Inside the Kenner Factory: How America's Star Wars Toy Empire Was Abandoned

[00:00:00] Speaker 1: In January 1978, a toy company in Cincinnati started shipping plastic men three and three quarter inches tall. By the end of that year, Kenner had shipped about 40 million Star Wars toys and taken in roughly $100 million. Before the original line was retired, it would sell more than 300 million figures. Kenner doesn't exist anymore. Hasbro closed its Cincinnati offices in 2000. The warehouse where Kenner kept its prototypes and original art was cleared out, and nearly everything in it was ordered destroyed. And the downtown block where Kenner had its headquarters for nearly 30 years is now the Hamilton County Justice Center, the county jail. If you had these as a kid, you remember the sound of the plastic bubble cracking off the card. A Luke Skywalker small enough to close your fist around, a Millennium Falcon big enough for him to actually sit inside, and a tiny blaster that disappeared into the carpet by February, and never came back. The strangest part is how it started. For Christmas 1977, Kenner sold Star Wars figures it hadn't made yet. What went on the shelves was a box with an IOU inside, and stores in New York and Chicago sold out of it anyway. Then the owners started changing. General Mills, then a spinoff called Kenner Parker, then Tonka, then Hasbro. Four sets of names on the paperwork in 24 years. In 1974, the county paid $2.2 million for Kenner's entire headquarters block. In 2024, one prototype Boba Fett, a version Kenner never put in stores sold at auction for $1,342,000. This is the story of a family soap business that turned a bubble gun into a toy empire, and of the owners who, one after another, kept the figure and threw away the card. The bubble gun came first. In 1946, three brothers, Albert, Philip, and Joseph Steiner, were running a family business out of offices on Kenner Street, just north of Cincinnati Union Terminal. The family dealt in soap and novelties. The way Philip told it later, Albert saw a little boy playing with a bubble wand and came back with an idea. What about a gun that shoots soap bubbles? They built it, out of metal, and called it the Bubblematic. The new toy company needed a name, so they took the one on the street sign, Kenner. Within a few years, the brothers had moved downtown to 912 Sycamore Street, a row of three old buildings on the block between Court Street and 9th. In 1961, Kenner took over the southernmost one as well, the Rao Building, and the company was now working out of 210,000 square feet. Kenner's own print shop turned out the stationery, the memos, even a seven-color phone book for the staff. And by the 1970s, the north wall of the building carried a huge abstract mural of a child playing marbles, designed by Barbara and David Day, wrapping around onto the Sycamore Street side. If you drove past, you knew a toy company lived there. That's a lot of floor space for a company without a famous character. And for its first 20 years, Kenner didn't have one. What it had was gadgets. In 1957, it was girder and panel, a building set. In 1959, it was the Give a Show projector, a toy slide projector for the bedroom wall. And in 1963, it was a turquoise oven. The idea came from Norman Shapiro, Kenner's sales manager in New York, who noticed street vendors keeping pretzels warm in small ovens. Kenner built a toy version. Instead of a heating element, it used two 100-watt light bulbs, one above the baking tray and one below, so a child could bake a tiny cake without a burned hand. According to Hasbro, it retailed for $15.95. That was a steep price for a toy in 1963, and it sold anyway, about 500,000 ovens in the first year. Three years later, in 1966, Kenner brought out Spirograph, the plastic gears that drew loops no hand could draw on its own. By then, you could see the pattern. Take one simple mechanism, a bubble, a light bulb, a gear, and sell it to parents as something their kid could make. That pattern made Kenner worth buying. In 1967, General Mills, the cereal company, bought it. In 1971, General Mills folded its Rainbow Crafts division into Kenner, which put Play-Doh under the same roof. And somewhere in that stretch, General Mills put a former Mattel salesman in charge of the toy company. He would make the biggest bet in Kenner's history. Bernard Loomis grew up in the Bronx, served with the Army Air Forces in the Philippines during the Second World War, and joined Mattel's sales department in 1960. At Mattel, he worked on Barbie and on Chatty Cathy, and in 1968, he started promoting a line of tiny die-cast cars called Hot Wheels. The next year, on September 6, 1969, a Hot Wheels cartoon premiered on ABC. Loomis understood something a lot of toy men didn't yet: that a toy with a story on television behind it sells differently from a toy on its own. In the toy business, he earned a nickname for his instincts: the man with the golden gut. In 1974, something happened to Kenner's home that had nothing to do with toys. Hamilton County bought the Sycamore Street block, buildings, and land for $2.2 million. The county wanted to put a new corrections center there. It leased the buildings back to Kenner for the time being, and in 1976, the company moved a few blocks away, into the old Kroger building at Vine and Court. So Kenner was barely unpacked in its new offices when the offer that would define it arrived. It wasn't Kenner's offer first. The obvious company to make Star Wars toys in 1976 was Mego. Mego was the sixth largest toy company in America by retail sales that year, and its 8-inch superhero dolls had set the standard size for action figures through the 1970s. By the late 1970s, it was doing about $100 million a year in sales. When the license for Star Wars figures was offered to Mego in 1976, Mego didn't take it. Accounts differ on why. One version says Mego simply turned it down. Another says the head of the company, Marty Abrams, was away in Japan and nobody left in the office had the authority to sign. Either way, the offer moved on. Loomis remembered the man carrying it as Mark Pevers, who handled licensing for 20th Century Fox, and Pevers found Kenner willing to say yes when, in Loomis's telling, nobody else was interested. In the mid-1970s, movies weren't considered good bets for toys. Loomis took it anyway. In an interview years later, he said he liked the name Star Wars, and he liked the robots. The terms were cheap. Kenner would pay a royalty of 5%, going up to 6% if Star Wars ever became a TV series. According to Loomis, Kenner volunteered the higher rate the following year without being asked. His plan was modest. As Loomis remembered it, the thinking was that the picture would come and go, and the following year, Kenner would take a shot at space with Star Wars. By one account, the contract was signed in April 1977, a month before the film opened, and Kenner showed its first prototypes to the filmmakers that March. Then there was the question of size. Mago's figures were 8 inches tall, and the older standard was 12. At 12 inches, a Millennium Falcon or a Death Star would have been impossible to make. The story Kenner people tell is that a designer named Dave Okada asked Loomis how tall Luke Skywalker should be. Loomis held his thumb and finger apart and said, "Luke is this tall." Okada got out a ruler and measured the gap, 3 and 3/4 inches. Star Wars opened on May 25, 1977. In Loomis' own words, "The picture came, but it wouldn't go." And that was exactly Kenner's problem. Kids wanted a Luke Skywalker that summer, and Kenner didn't have a single one to sell. Kenner's John Beck explained at the time that it usually takes a year of production time for toy figures like this. Kenner squeezed the schedule down to seven months. That still missed Christmas. Meanwhile, as Loomis remembered it, the market was flooded with unsafe plastic tubes that were supposed to be lightsabers. Kenner's answer was to sell the box first. The Early Birds certificate package went into stores for the 1977 holidays at somewhere around $10 to $15, depending on who was selling it. Inside was a cardboard display stand printed with 12 characters, a Star Wars Space Club membership card, a few stickers, and a postage-paid certificate. A parent filled in the certificate and mailed it to Kenner. In return, Kenner promised four figures — Luke, Leia, Chewbacca, and R2-D2 — delivered sometime between February and June. That was the whole toy, a promise with the postage already paid. Beck was frank about how unusual it was. "Chances are," he said, "it will never be done again." Loomis later called it one of the two lonesome decisions he ever made. The kit itself was put together by a Kenner man named Ed Schiffman, and by one account, Loomis' entire verdict on it was one word: "Good." Loomis was clear about who the real customer was. He said he made a contract with the parents, not the child. "Buy this package now, and the figures will come." Not everyone went along with it. Some toy shops refused to stock the package at all. One New York store owner was quoted saying his shop sold toys, not promises. The parents disagreed with him. By December 18, 1977, the package was sold out in New York and Chicago. Kenner capped it at 500,000 units, and it couldn't be sold after December 31. In the middle of January 1978, Kenner began shipping figures to several hundred thousand families who had been checking the mailbox since Christmas. And Kenner wasn't done selling to them. There was a second offer, too. Send in a form with $2, and Kenner would mail you a collector's action stand with room for eight more figures, figures that didn't exist yet. That meant a family could pay Kenner twice before a single figure had arrived. Loomis did the arithmetic himself, years later. The certificate program put about 1.5 million figures into kids' hands, and he credited those figures with the sale of $40 million the following year. In other words, the box that was meant to buy Kenner some time ended up selling the next year's toys. By the end of 1978, there were 20 figures on the pegs. In 1979, sales topped $100 million for the second year running. Loomis would later say that the General Mills toy group, fueled by Kenner, passed Mattel in volume and profit. Loomis, remember, had started out at Mattel. Kenner also kept using the trick that had worked with the empty box. In 1979, it ran a mail-in offer. Send four proofs of purchase, and you got a figure from a movie that hadn't come out yet, a bounty hunter named Boba Fett. The plan was for his backpack to fire a little rocket. Kenner dropped the firing mechanism over safety concerns, the worry being that a small child could choke on a small rocket. But prototypes with the working rocket had already been made, and some of them survived. Remember that figure, because it comes back at the end of this story. The Empire Strikes Back came out in 1980, and Return of the Jedi in 1983, and the line kept growing. By 1984, about 80 figures had been released. In 1981, Loomis started a new design outfit inside General Mills, the Manufacturing and Design Group, which worked with American Greetings on Strawberry Shortcake and the Care Bears. And the company that had passed on Star Wars? Mego had tried space on its own, with a line called Micronauts that earned more than $30 million at its peak. It wasn't enough. On June 14, 1982, Mego filed for Chapter 11. By 1983, it was gone. Kenner had beaten its rival. The trouble was, it had done it with someone else's movies, and after 1983, there were no more Star Wars movies on the schedule. Kenner tried to keep the line going without one. In 1985, it released The Power of the Force, 15 new figures, each packed with a collector's coin. It started a droids line with 10 new figures, and an Ewoks line with six. Demand kept slowing anyway. In the middle of 1985, Kenner stopped making Star Wars figures. The original run had lasted about seven years and produced around 96 figures, and more than 300 million units had gone out the door. That same year, General Mills got out of toys. In 1985, it spun Kenner off together with Parker Brothers, the Monopoly company, as a new public company called Kenner Parker Toys. For the first time since 1967, Kenner was on its own. In 1986, Kenner Parker sold off its Lionel Trains division. A year after that, Kenner Parker was gone too. The ownership list from here moves fast. In 1987, Tonka, the toy truck company, bought it. The usual figure for the deal is $555 million. A Bloomberg account from 1993 puts it at $622 million in a hostile takeover. The purchase also brought along Palatoy, a large British toy maker. Tonka's president, Stephen Shank, explained the logic in plain terms. The merger would give Tonka an annual sales base of more than $500 million, which was the size you needed to survive in a toy business where everybody was merging. The problem was the loan. Tonka had borrowed heavily to pay for Kenner Parker, and the cost of servicing that debt meant Tonka itself had to find a buyer. In 1991, four years after Tonka swallowed Kenner, Hasbro of Rhode Island bought Tonka for $486 million. That price covered Tonka, Parker Brothers, and Kenner together, less than Tonka had paid for Kenner Parker alone. So in 45 years, Kenner had belonged to the Steiner family, then General Mills, then itself, then Tonka, then Hasbro. In 1992, it moved out of the Kroger building, and in 1994, Hasbro merged the Kenner unit into a division called the Hasbro Toy Group. The name was still on the boxes. The decisions were being made in Rhode Island. For a few years, though, it looked like Hasbro had bought itself a second golden age. In 1995, Kenner, now under Hasbro, launched a new line of Star Wars figures, the first in a decade. The people designing them were still in Cincinnati. And in 1999 came the first new Star Wars movie in 16 years, The Phantom Menace, and Hasbro made a lot of toys for it. Reportedly, too many. On October 12, 2000, Hasbro announced the bill. It would cut about 5% of its workforce, roughly 500 jobs, and close its facilities in Cincinnati, Napa, and San Francisco by the end of the year. Some Cincinnati staff would be moved to the headquarters in Pawtucket. Hasbro blamed weak demand for Pokemon toys and Star Wars products. Its president, Alfred Varecchia, called the results disappointing. The plan was supposed to save about $100 million. Hasbro would hand off about 75% of its sales volume to outside companies and move more of its design and manufacturing to the Far East, which, the company said, could be done more economically and faster. By one count, 420 people in Cincinnati lost their jobs, and 100 were transferred. That ended more than 50 years of Kenner toy-making in Cincinnati. But closing the offices didn't finish the job. Somebody still had to empty the morgue. The morgue was the nickname for a warehouse area at 2950 Robertson Avenue, where Kenner stored its toy concepts, original art, packaging prototypes, and similar material, years of it. Hasbro didn't want to pay to move it or store it. According to the internal documents that Kenner collectors later posted online, the rule was simple. A piece could be kept only if it was three-dimensional and still useful, something that could be cut up for a new prototype or studied to see how a mechanism worked. Everything else was to be destroyed. The inventory of what was in there ran to 128 pages. The main offices at 615 Elsinore Place were cleared the same way, with anything not shipped to Rhode Island trashed or auctioned off. Now, here's what survived. Some of the toys did. Hasbro still sells the Easy Bake Oven, and the brand has passed 30 million ovens, and the figures survived, in a way nobody at Kenner planned. In July 2019, Hake's auction house in Pennsylvania sold a rocket-firing Boba Fett prototype, one of the figures Kenner had pulled for safety for $112,926. It was the first Star Wars toy ever to sell for six figures. In August 2024, another one went through Golden for $1,342,000, and Guinness later listed it as the most expensive Star Wars action figure ever sold at auction. Ken Golden has said only about 30 of these prototypes were made. Other collectors put the number closer to 100. According to one report, only three of that kind are believed to survive, and the one that sold for over a million is the highest graded. Bernard Loomis didn't see that sale. He moved over to Hasbro in the mid-1980s, left in 1988 to start his own company, and was inducted into the Toy Industry Hall of Fame in 1992. He died at his home in Florida on June 2, 2006. He was 82. Now go back to Sycamore Street. The county's jail project stalled in 1975 for lack of federal money. In the summer of 1977, the same summer Star Wars opened, the county knocked down two of Kenner's old buildings to make a temporary parking lot. The last one came down in 1982, and the Hamilton County Justice Center opened on the site in 1985, its two 10-story towers joined by an enclosed skywalk, with a second skywalk crossing Sycamore Street to the courthouse. The county sheriff runs it, and in 2013, it held an average of 1,424 inmates a day. Kenner's people didn't vanish quite as completely as its buildings. In late 2015, the public library on Vine Street, a short walk from the old Kroger building, put on an exhibit of Kenner toys on loan from collectors, with catalogs from 1966 to 1990 under glass. On December 12, it held a Kenner Day, a day-long symposium where former Kenner employees and executives came back to talk about what they'd made. Two of those Boba Fett prototypes would cover the $2.2 million the county paid for Kenner's entire block. That's $1974 against $2024, so it isn't a fair comparison. It's still a strange sentence to say out loud. Three things come out of this story, and each of them comes with a number. The first is about the license. In 1976, Mego was the bigger toy company, and the Star Wars deal it let go cost Kenner a 5% royalty. Six years later, Mego was in bankruptcy court, and Kenner had sold tens of millions of figures. The second is about the debt. Tonka borrowed heavily to buy Kenner in 1987, and four years later the payments forced Tonka to sell itself to Hasbro for less than it had paid for Kenner Parker. The third is about the archive. In 2000, Hasbro ordered nearly everything in the morgue destroyed rather than pay to move and store it. Collectors now pay six and seven figures for prototypes from those same years. In December 1977, Kenner sold about half a million boxes, with nothing in them but a promise, and by spring the figures showed up, just as the certificates said they would. The Kenner logo went back onto Star Wars cards in 2010 on a Hasbro line called The Vintage Collection, printed to look the way it did in 1978. Collectors figured out a long time ago that a figure is worth more with its card. Kenner's owners never quite did.