Tegu, Honduras, and a quality product

Chris Haughey, the founder and head of Tegu Toys was the speaker in the course last Thursday, and did a remarkable job of not only telling a compelling story, but discussing the interaction of product quality and economics.  Tegu toys is located in Honduras, but sells its products mostly in the U.S. and other developed countries.  The website for Tegu Toys is here, and it not only describes their products, but also gives information on the story and goals of the company.  There are other websites about Tegu, because it has caught the attention of many people because of its idealistic goals and determination to produce high quality products. An article about Chris is here.

 In brief, Chris graduated with an engineering degree from Stanford and went to work for the Boston Consulting Group.  A business trip to Hondurus along with a deep interest in helping the economy of a poor country made him decide to quit his job, move to Honduras, and attempt to do something about their extremely high unemployment rate by starting a company to make jobs. After some thinking he decided that since excellent hardwood was available, and since there seemed to be a demand for high quality wooden toys in places such as the U.S., high quality wooden toys would be an excellent product, so with some help from his friends and his brother, he started Tegu.Their products are kits of beautifully finished wooden building blocks that contain internal magnets, allowing  them to be combined as desired.

 Chris did an excellent job of telling the story of not only starting a toy company, but doing so by employing people who had little education and few skills, and trying to keep the product both extremely high in quality and also affordable.  Like many company founders, he consistently discovered expenses and  problems he had underestimated, and had to cut costs over time,  but as of now, the company is in good shape and gaining visibility.  And the product, although expensive by many standards, is very effective.  Chris passed out a number of samples to the students, which resulted in an appreciable noise level of clicks and clacks as they happily played with them, even though they were intended for people fifteen years younger.

Tegu is a fascinating combination of idealism and economics, and experiences both the benefits and advantages of operating a factory in a poor country.  It is taking advantage of low labor costs, but bearing the weight of slow government responses and the complexity of international business.  The class was very positive about his presentation, but afterwards, I overheard several of them discussing the differences and similarities between operating a factory in Hondurus for products to be sold in countries such as the U.S., and outsourcing products to China.  Neither helps unemployment in the U.S.  but they tended to think that building products in Hondurus is better than building products in China — complicated, these international issues.  My reaction was one of being impressed.  I think I need to go visit them.