First Lesson from the Recent Toy Recalls: The Buck Stops Here

October 3, 2007

The political, public, and legal fall-out continues from the recent recall of more than 9-million lead painted toy products imported from China.  On September 19, 2007 a congressional House Subcommittee held a hearing requesting information from 19 companies responsible for recent toy recalls.  The question everyone wants answered is:  How can costly recalls be avoided in the future?

Relying on government agencies is not the answer.  The Consumer Products Safety Commission (CPSC) is under financed, under staffed and ill-equipped to regulate imported products.  CPSC relies heavily on the industry to police itself.  CPSC was created in 1972 to protect the public against “unreasonable risks” from consumer products that now contribute to 27,000 American deaths and 33 million injuries a year.  Even as the number of domestic and imported goods exploded, the agency has undergone drastic cuts in budget and staff, according to the Consumer Federation of America.  Only 15 trained inspectors regularly monitor goods at U.S. ports where hundreds of millions of toys, about three-quarters from China, come in yearly.  Fewer than 100 inspectors have to cover the rest of the country, usually scouring store shelves for safety problems among the 15,000 products regulated by the CPSC.  By law, the CPSC must report safety concerns within 24 hours of their discovery, a process that usually results in a voluntary recall.  The CPSC can impose fines for failure to report problems, but the penalties are capped at 1.83 million, which critics consider a small amount compared to other consumer protection agencies.  Currently, the CPSC chairman position is been vacant.

Bryan Stockton, Executive Vice President of Mattel International, associated the recent problems with lead contaminated toys on the use of uncertified paint by a Chinese subcontractor.  In fact, this particular subcontractor responsible had maintained a relationship with Mattel for over 20 years.  But it has been Mattel that has born the brunt of political, legal and public image consequences.  The message to companies importing products from international vendors is clear:  the buck stops here.  If something goes wrong, ultimately, the responsibility lies with the United States based supplier.  Here are some practical tips some companies have learned the hard way. 

First, make sure your company has a coherent and comprehensive plan for international quality control.  It is not prudent to assume that if your specs and instructions are without a safety defect, that the importing businesses are going to comply with them.  Therefore, strict quality control enforcement is essential to protecting your company.  If your company does not already have a specific plan for each importing country, consider retaining a team of attorneys and third-party consultants to develop a plan for you. 

Second, have pre-market controls in place.  Demand that your international vendors and their subcontractors meet certain quality control standards before they are approved by your company.  All subcontractors should be approved by your company before they are retained to provide materials or services.  Additionally, it is important to establish a specific training program that educates all international vendors and their subcontractors.  At a minimum, vendors and subcontractors should undergo training at least once a year.  Audit your vendor regularly and insist that they maintain accurate records. 

Third, require any quality control team, whether in-house staff or an independent third party, check the quality of the manufactured goods before they leave the country importing into the U.S.  Checking your products for quality issues when they arrive in the U.S. is usually too late.  Quality control checks in the originating country are more effective and reduce the involvement of the Consumer Product Safety Commission.  Consider whether your company should increase the testing of your product shipments. 

Finally, communicate, communicate, and communicate more.  When communicating across cultures, often understanding U.S. requirements can be lost in translation.  For example, the CPSC has “voluntary” standards in a number of industries that the entire industry complies with as if they were mandatory standards.  Member of these types of industries have found that emphasizing that a CPSC “voluntary” standard must be complied with as if it were mandatory to their overseas suppliers has been a challenge.  As Mattel’s Director of Operation and Safety observed at the Second Biannual Sino-U.S. conference, “You can’t over communicate.”  Training and communication should be directed at all levels of production – not just the highest levels of the importer’s leadership.  Make sure any manuals for safety standards are published in both the originating country’s language and in English.  Ensure that training manuals are required reading for all employees that work as a vendor or subcontractor.  Moreover, as stressed by Chuck Rodgers from Wal-Mart, it is also important that your foreign manufacturers understand why certain policies are important.  This can be accomplished in part through training programs and periodic advisories describing the state of U.S. laws and customs.