October 7, 2009 by Rick Woldenberg, Chairman, Learning Resources, Inc.
Filed under BLOG, Featured Articles
I know I am crazy, over the edge, worrying about a CPSC so hellbent on enforcing the awful CPSIA that it will chill the market and kill products and companies that are essential to those markets. I know I have a reputation . . . .
Well, consider this recall today: a California company agreed to a recall of 130 pieces of several toys, including an inflatable bat stenciled with “Home Run” on it. The bat was offensive because it violated the phthalates standard. A recall of 130 pieces spread over several toys, means that they must be recalling less than 130 pieces of the inflatable bat. So I called the company (Daiso Japan) and asked them exactly how many bats were involved – the answer? Forty. Feeling safer already?
This is a rather strict standard . . . and completely disproportionate to any conceivable risk. Phthalates do not “ooze” from toys – they must be mouthed and chewed. The CPSC knows this – their own CHAP examined this question and their own scientists participated in “chew tests”. So, in choosing to expend resources on a recall of 40 pieces of an inflatable bat that is clearly not intended or likely to be mouthed, the CPSC is imposing a strict liability standard with no apparent threshhold for recalls – one unit is enough to justify this public humiliation.
This is asinine, of course. How do you expect the business community to react to this development? Well, for one thing, they will overreact. I anticipate that our customers will demand that we prove that everything we make is phthalate-free, toy or not. This means expensive tests to prove that we have not used an additive not found in nature. [It's an ADDITIVE - it will only be there if added.] The application of this rule by the marketplace to every product, whether or not subject to the ban, means that more of our items will lose marketshare simply because we cannot afford to test them to prove we were compliant. The cull of items will accelerate.
This turn in the market will dramatically increase our costs. At this point, we have seen cost increases in the range of 12-40%. Perhaps those surcharges will fall over time, but right now, that’s a pretty hefty chunk of lost profits. The impact will be lower revenues as products are dropped and volumes decline in the face of forced price increases. Price increases in a weak market is not a winning strategy.
Another factor will be fear. Companies will look at this development, connect the dots with the penalty-happy posture of this new CPSC, and realize that any misstep is subject to dramatic punishment. They will pull into their shell – or leave the market. This is called a “chilling effect”.
And what will be achieved? Recalls of less than 130 pieces is pointless from a safety standpoint. The presence of phthalates in a toy is not tantamount to devastating injury, even if banned. The CPSC used to tout its “enforcement discretion” but apparently has no intention of using it here. Even so, the use of phthalates in a baseball bat is hard to link to injury under any rational standards – baseball bats are not teethers. Ergo, there are no rational standards. “Common sense” at the CPSC is a sound bite only and a pathetic figment of the marketers’ imagination.
Enjoy! You can thank the Congressional Democrats for all the good this is bringing to your life.
Read more here:
CPSIA – CPSC Recalls 40 Inflatable Bats for Phthalates