After Years in China, Lincoln Logs Are Now 'Made in the U.S.A.' Toymaker K'Nex is now manufacturing its iconic toy in Maine. Here's why.

This story originally appeared on CNBC

Lincoln Logs, the popular building toy created nearly a century ago by a son of architect Frank Lloyd Wright, is coming home to the U.S.

Toymaker K'Nex has brought manufacturing of the wooden pieces to Burnham, Maine, after decades of being made in China.

"With such an iconic brand like Lincoln Logs, which has been made in China for the last almost 60 years, we've been working on bringing it back for the last four years. We've had some fits and starts, but finally have a supply chain built," said K'Nex CEO Michael Araten.

That supply chain involves Pride Manufacturing, which won the three-year contract and has undergone 17 months of planning, building machinery and testing paints, strength and tensility of the Lincoln Logs to gear up for full production in January 2015. The move means that 80 percent of the iconic toys will be "Made in the U.S.A." in the same place where Pride manufactures golf tees for Wal-Mart Stores and wooden cigar tips for other clients.

"We're seeing products come back into the U.S. Some of our retailers want 'Made in the U.S.A.' products, and we've been in a position where we can certainly provide that, and that has helped us secure some important business for our operation," said Randy Dicker, senior director of manufacturing at Pride.

The manufacturing is in operation 20 hours a day, four days a week, not including the sawmill work where logs are brought in five days a week, mainly from forests in Maine.

Consumer Reports said given the choice between a product made in the U.S. and an identical one made abroad, 78 percent of Americans would rather buy the domestic version and they're also willing to pay more.

Dicker attributed the demand for "Made in the U.S.A." products to consumers and businesses beginning to realize the positive economic impact that results from keeping manufacturing onshore.

"You can't completely give up manufacturing and let it go across the waters for pure price and expect your country to be as strong as it can be. So, I think the whole country is looking at how we get it back here, how to make it a little cheaper. We won't be the best price, but we'll probably be a lot better quality, and that's going to save the customer money in the long run," Dicker said.

Rising awareness

With consumer awareness of where products are made on the rise, retailers and brands like Wal-Mart are looking to move manufacturing back onshore when the economics make sense.

Eighty-five percent of Wal-Mart customers tell the retailer that where products are made is second only to the price when evaluating a purchase, according to Cindi Marsiglio, vice president of U.S. manufacturing at Walmart.

The buzz surrounding the move of Lincoln Logs from China has also helped raise consumer awareness of the product, which Araten and Dicker hope will create even more demand.

"What we've learned when [the news] got out there, that iconic name 'Lincoln Logs' meant a lot to people and the fact that it was going to be made in the U.S.A. again sparked interest from the people and generated interest from other manufacturers that are looking to bring manufacturing of other products back to the U.S.," Dicker said.

Pride Manufacturing, which experienced a downturn during the recession, has already increased capacity and added jobs to meet demand in the growing wooden cigar tip business and anticipates hiring eight more people to fulfill requirements for the Lincoln Logs' contract.

While eight may not sound like a lot, that's on top of the roughly 60 jobs K'Nex has added in the last five years to its facility in Hatfield, Pennsylvania.

Improved margins

And while it used to be much more expensive to produce goods in the U.S., that's not necessarily the case anymore.

"Our margin structure has actually slightly improved as we've brought things back over to the U.S. That wasn't true in the beginning, it was a little bit lower when we started, but we got smarter at it, we got more efficient, and as we've done that, the margins have come back and allowed us to be a nice profitable enterprise yet deliver the value that we need," Araten said.

But with electronics, tablets and smartphones at the top of many youngsters' wish lists for the holidays, does a classic activity toy like Lincoln Logs have a chance to compete for a place under the tree? Araten said he's not worried.

"One of the great lessons out of the recession has been that families with discretionary income, who are buying things during the holiday season, like ours—especially for young children, love to buy things made in America. There is no more powerful brand in the world than 'Made in the U.S.A.,'" he said.

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