief Adviser to the China Toy Association, is on the board of trustees at the University of Pennsylvania, and is a member of the Dean’s Council for Harvard University’s Kennedy School of Government. In addition, he is a member of the board of overseers of Brown University’s Warren Alpert Medical School, a trustee of Bryant University, and a trustee emeritus of Brown University.

Company Brief

Headquartered in Pawtucket, Rhode Island, Hasbro, Inc. (NYSE: HAS) is a worldwide leader in children’s and family leisure-time entertainment products and services, and designs, manufactures, and markets games and toys. The company (www.hasbro.com) markets its Playskool, Tonka, Milton Bradley, Parker Brothers, Tiger, and Wizards of the Coast brands both in the United States and internationally.

What is the ICTI CARE Process, and what impact is it having on the market?

The ICTI CARE Process came out of ICTI, which is the International Council of Toy Industries – an association whose members are national toy associations. An ICTI Code of Business Practices was established in 1995. Then in 2002, ICTI had a group meeting in Beijing, where it unanimously agreed to launch a worldwide auditing process to implement the code with a guidance document and audit protocol. In 2004, it agreed to set up the ICTI CARE Foundation to oversee the ICTI CARE Process with a separate board of governors, so it could be totally transparent. I became Cochair with Maria Cattaui, who at that time was head of the International Chamber of Commerce in Paris. This was a global initiative – no one country was taking the lead. In the beginning, the manufacturers were willing to join. But a code such as this cannot be successful unless the brands and the retailers are also involved. It’s remarkable that in just three years, about 70 percent of the world’s toy retailers have joined the Process, along with about 70 percent of the toy brands, and maybe 60 to 70 percent of the manufacturers.

It sounds as if support from manufacturers and retailers has grown a lot since the beginning of the initiative.

That’s right. Support has grown immensely, especially since the retailers have become part of the program. One of the problems for the factories was that if they had multiple retail customers, they might be audited many different times, according to each retailer’s standards. What we’ve done is incorporate all the codes into one for the entire toy industry. And there’s increasing pressure to do something like this on a global basis across many industries.

So, we’re doing a lot of things right, but we’re also learning every day. There are a lot of people watching us. We’re doing the right thing for workers, we’re doing the right thing for consumers, but we should also understand that we’re doing the right thing for ourselves because, in reality, we’re making the manufacturing process a little bit easier. In most cases, you’ll find that the people who violate intellectual property laws or make cheap, unsafe products are also running factories that treat workers badly. None of us can compete with factories that have bad work ethics. So, in one sense, if we terminate a factory, it’s almost like a failure. Our ability to mediate and help educate factory managers in proper work ethics is really what this is all about.

The industry has taken a beating in the recent past over issues of safety. Do the media sometimes push that too far?

Yes, I think the media overdo it, and the politicians overdo it as well. But when it comes to children, who are our greatest natural resource, there can be no mistakes. There has also been a great hullabaloo about China, and this is where I think the media are wrong. The Chinese government does not make toys – factories and companies make toys. It is our responsibility to make safe toys. There was too much bashing of China. The total number of toys recalled in 2007 turned out to be about 1 percent of all the toys sold in the United States last year. Of those, 25 percent were recalled because of lead and the other 75 percent because of design flaws. So I don’t think the media had the story right.

However, for every one thing that is wrong, there are a lot more things that we do right. The ICTI CARE Process is handling human rights, but someone now has to handle safety certification. Because of what has happened, the Chinese will not let anything be exported from China unless it has been certified safe. The U.S. Toy Industry Association and the U.S. government are coming up with a certification process. The other thing that I’m now calling for, through ICTI, is one global safety code, which covers all the most important items, rather than the seven or eight codes that are out there right now confusing people.

Has the U.S. lost its edge in manufacturing toys?

No, this is just one of those myths. The toy industry moved manufacturing out of the United States in the early ’60s. It went first to Japan, then to Taiwan, Korea, and Hong Kong, and began to move from Hong Kong into China in the mid ’80s. The jobs that left America in the toy industry left at least 20 years ago. When people cry over spilled milk that spilled a long time ago, it stops us facing the future. America is the greatest country as far as innovation is concerned. We have to take what we do well and continue to be creative, but we have to make the product in places that are competitive. Hasbro still has factories in both Ireland and Massachusetts, and we’re proud of those factories. But those factories manufacture games, with incredible technology and equipment that’s heavily automated and needs an incredibly good workforce. The very labor-intensive jobs, like painting, sewing, and gluing, left the U.S. ages ago.

Corporate social responsibility has always played a part in your career. Do corporate leaders need to build a culture of giving in their organizations?

I’ve watched many CEOs and chairmen talk about corporate social responsibility and ethical behavior when they don’t feel it and it shows. Unless you feel it inside your heart, it will not happen in a company. It has got to happen at the top, because if the CEO gives it lip service and nothing more, people know he doesn’t mean it. Whereas, if you believe in it, you are doing the right thing by the shareholder in the long run, because you are creating a firm foundation for your business going forward.