CPSIA – Mania Update

Hey, did you ever wonder what it might take to satisfy a mass market retailer on safety in the post-CPSIA world? Here are the requirements of Costco – all 141 pages of fun. It’s a huge file – you may have wait a little while for it to fully download.

These documents took us six man-hours to read – to assess whether or not we understood the rules and whether we knew what to do to comply. The breathtaking out-of-pocket testing costs are scattered throughout the document – see pages 40, 41, 51, 58 and 131-134.

Needless to say, compliance with these rules is an exceptionally expensive undertaking. This kind of duplicative testing (you have to use their testing vendor and cannot supply other independent tests you have already performed and paid for) has never revealed anything that I would call a “safety” issue, but has revealed numerous meaningless niggling issues that cost a ton to resolve. No one is made safer by all this expense but we are sure made poorer. All that matters these days is whether we comply with all 141 pages, every line and every word.

Sometimes, I think the debate over the CPSIA mania is too abstract. It’s too theoretical and sides chosen by whether you “care” about safety or not. Few people bother themselves with the details. Even fewer people are willing to be accountable for what the law has unleashed.

Requirements like this 141-page document were rare before Congress took over safety administration. Now that the mania has been stoked, it is going to be hard to put the genie back in the bottle. People feel secure in a blizzard of new safety requirements. “Obviously” more requirements means more safety . . . .

Ahem, no. First of all, the more requirements, the more likely that focus shifts from safety to compliance. SAFETY AND COMPLIANCE ARE NOT THE SAME THING. Guys, here’s more bad news – tests are not always right and rarely provide meaningful information. Our supply chain is where we build in safety and by running our business properly, tests are rarely useful (we get a LOT of repetitive passing test reports). The blind faith placed in stacks of new rules and “independent” testing as a means to create “safety” is unrealistic. I remember talking to a Whirlpool engineer who assured me that EVERY recent recall of Whirlpool products had been tested under federal and state standards and passed with flying colors. Hmmm. The CPSIA safety system is devolving into a faith-based system.

Even worse and much more profound is the commerce that this kind of mania extinguishes. How many companies can manage these requirements? How many companies will pass on making a deal to avoid the risk and hassle of these purposeless requirements?

Regulators like to stick their heads in the sand. These after-market requirements are “not their responsibility”. Let the market decide, blah blah blah. Unfortunately, they can’t get off the hook so easily – they started the mania and feed it regularly with their big fines and ridiculous recalls. Sorry, we don’t live in a vacuum – yes, the actions of the regulators have an impact on the market.

To get a sense of it, read the 141 pages of Costco requirements. Welcome to my world!

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CPSIA – Mania Update

CPSIA – Publishers HOWL Over Inadequate Waxman Amendment

As rumors swirl over the demise of the Waxman Amendment (CPSEA) over Mr. Waxman’s stubborn refusal to fix the CPSIA, the Publishing industry is bemoaning their fate under the awful CPSIA. Stand in line, baby!

In an article in Publishers Weekly online, the publishers noted that last week’s hearing did not “address the needs of the book publishing industry, which argues that it should be exempted since virtually no ‘ordinary’ children’s books contain lead above the limits outlined in the CPSIA.” Hmmm. Apparently, the publishers don’t have much of a sense of humor about the burden of being swept up in new safety rules that will accomplish nothing:

“’We don’t see the sense of hundreds of thousands of books clogging the queues at the independent third-party testing facilities, only to be found safe, at a great burden of cost to publishers,’ said Allan Adler, v-p for legal and government affairs at the Association of American Publishers. . . . Adler noted that the current stay of enforcement expires in February 2011 and the publishing industry needs a solution before then. ‘We have our eye on the calendar.’ No matter what happens with “ordinary” children’s books, novelty and book-plus titles (such as those with plastic incorporated or toys attached) will still be subject to the CPSIA’s testing and other requirements.” [Emphasis added]

Eyes on the calendar . . . wow, the publishers really seemed pissed off. I wonder why.

Well, since you asked, here is the data for all book recalls in the last 11 years:

• Choking recalls: 8 recalls, 1 injury, no deaths
• Lead recalls: 2 recalls, no injuries, no deaths
• Lead-in-paint: 3 recalls, no injuries, no deaths
• Strangulation: 1 recall, no injuries, no deaths

Obviously a very dangerous category of products – books produced one injury in 11 years. The “injury” was that a child “began to choke”. Oh the horror of it all.

Think of the quality of our government – the book guys have been begging, literally BEGGING, for relief for almost two years now and the Dem-led Congress has utterly refused to act. The most the CPSC could do for them was to announce that books printed after 1985 were lead-free. Everybody, toss out your copy of “1984″. The government says so!

Let’s dig a bit deeper into the five recalls associated with lead. I am sure these injury-free lead recalls over the last 11 years will clarify how at risk we are:

1. Parragon, Inc.: This recall for lead featured lead solder on a jewelry charm. Oooo, that’s scary.
2. St. Martin’s Press LLC: This recall of cloth books featured a “red plastic dot” that contained high levels of lead. I assume this “dot” was made of vinyl and was not in fact coated. One might ask how this might cause lead poisoning. This recall was a head scratcher for many people after it occurred.
3. Martin Designs, Inc.: This recall involved lead paint on the spiral binding of a book.
4. eeBoo Corp.: This recall involved lead paint on the spiral binding of a book.
5. Galison/Mudpuppy: This recall involved lead paint on the spiral binding of a book.

Please note that the lead-in-paint violations were ALSO violations of prior law. Lead-in-paint has been illegal for decades on children’s products.

Can anyone identify the dreaded danger posed by books? As I said long ago in this space, I always thought it was the words that were dangerous in a book. Certainly that’s what seems to be dangerous in a blog . . . .

And perhaps someone from the CPSC (I know you are reading this, I can see you!) could leave a comment here admitting how many man-hours have been spent (wasted) on the book issue under the CPSIA. I bet it’s nothing short of 500 man-hours, and would not be surprised if it’s more than a full man-year.

And remember, when the CPSC devotes all its resources to counting angels dancing on the head of a pin, they have very little time to find dangerous products (no, I mean ACTUALLY dangerous products). Feeling safer yet? [You shouldn't.]

Too bad, book people. You are a “necessary sacrifice” to the greater cause of making children so, so, SOOOOO safe.

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CPSIA – Publishers HOWL Over Inadequate Waxman Amendment

CPSIA – Target Gets WHACKED for Old L-I-P Violations

Target Corporation was assessed a $600,000 penalty today for old Lead-in-Paint violations (2006-2007). Makes you wonder when these matters close, doesn’t it? There were three recalls, two of which were self-reported by Target based on its own internal auditing activities. There were no injuries, either. Target’s good faith didn’t matter at all. In fact, consider this quote from the Settlement Agreement: “Target’s quality assurance procedures were reasonable and satisfied the standard of care. Target’s knowledge when the subject products were imported and offered for sale was that they complied with the lead paint standard. Notwithstanding satisfactory pre-production test results, certain units were subsequently found to contain impermissible levels of lead paint.” Although the CPSC could not pin a “knowingly” violation on them (or impute knowledge, apparently), they had no trouble assessing blame: “[Target] failed to take adequate action to ensure that none [of the recalled items] would bear or contain lead-containing paint. . . .” That’s rather self-evident, isn’t it? The Target penalty is essentially a strict liability penalty, and was not (apparently) mitigated by Target’s good faith or good efforts. Failure to prevent a L-I-P violation is apparently now deemed a bad act whether or not there is credible evidence that the incident could have been avoided – which is a strict liability standard for L-I-P penalties. The CPSC does not want to announce a strict liability penalty policy so they persist in twisting words to create the impression that something “bad” took place. Yes, something bad happened – there were three undiscovered L-I-P violations but there is also considerable mitigating evidence of Target’s good faith efforts to control quality. This means that a defect occurred, which is a risk of any manufacturing business. Elimination of risk from the world around us is a fantasy for the likes of Henry Waxman but for the rest of us, risk is a permanent attribute of our reality. Target can clamp down on quality as much as it wants, but risk cannot eliminated, just controlled. They will fail again, and perhaps the CPSC will be waiting with their bill. The consequences of these high and arbitrary fines will be bad for small businesses. Let me explain. If you sell on a make-to-order basis to large retailers, then the economic consequence of tighter compliance rules is minimal and the law incentivizes the lowest risk behavior (testing for that order to ensure compliance). You can lay off the costs on the large runs for the make-to-order customers. Everything’s fine and prices don’t even go up noticeably. Everybody’s happy. Perhaps this is why you don’t hear Hasbro or Mattel screaming, what do they care? As for the rest of us, we live in a make-to-stock world. What does this mean? Companies in a make-to-stock model order new inventory to store in their warehouse for later sale to customers who haven’t made a forward commitment to buy. Make-to-order means (not surprisingly) that you produce inventory only when you make a sale. If Wal-Mart buys 50,000 units of your widget, you make 50,000 widgets in a single run and send them directly to Wal-Mart. Who needs a warehouse?! We make-to-stock folks need warehouses. Make-to-Stock is almost obviously for lower volume items. If you were selling higher volumes, you would make-to-order, right? Make-to-stock is also riskier, as we buy the inventory before we sell it (again, different than make-to-order). With lower product volumes to absorb the high cost of testing, make-to-stock inventory is at considerable economic risk under the CPSIA. That means all of us small businesses. It also threatens markets depending on make-to-stock products (like schools, specialty retail, special needs, and so on). When Target raises its quality and testing requirements into the stratosphere to avoid paying those annoying $600,000 penalties, it likely means that their door will be closed to small businesses that sell low volume items. Target’s array of children’s products will shrink and the ability of small businesses to grow by selling through major retailers will be limited to high volume, make-to-order items. Thus, your relationship with Target could be in one item per year, rather than the 25 you might get them to pick up for a planogram. This will make the mass market by-and-large the playground of large businesses. Small businesses will be left scraps in the specialty market. Unfortunately, the Target penalty will make even the specialty markets unfriendly for small businesses. First of all, the larger and more sophisticated outlets in specialty will know about Target and will raise their requirements up to a level making low volume items unprofitable to avoid the large and arbitrary fines. These outlets will become like mass market retailers in their practices and assortments. As for the rest of the market, small businesses will also have a difficult time selling there because with so much shrinkage in the available market, the cost per unit for the testing and other CPSIA costs will make it impossible to make money. Many small businesses will either have to shut down, commit to the mass market over the specialty business, or make products that avoid the CPSIA lead and phthalate restrictions (exit the children’s market). It’s unremittingly depressing. I wish I could tell you that I see a weakness in this argument. I invite my readers to dialogue on where the flaw is in my reasoning. Every time I read a press release from the CPSC, read one of their rules or find about one of their enforcement actions, I feel more and more certain in my views. Please set me straight.

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CPSIA – Target Gets WHACKED for Old L-I-P Violations