HATFIELD, Pa.—As every American child knows, toys come from the North Pole or—more likely—China. But K'Nex Brands LP, a family-owned company in this Philadelphia suburb, is trying to prove they can still be made in America.

Over the past few years, K'Nex has brought most of the production of its plastic building toys back to its factory in Hatfield from subcontractors in China. To make that possible, the company has redesigned some of the toys and even handed over to kids a bit of the assembly formerly performed by hand in...