Toymakers Assail Costs of New Law

[DainBramaged]

How Consumer Protections Will Be Implemented Is Onerous, Manufacturers Say

Selecta, a German toymaker, carves whimsical cars and characters from native woods, colors them with vegetable dyes and coats them in silky beeswax. No lead, no toxic varnishes. Not even waste -- the company heats its factory with leftover woodchips. Just the kind of toymaker in demand after scares about tainted playthings from China.

But this holiday season, Selecta is preparing to pull out of the U.S. market. Its problem, executives say, is consumer legislation that is adding crushing costs to selling toys in America.

The law, which takes effect Feb. 10, was passed by Congress in response to recalls of lead-laced toys and growing health concerns about chemicals in plastics. The $22 billion toy industry says the requirements have created confusing bureaucratic layers and startling new costs that will decimate a business already struggling through a punishing recession.

For the first time, manufacturers will have to pay independent testing laboratories to verify that every component of a product meets new limits for lead and does not contain six chemicals that Congress has banned from plastic children's products.

Learning Resources, an Illinois manufacturer of educational toys, says one lab wants $24,000 to test a certain model of children's telescopes. Many companies say that the law does not spell out exactly what must be tested and that the uncertainty is creating havoc with business plans.

Manufacturers say the law will have unintended consequences: halting the sale of kids' bicycles, requiring clothingmakers to discard millions of dollars in inventory, and banning products that pose little or no safety threat.

"This business is being ruined, and it has nothing to do with safety," said Rick Woldenberg, chairman of Learning Resources. "It has to do with mania."

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/20/AR2008122001878.html?wprss=rss_business


Money, more important than children's lives. Long article

[Orrex]

1. I've read about this, and I have to say that it's about the dumbest thing I've ever heard

It will instantly and permanently kill countless American businesses, it will do nothing to improve the safety of imported products, and it will guarantee that no new toy manufacturers seek a foothold in the US.

Nice work, Congress. How's that impeachment going, by the way?

[DainBramaged]

2. So nothing should have been done?

DU, where being contrary is the right thing to do. :eyes:

[FormerDittoHead]

5. Maybe thinking it out first.

The way the rule was written benefits the large players who do the greatest volume (Mattel, Fisher Price, etc). The "testing tax" would cost much more per unit to those small companies doing a smaller volumes.

So, maybe the thing to have done would have been to have a severe penalty (and I don't mean a slap on the wrist) for selling tainted toys and have some spot checking, like red paint. Also, I wouldn't want INTENT to be a requirement of penalty. You do it, or even a subcontractor, you pay the fine.

You could even offer a reward offered to independent labs who found toxins in toys, financed through penalties paid by the same offending toy companies.

Small companies who did things right from the start wouldn't be penalized, and large companies who didn't follow the rules would be caught as they have been, and 'motivated' not to do it again.

This was just off the top of my head.

[Orrex]

6. That's the correct answer

Too often Congress legislates out of fear. That's how we got the PATRIOT act; it's how we got the Medicare overhaul, and it's how we got the trillion-dollar bailout.

Cooler heads should prevail, but they seldom do.

[Cessna Invesco Palin]

12. I've been thinking of something similar.

As I've described in other posts in this thread, the current system won't really work anyway. There really isn't an easy solution to this problem. I've been thinking along several avenues, and one in particular is some kind of industry-funded contractor/subcontractor certification system. A lot of these contract manufacturers make toys for a variety of companies, so it might make some sense.

The biggest problem comes when you get down to the subcontractor level. Sometimes these relationships can get so convoluted that even the contractors don't know the origin of their parts, and a subcontractor's subcontractor might not even give you the same product for the same part number every time. This system is just begging to be abused, and it is - frequently.

[anigbrowl]

16. Quite right. Regulation for the sake of regulation is wasteful.

But you can sell anything in America by claiming children are at risk, whether they are or they aren't. Frankly, it's amazing to me that I was able to survive childhood without helmets and location monitors and exhaustive chemical testing on everything I came in contact with. Once you tell people there's a risk they often seem to go into panic mode, without first wondering whether the risk is 50% or 0.00005%.

[AdHocSolver]

4. The businesses that manufactured the tainted toys were located mainly in China.

So how will this action "kill countless American businesses"?

Moreover, if it stops the importation of dangerous foreign products, that is all that is required from the U.S. perspective. The foreign companies will improve the safety of their products, or the U.S. will not buy them.

Moreover, if cheap, dangerous foreign products are not sold here, then retailers who want to sell toys will have to buy them, maybe, from American toy manufacturers?

This problem occurred because retailers look to buy the cheapest products they can in order to maximize profits without caring whether the products they import meet any safety or quality standards.

This problem isn't limited to toys. This country has experienced the importing of tainted pet food, unsafe ingredience to be used in medicine, and vast quantities of shoddy merchandise.

This is what happens when a country suffers from the disease of unregulated corporations.

[Cessna Invesco Palin]

11. Because American businesses have to test their toys, too.

As I said downthread, the burden is much larger on the smaller toy companies.

Moreover, if it stops the importation of dangerous foreign products, that is all that is required from the U.S. perspective. The foreign companies will improve the safety of their products, or the U.S. will not buy them.


Except that it does no such thing. The vast majority of the problems with Chinese products occur when a contractor or subcontractor substitutes a poor quality product for a high quality product to save costs. Testing the *design* of a product doesn't necessarily mean that every subsequently manufactured example of said product will pass the test.

This problem occurred because retailers look to buy the cheapest products they can in order to maximize profits without caring whether the products they import meet any safety or quality standards.

No, the problem primarily occurs because large companies that do their manufacturing in China are not properly inspecting and policing their contractors, and holding them to account when they screw up.

[Eric H]

20. second that

Yep, yibbehobba is right. It's the lack of oversight. Also, keep in mind that many of the high profile recalls in the last few years were blamed on the Chinese contractors, but later admitted to be design errors by the parent, and that the lead violations were already illegal under the FHSA.

What this law will do is drive out the small-to-medium players in the apparel and toy markets and leave **only** the big multinationals. Haynes t-shirts and plastic toys as far as the eye can see.

[chucktaylor]

3. This is the ping pong table, price verses safety. The ball keeps bouncing until nobody can play.

There must be a happy medium.

[annabanana]

7. Sorry.. this is just a bargaining squeal. .

The claim that it would cost that much to maintain an inedpendent testing laboratory is horseshit..
and no where supported.

Don't fall for it folks...

[depakid]

9. I would also note that the Post is not a very credible source for this sort of information

given their history of playing fast and loose with the facts and their deregulatory ideological bent.

[Eric H]

19. Eeek, the uninformed yet certain strike again!

Actually, I am sitting here looking at a variety of e-mails from small manufacturers who are contemplating whether to try to stay in the game (and be compliant) or to get out of it.

Lead Testing in Substrates (Wet Chemistry) $ 50
Lead Testing in Fabric Substrate (XRF method) per shot $ 10
Lead Testing in Surface Coatings/Paint (includes 1st hour $ 75
prep fee)
Lead Testing- Scrapping/sample prep Fee- per hour $ 35
(charged after initial hour)

I'm sure if I look about I'll find a phthalate test quote, but it should be noted that CPSC is far from issuing final rules on lead and phthalate testing. The XRF gun may not make it. I also think that as the number of people who test increases exponentially, the prices and delivery times will shoot up. Bureau Veritas is apparently refusing to give turnaround times anymore.

Now, keep in mind that you have to do this testing for each SKU. So, if you're making 5 kinds of dresses, and each in three colors, that's 15 tests. I've got another e-mail from a woman who makes baby booties. The testing is going to cost her between $5940 and $23,760. She grosses about $16k per year. The testing is going to hit her between 37% and 148.5% of her gross.

[melm00se]

8. the world is shrinking

and the American market, while large, is no longer key to a company's survival. Knee jerk legislation can have the desired effect but also undesirable side effects.

[Cessna Invesco Palin]

13. The American market is key to many global companies.

That's as true of toy companies as it is of car companies. Large companies will have the resources to deal with the new regulations, but smaller ones won't.

[Cessna Invesco Palin]

10. The stupid thing about this law...

...is that it's most harmful to the companies who are actually responsible. A giant that manufactures millions of items in China and doesn't even bother watching its contractors and subcontractors will have to pay a relatively similar amount to the aforementioned German company for testing of a toy. Thus, it ends up hurting the low volume business. I'm not against testing, but this law is poorly thought out.

[jvanvorst]

14. the CPSIA will but the handmade industries out of business

I must comment on this law and devastating affect it will have on US handmade industries. As a parent, I applaud Congress for passing more stringent laws to keep our children safe. I agree that lead levels and phthalate levels should be reduced or banned altogether. HOWEVER, the testing requirements imposed by this law will put most if not all small manufacturers or handmade manufacturers out of business. There is a thriving community of companies that specialize in creating high quality handmade products for children (blankets, bibs, toys). This law will have a devastating affect on this community!

I am a small manufacturer of handmade baby and toddler items including cloth bibs and baby blankets. Everything is handmade by me. I use only the highest quality organic and non-organic cotton, uncoated fabrics. The organic fabrics used have been certified organic by GOTS and must meet stringent requirements (less than 1ppm of lead). All fabrics used to handcraft my products are purchased in the US from US retailers. There is no way that these items will ever harm babies or toddlers. Yet, I will be forced to spend hundreds of dollars testing each product. This will put me out of business.

Under these new regulations, manufacturers of all sizes (including crafters who sell as a side business) would be required to submit each piece or lot to prohibitively expensive government approved third party testing. From what I understand, each test would cost anywhere from $100-400, for each COMPONENT of the of the carrier, doll, clothing, cloth diaper, etc.. That’s a test for thread, buttons and each fabric. Considering the fact that each piece is made from completely different fabrics, it would effectively eliminate the ability of small manufacturers, and those trying to make a little extra money for their families, to do business legally in the US.

I recognize that there have been serious violations by unscrupulous manufacturers (particularly those manufacturing in developing countries). And we agree these violations have to be stopped. However, the companies that have created these safety problems are not small US and European manufacturers of quality goods -- the companies most likely to feel the negative impact of this legislation.

I have read the CPSIA and there appears to be no exception for quantities made, where the garments/products are made or anything else. Nor is there an exception for unadorned fabric components, unfinished wood components, or wood finished with food-grade finishes -- materials which, by their nature, are free of lead and phthalates. In addition, the Act takes a "guilty until proven innocent" approach, which would treat a handmade, unfinished wooden toy that doesn't meet the certification deadline of 2/10/09 as a "banned hazardous substance" which would be illegal to distribute in this country.

To me, this means that grandma selling handmade baby sweaters at the church bazaar is selling contraband if she is unable to produce the required safety certificate. It means that for artisans and small manufacturers in America one thing…unless you are a multi-million dollar company, you have no right doing business in the U.S. So much for the American dream.

February 10, 2009 is being dubbed “National Bankruptcy Day” by many experts in the apparel and toy industry. I expect that if this legislation is allowed to be enacted, it will affect everyone from port workers to parents looking for legal products. Millions of pieces of merchandise will be destroyed because it can’t be legally sold, causing not only environmental problems, but impacting charities that can’t accept donations without a safety certificate.

As a consumer I am worried at the lack of product choice that this situation will create. During the turmoil over lead found in products imported from China I turned to many of these US, European and Canadian small manufacturers for products for my children. Now, many of these companies will be forced out of business and I will have no choice than to purchase products from companies who have lost my trust.

Small and handmade children's product manufacturers are NOT trying to escape regulation. Rather, they should be regulated in an efficient, effective way that allows them to continue to produce high quality handcrafted products. Do not lump these companies in the same pile with companies like Mattel. We are just asking for the CPSIA to take company size and product into consideration.

As you can see, this legislation is well-intentioned, but deeply flawed. I can only hope that Congress and the CPSC will take action in defense of hard working American business owners and help us continue our ethical practices of making and distributing safe products. Please help to defend entrepreneurial America!

[Cessna Invesco Palin]

15. You make some extremely good points.

However, I would be a bit more blunt in my assessment: These regulations do nothing to cure the systemic problem, which in every recently publicized case of lead contamination has been down to a contractor or subcontractor in the Far East substituting a cheap, unsafe product for a less cheap, safe product. The two primary factors driving this are price pressure and manufacturer negligence. For the latter, it's specifically American companies with contract operations in the Far East failing to properly police their contractors (and insist that their contractors in turn police their subcontractors.) For the former, it's market pressure that takes the following form:

Wal-Mart or <insert large retailer here> applies pressure to manufacturers (by which I mean companies like Mattel) to provide them with cheap goods. The manufacturer then applies pressure to its contract manufacturers to provide them with cheap goods. Often these CMs in the far east are working on razor-thin profit margins, so naturally they attempt to apply pressure to their subcontractors, and at this point we enter a web of intrigue and corruption that really has no parallel in the Western world.

Furthermore, regulations of this type almost inevitably have exceptions for artisans or low-volume sellers, and that exemption is completely absent here. It entirely ignores the root problem, which is failure on the part of large manufacturers to police their CMs and subcontractors, and places an onerous burden on the sorts of artistans who have more or less been able to operate safely since time immemorial.

[jvanvorst]

17. No exceptions for certified organic materials either

Yep! I agree! I don't think I've ever seen regulations that don't have some exceptions for small business, good or bad.

This law is just horribly over general...it lumps certified organic fabrics (that must contain less than 1pmm lead) with plastic toys manufactured in China. They aren't anywhere close to each other. So come February 10th, 2009 my organic baby bibs and blankets will be illegal since I cannot afford the roughly $600 it will take to test each one.

so either the CPSIA needs to be amended to include exceptions or alternative testing for small businesses or it must be amended to include exceptions based on materials.

[Cessna Invesco Palin]

18. There's another interesting point.

Obviously some materials (plastics, for instance) are going to have a massively higher likelihood of lead contamination than, for instance, cotton (especially organic certified cotton.) However, the regulations don't seem to differentiate between materials based upon likelihood of contamination. It's worth pointing out that there are plenty of non child-oriented plastic products which may contain lead, and which may come into contact with a child on a regular basis, and thus be problematic. (Plastic utensils, etc are perfect examples.) This isn't addressed by the regulations at all, because the regulations appear to make an erroneous assumption that only products specifically designed for children will come into contact with children.

[jvanvorst]

21. More about how the CPSIA will put small and handmade manufacturers out of business

Learn more about how the CPSIA as currently written will hurt small manufacturers at:

http://www.change.org/ideas/view/save_handmade_toys_from_the_cpsia

www.handmadetoyalliance.org

http://www.etsy.com/storque/craftivism/handmade-childrens-items-unintended-consequences-consumer-pr-3056/

[MilesColtrane]

22. I hope nobody tells them that the elves are thinking of unionizing.

We'll see a lobbying blitzkrieg of historical proportions.