Last Updated on March 10, 2022 by Dave Farquhar
On Dec 12, 1955, Louis Marx was on the cover of Time magazine, the subject of a story that called him the Toy King. Twenty seven short years later, Louis Marx died in his home, aged 86. The same day, a bankruptcy court ruled that his factory in Glen Dale, West Virginia, had to close for good. Marx and his company died on the same day. Why did Marx Toys close? And why so suddenly?
There were several reasons. I don’t think it was any one thing, but rather, several things that led to another, and the cascade brought Louis Marx’s empire down.
Why did Marx Toys close? There was only one Lou Marx
Louis Marx purposely did not groom a successor. Not only did he not groom a successor, he took steps to ensure he would have no logical successor. The reason has to do with his own rise.
A young Louis Marx started his career working for Ferdinand Strauss, another legendary toymaker who fell hard. Part of the reason Strauss failed was because of a disagreement with Marx. Strauss fired Marx, who then went into business competing with him. Marx took Strauss down, and Marx was afraid of having a protege stab him in the back.
Successorship was a problem for several Marx competitors too. When they retired, Lionel’s Joshua Cowen and Gilbert’s A.C. Gilbert turned their companies over to their sons. Their sons lacked their fathers’ business chops and their passion, and both families quickly sold out. It only took the new ownership a few years to run both companies into the ground.
Arguably, Lionel and Gilbert had other people they could have put in charge and fared better.
Marx had no one.
Not changing with the times
The secret of Marx’s success for decades was its adaptability, and it was adaptable in numerous ways. Marx got its start by buying the tooling for two obsolete tin lithographed toys. By merely changing the printed design on the toys to something current, he turned them into best-sellers again.
Marx continued this cycle throughout its history. When a toy ran its course, Marx could print a new design and give it yet another life, sometimes milking that tooling for decades.
Marx wasn’t first in line to adopt diecast metal and plastics. But once the two technologies were mature and well understood, he went all in. Marx wasn’t the first to get into plastic, but once the company did, it did it extremely well.
But that spark faded in the 1960s and 1970s. Moving into electronic toys would have been the next logical step, but the seventy-something Louis Marx didn’t have it in him to reinvent his company that last time.
Slowness to use television
This probably fits in with not changing with the times. Marx didn’t advertise on television nearly as early as its competitors did. Eventually Marx got with the times and started making TV commercials like its competitors, but by then, it had lost ground.
Marx sold his company to Quaker Oats in 1972 for $53 million. Cereal companies turning themselves into conglomerates tied up with toy companies was a trend. General Mills had acquired Kenner, Parker Brothers, Lionel and the plastic model kit company MPC in the 1967-1970 timeframe. Quaker bought Fisher-Price in 1969 when Herman Fisher retired. Quaker saw an opportunity to put Fisher-Price management in charge of Marx, find efficiencies and synergies, and potentially increase profits.
It didn’t work out that way. Marx’s business was highly seasonal, being dependent on sales of dollhouses, big playsets, and trains. Louis Marx got used to that over the decades. Fisher-Price’s managers couldn’t adapt to that.
Several articles I dug up from the 1970s mentioned army toys as a factor. Louis Marx had served in World War I and was a huge fan of the military, befriending as many generals as he could. He and Dwight Eisenhower ended up being good friends. Marx sold a lot of military toys. This included the little green plastic army men we all remember from when we were kids, but it went beyond that. Marx had elaborate military playsets, and from time to time released military-themed train sets.
Quaker Oats decided that it didn’t want to sell military toys. This makes sense when you think about it. Quakers don’t serve in the military, and can obtain conscientious objector status to exempt themselves from the draft. Printing “Manufactured by Marx, a subsidiary of Quaker Oats” on bags of green Army men would send an odd message. And it was the early 70s. Vietnam wasn’t going well, so I can see why a company might want to reconsider military toys during a time of a highly unpopular war.
The problem was, this eliminated too much of Marx’s product line, and they didn’t have anything else waiting in the wings to replace it.
Looking back now, it’s easy to wonder why Quaker bought Marx in the first place
Marx also had an extensive line of trains–so extensive that a single factory in Girard, Pennsylvania made nothing but trains. In the early 1950s, trains were the must-have toy, but that market took a sharp decline in the mid-late 1950s. Marx handled the downturn better than its rivals, partly because its trains cost so much less than its rivals’ trains. You could afford to buy a Marx train even if you were only going to set it up once in a while.
But two things happened in the 1970s. The railroad industry went into a tailspin, and there wasn’t much about the railroad industry during that timeframe that people admired. Secondly, Lionel, operating as a subsidiary of General Mills, cut prices. Lionel had the bigger name, and Marx no longer had its price advantage.
Quaker refreshed the designs in 1973 on Marx’s plastic trains and made some great sets, but it wasn’t enough. Quaker discontinued Marx train production in 1974. Again, there was nothing to replace the trains in the product line.
The inglorious end for Marx
Quaker sold its Marx subsidiary to the British toymaker Dunbee-Combex-Marx in 1975. Dunbee-Combex had bought Marx’s UK operations in 1967. Quaker took a huge loss in the deal, selling the company for $15 million. Economic conditions in the UK hampered the parent company, and the US subsidiary filed for bankruptcy in 1980. Marx toys limped along until 1982, until a court order closed the last remaining plant in Glen Dale, West Virginia, on the day Louis Marx breathed his last.
David Farquhar is a computer security professional, entrepreneur, and author. He started his career as a part-time computer technician in 1994, worked his way up to system administrator by 1997, and has specialized in vulnerability management since 2013. He invests in real estate on the side and his hobbies include O gauge trains, baseball cards, and retro computers and video games. A University of Missouri graduate, he holds CISSP and Security+ certifications. He lives in St. Louis with his family.