message to Capitol Hill
Final Case Analysis Paper Focus of the Final Case Analysis Paper: The Final Case Analysis Paper should focus on real life and real time application of topics covered in this course; the uses you have seen and the uses you can envision. Read Case Eight, Mattel and Toy Safety (PROVIDED AT THE BOTTOM OF THIS PAGE). This case describes the 2007 Mattel toy recalls, which were in response to findings that several children’s toys were coated in lead-based paint. Write an eight- to ten-page paper (not including the title and reference pages), that addresses the following:
1.Explain if Mattel acted in a socially responsible and ethical manner with regard to the safety of its toys.
2. Describe what Mattel should or could have done differently.
3. Describe who or what was responsible for the fact that children were exposed to potentially dangerous toys.
4. Explain the best way to ensure the safety of children’s toys and consider how the following groups would respond: government regulators (in the United States and China); consumer advocates, the toy industry, children’s product retailers, and standard-setting organizations. Explain the differences in their point of view.
5. Describe what you think is the best way for society to protect children from harmful toys and discuss the appropriate roles for various stakeholders in this process.
Writing the Final Case Analysis Paper The Final Case Analysis Paper:
1. Must be eight- to ten- pages in length (excluding the title page, references page, exhibits, etc.) and formatted according to APA style as outlined in the Ashford Writing Center.
2. Must include a cover page:
a. Title of paper
b. Student’s name
c. Course name and number
d. Instructor’s name
e. Date submitted
3. Must include an introductory paragraph with a clearly stated thesis or topic.
4. Must address the topic of the paper with critical thought. That is, state your response to the content, either positive or negative, and then defend your position. If multiple options/alternatives/positions are present and are being rejected, you must also defend the reasons for rejecting an option.
5. Must conclude with a restatement of the thesis or topic and a closing paragraph that summarizes the main point or points of your paper.
6. Must use at least four scholarly sources in addition to the textbook.
7. Must include, on the final page, a reference list that is completed according to APA style
Mattel and Toy Safety
On September 12, 2007, members of Congress, their staff, reporters, prospective wit- nesses, and curious members of the public gathered in a U.S. Senate hearing room to consider the issue of toy safety. In the weeks leading up to the hearing, Mattel, Inc., one of the world’s leading toy makers, had ordered a series of recalls of children’s playthings that had been found to be coated with lead paint. Lead—a heavy metal sometimes added to paint to intensify color, speed drying, and increase durability—was a potent neuro- toxin and potentially dangerous to children who might ingest bits of paint. The toy recalls had alarmed parents and consumer activists, as well as the toy industry, retailers who marketed their products, and product safety regulators. Now, as the holiday shopping sea- son approached, everyone wanted to make sure that toys—80 percent of which were made in China—were safe. “It’s scary,” said Whitney Settle, a mother from Petroleum, West Virginia. “I have a 2-year-old boy who chews on everything. I doubt I am going to buy [Mattel toys] anymore—or it’s going to make me look twice.”1
Headquartered in El Segundo, California, Mattel, Inc., was the global leader in the design, manufacture, and marketing of toys and family products. Mattel toy lines included such best-selling brands as Barbie (the most popular fashion doll ever introduced), Hot Wheels, Matchbox, American Girl, Radica, and Tyco, as well as Fisher-Price brands, including Lit- tle People, Power Wheels, and a wide range of entertainment-inspired toys. Mattel had long enjoyed a reputation as a responsible company. Forbes magazine had recognized Mat- tel as one of the 100 most trustworthy U.S. companies, and CRO magazine had ranked the company as one of the 100 Best Corporate Citizens. Mattel employed more than 30,000 people in 43 countries and territories and sold products in more than 150 nations. In 2006, the company earned $592 million on sales of $5.6 billion.
In 2007, Mattel manufactured about 65 percent of its toys in China. When the company first began shifting production to Asia in the 1980s, it used outside contractors. Mattel soon became concerned, however, that outsourcing put the company’s intellectual property at risk, as outsiders could learn to make imitation Barbie dolls and other trademarked products. Believing it could handle manufacturing more securely by operating its own fac- tories, in the 1990s Mattel built or acquired production facilities in China, Hong Kong, Indonesia, Malaysia, the Philippines, and Singapore. In 2007, nearly 50 percent of the company’s toy revenue came from core products made in these company-run plants, which included five factories in China. Mattel also contracted production to between 30 and 50 Chinese firms, many of which had relationships with other subcontractors. In 2007, pro- duction throughout the toy industry was shifting toward China, in part because the weak- ening Chinese currency made goods manufactured there increasingly cost-competitive.
In 1997, Mattel had developed a detailed code of conduct, called its Global Manu- facturing Principles. Covering both Mattel’s factories and those of its contractors and suppliers, the principles addressed a wide range of labor issues. These included wages (at least minimum wage or local industry standard, whichever was higher), child labor (workers had to be at least 16 years old or the local minimum, whichever was higher), and health and safety (compliant with the standards of the American Conference of Gov- ernment Industrial Hygienists). In a move that was at the time unprecedented, the com- pany hired S. Prakash Sethi, a professor at Baruch College in New York, to carry out independent audits to assure compliance with these standards. Mattel gave Professor Sethi a generous budget, access to all facilities and records of the company and its con- tractors, and permission to make the results of his inspections public. Since 1999, the International Center for Corporate Accountability (ICCA), the nonprofit organization headed by Professor Sethi, had conducted audits of facilities operated by Mattel and its contractors at least once every three years and more often if it found problems. Over the years, Mattel had terminated several dozen suppliers for noncompliance and made numerous changes in its own plants.2
Although its Global Manufacturing Principles focused exclusively on working conditions, Mattel also took steps to ensure product quality and safety. In China, Mattel tested products both at its own facilities and in special test labs. The company had specific standards with respect to lead in paint. Robert A. Eckert, Mattel’s CEO, described the com- pany’s safety protocols for paint:
For years, Mattel has required vendors to purchase paint from a list of certified suppliers or test the paint that they used to ensure compliance with the established standards; audited the certified paint suppliers to ensure compliance with lead level standards; periodically audited vendors to ensure that they are comply- ing with paint requirements; conducted lead level safety tests on samples drawn from the initial production run of every product; and had protocols for further recertification testing for lead on finished products.
On August 1, 2007, Mattel issued a voluntary recall of 1.5 million Chinese-made, Fisher- Price products, including the popular Big Bird, Elmo, Diego, and Dora the Explorer characters, after the company learned that they contained too much lead. The company had begun a special investigation in July after a European retailer found lead paint on a Mattel product. Two weeks later, Mattel recalled another 436,000 toys—the Sarge toy from the Cars die-cast vehicle line—again because of high levels of lead. The second recall also included 18.2 million toys, such as Barbie, Batman, Polly Pocket, and Doggie Daycare play sets, that contained small but powerful magnets that could fall out of the toys and be swallowed by young children. Once ingested, these magnets could attract each other and cause a potentially fatal intestinal perforation or blockage. Mattel’s ongo- ing investigation continued to turn up problems, and in early September the company issued a third recall of 11 different products—eight pet and furniture play sets sold under the Barbie brand and three Fisher-Price toys.
As it issued one recall after another, Mattel sought to reassure its customers. The com- pany told the public that it was aggressively working with the Consumer Product Safety Commission in the United States and other regulatory agencies worldwide that governed consumer product safety. It provided a comprehensive list of all recalled products on its Web site and a toll-free number to respond to consumer questions regarding the safety of its products. The company also placed full-page ads in The Wall Street Journal, The New York Times, and USA Today. It also issued many press releases, including one that said, “Mattel has rigorous procedures, and we will continue to be vigilant and unforgiving in enforcing quality and safety. We don’t want to have recalls, but we don’t hesitate to take quick and effective action to correct issues as soon as we’ve identified them to ensure the safety of our products and the safety of children.”
Mattel instructed customers who had purchased the recalled products to take them away from their children, and it provided them with a prepaid mailing label to return affected toys for a refund or safe replacement product. Although Mattel did not reveal how many toys were actually returned, past recalls of inexpensive toys had yielded return rates below 5 percent, according to product safety experts. The company indicated that it would safely dispose of the returned products and recycle some materials into other products, such as park benches.
What Had Gone Wrong?
In its investigation, Mattel learned that some of its external vendors and their subcon- tractors were cutting corners to save money and time. Lead paint was at least 30 per- cent cheaper than unleaded paint, and some thought that it produced a richer color and was easier to apply. Mattel discovered, for example, that the main supplier of the Cars product, the focus of the second recall, was a Chinese contractor called Early Light Industrial. This firm had subcontracted the painting of the toy to another company, Hong Li Da. Although the subcontractor was supposed to use paint provided by Early Light Industrial (which had had been inspected and approved for use in toys exported to the United States), instead it substituted lead paint. “Early Light, the vendor, is every [bit as] much the victim as Mattel is,” Eckert later commented. “The subcontractor chose to violate the rules.”4 In another instance, Lee Der Industrial, a contractor, had used paint supplied by another firm and had apparently failed to test it for lead. In total, Mattel’s investigation uncovered seven contractors that had been involved in making the lead paint–coated products.
In its investigation of the problem with the small magnets, Mattel found that the problem lay in the toys’ design, not their production. While the company routinely put its products through rigorous stress tests, it did not anticipate that if two or more high-powered magnets were ingested at once they could close off the intestines if they became attached inside a young child. Once it discovered this possibility, Mattel changed the design of the toy; in the newer versions the magnets were locked into the products so that a child could not break them free and accidentally ingest them. (The Consumers Union reported that one toddler had died and 12 children had been injured as a result of swallowing magnets, but did not say if Mattel toys, in particular, had caused these injuries.)
In the United States, the Consumer Product Safety Commission (CPSC) had responsi- bility for protecting the public from unreasonable risks of serious injury and death from more than 15,000 types of consumer products, including children’s toys. The commis- sion’s mandate included developing uniform safety standards for various products and, if necessary, issuing a voluntary recall of unsafe products. Some observers believed that the CPSC was underfunded and understaffed, relative to the breadth of its mission. In 2007, the commission had an annual budget of $62 million and employed around 400 people (down from a high of around 900), including about 15 investigators charged with visiting ports of entry to inspect imports and 100 charged with monitoring products on store shelves. According to the Consumers Union, an advocacy organization, Chinese products in 2007 accounted for two-thirds of the products the CPSC regulated and 60 per- cent of all product recalls, compared with 36 percent in 2000.
When Mattel announced its first recalls in August, the CPSC’s acting commissioner, Nancy A. Nord, attempted to reassure the public. She told the press that she was nego- tiating with representatives from the toy industry to conduct broader testing of imported toys and urged consumers not to overreact to news of the recalls. “In today’s environ- ment, it is easy to take recalls out of proportion. By no means is it the largest recall this agency has done, and it represents only a tiny fraction of the hundreds of millions of toys that are sold in the United States every year.”5
In China, government standards required that paint intended for household or consumer product use contain no more than 90 parts of lead per million. (By compar- ison, U.S. regulations allowed up to 600 parts per million, although they banned the use of lead paint in toys entirely.) However, enforcement of the lead standard in China was lax, according to some observers. “There is a national standard on the lead level in toys,” said Chen Tao, sales manager for a toy factory in Shantou, in southern China, “but no one really enforces it. Factories can pick whatever paint they want.”6 Whether lead-based paint was used or not was generally left up to the customer. “It depends on the client’s requirements,” explained a manager at another Shantou manufacturer. “If the prices they offer make it impossible to use lead-free paint, we’ll tell them that we might have to use leaded paint. If they agree, we’ll use leaded paint. It totally depends on what the clients want.”7
In the wake of the toy recalls, Chinese officials and regulators took several steps. In mid-August, the Beijing government established a cabinet-level committee, headed by Vice Premier Wu Yi, to improve the quality and safety of Chinese products. It suspended the export licenses of two companies, Hanshen Wood Factory (which had made some lead-painted Thomas & Friends toys recalled by another company) and Lee Der Indus- trial. Zhang Shuhong, one of the owners of Lee Der Industrial, reportedly killed himself by hanging in a factory warehouse shortly afterward.8 In September, the government introduced a new food and toy recall system and announced a “special war” to crack down on poor-quality products and unlicensed manufacturers. Beijing’s largest state-run television network began broadcasting a special called “Believe in Made in China,” featuring interviews with government regulators, reports on China’s biggest companies, and segments on foreign buyers of Chinese goods. The government also agreed to prohibit the use of lead paint on toys exported to the United States, to increase inspections of its exports, and to hold regular talks with American safety regulators.
In September 2007, as the hearings commenced, many of the key players in the toy safety crisis gathered to offer their perspectives to members of the Senate. Those testifying included representatives of the Consumer Product Safety Commission, the consumer advocacy organization Consumers Union, the American National Standards Institute, the Toy Industry Association, the retailer Toys “R” Us, and Mattel.
Consumer Product Safety Commission
Acting Commissioner Nancy A. Nord offered the following comments at the hearing:
I would like to report to you in more detail today on the initiatives that the CPSC has undertaken in recent years to address the growth in imports and to relate to you what actions we are planning for the future. . . .
The issue of Chinese imports cannot be adequately addressed by any one remedy but rather requires a multi-pronged approach to the problem. The CPSC’s plan of action includes dialogue and initiatives with the Chinese government; working with the private sector including Chinese manufacturers directly; increased surveillance and enforcement activities at the borders and within the marketplace; and modernization of our governing statutes.
[We are working with Chinese regulators on] specific cooperative actions . . . to improve the safety of consumer products: training; technical assistance; a mechanism to provide for “urgent consultation” when necessary; information exchanges; and the creation of Working Groups to address issues in four priority areas [including toys].
The second prong of our plan to address Chinese imports is to work with the private sector including Chinese manufacturers. One of the commission’s first initiatives in responding to the growth in imports was to establish the Office of International Programs and Intergovernmental Affairs to support a comprehensive effort to ensure that imported consumer products complied with recognized American safety standards. . . .
A major emphasis of this program is working with foreign manufacturers to establish product safety systems as an integral part of their manufacturing process. We have found that many overseas manufacturers, particularly those from the developing world, are either ignorant of existing voluntary and mandatory standards or simply choose not to design and manufacture their products to those standards. The CPSC has also conducted industry-specific safety seminars and retail and vendor training seminars in China. . . .
The third prong of our plan of action for Chinese imports is increased surveillance and enforcement activities. . . . CPSC obviously attempts to keep dangerous products from entering into the country in the first instance. However, in the event a defective product does enter the stream of commerce, CPSC has been taking stronger measures to effectively remove such products from the marketplace. . . .
CPSC staff is also working with various domestic and international associations and standards groups to assure that a strong message is being delivered to Chinese manufacturers and exporters. . . .
The fourth prong of our plan of action for Chinese imports is the modernization of our governing statutes to better allow us to address the large influx of imports. . . . For example, . . . [we propose to make] it unlawful to sell a recalled product in commerce. Consumers Union
Sally Greenberg, senior product safety counsel for the Consumers Union, a private con- sumer advocacy organization and the publisher of Consumer Reports magazine, testified,
Unfortunately, the system in place to protect consumers—especially children— from unsafe products has broken down. The recent avalanche of toy recalls, involving Chinese-made toys made with excessive lead levels in the paint, has exposed millions of children to a highly toxic substance and created a crisis of confidence among consumers who feel that they can trust neither the toy indus- try nor our government to keep their children safe. . . .
Never in its history has the CPSC been so challenged as an agency. . . . [W]e believe the agency’s leadership has failed to use the regulatory authority it has to fine companies that violate its rules, has refused to request more funding and resources even while admitting it cannot carry out core functions, and has opposed efforts by consumer groups to provide the commission with the funding and tools it needs to keep consumers safe. In addition, further exacerbating the CPSC’s weakened state, the current administration has instead imposed additional cuts on the already woefully underfunded and understaffed agency. . . .
[W]e recommend that Congress set a goal of funding the CPSC at least to reach 700-plus employees, [which] the agency had when its doors opened in 1974. Consumers Union commends the toy industry, including retail giants such as Toys “R” Us, for embracing the idea of third-party testing and inspecting, and for welcoming the federal regulatory involvement in making testing and inspec- tion mandatory.
Greenberg also took the opportunity to press for a proposal backed by her organization to protect consumers from unsafe Chinese-made products.
On July 18 of this year, Consumers Union . . . [proposed] eight steps that should be taken to help safeguard the health and safety of American consumers from the onslaught of unsafe Chinese-produced consumer products and foods. That list included the following steps:
1. Provide increased resources to government safety agencies to prevent unsafe prod- ucts from crossing our borders.
2. Hold suppliers, importers, distributors, as well as manufacturers accountable for bringing unsafe products to the market by requiring preshipment inspections and testing to ensure product safety.
3. Develop U.S. government–administered, third-party safety certification programs for all products.
4. Develop a product traceability program for country-of-origin labeling for both food and consumer products as well as for all components and ingredients.
5. Require that importers post a bond to ensure they have sufficient resources to recall their products should they prove dangerous or defective.
6. Give all agencies with enforcement authority the power to levy meaningful civil penalties for manufacturers, importers, distributors, and retailers who fail to comply with regulations, and criminal penalties for those who knowingly and repeatedly jeopardize public safety.
7. Authorize mandatory recall authority for all government agencies.
8. Require all government agencies to publicly disclose information pertaining to safety investigations and reports of adverse events.
She later added a comment on recall effectiveness:
Recall notices rarely reach the very people who most need it—parents and care- givers. There is no law requiring manufacturers to try to find purchasers of the product or to notify parents or day care centers if a product proves dangerous and must be recalled. Further, there is no requirement that manufacturers advertise a product recall in the same way they advertised the product in the first place—toys with lead paint and magnets, high chairs, cribs, strollers, infant swings, and carriers often continue to be used for months or years after they have been recalled. In an effort to improve recall effectiveness, consumer groups petitioned the CPSC, asking that the commission require simple registration cards on products intended for use by children. While not a panacea, registration cards are one way to facilitate recalls.
The president and CEO of the American National Standards Institute (ANSI), S. Joe Bhatia, also spoke before the Senate Committee. ANSI is a private nonprofit organization that coordinates the development of voluntary standards to protect consumer safety in a wide range of industries; it collaborates internationally with the International Organization for Standardization (ISO). Bhatia testified,
Standards are important for everyone because they influence the design, safety, manufacturing, and marketing of many products worldwide. Standards are not only developed in response to injuries, hazard, or other identified safety risks, but more often in a proactive manner to prevent injuries from known hazards. . . .
This hearing is necessary not because there is an issue with standards. It is necessary because some suppliers—particularly those who are exporting products to U.S. soil—are not complying with the rigorous standards and regulations that have been established to keep our citizens safe.
Products manufactured in accordance with U.S. toy safety standards provide greater protection to our children. Testing and inspection systems must be strengthened so that compliance with these standards can be verified before unsafe products get into this country. . . The system must be efficient, consistent, and sustainable. It must focus on improv- ing how products are evaluated and assessing who is conducting the evaluations. . . .
ANSI wants to help reassure consumers that the products they find on the shelves of their local retailer have been tested and found to be safe—regardless of country of origin. In order for the Institute to accomplish the objective:
• Standards and conformity assessment resources that are already in place must be used more efficiently;
• Government and industry need to work at a single purpose to identify gaps in the current systems of testing and inspection of products imported to the United States;
• New human and financial resources must be brought to bear to strengthen existing systems and fill any identified gaps.
Toy Industry Association
Carter Keithley, president and CEO of the Toy Industry Association—an industry asso- ciation representing companies that provides 85 percent of the toys sold in the United States—also testified. He said,
At the outset, I would like to note the U.S. has among the strictest, most com- prehensive toy safety systems in the world. U.S. toys have, for years, been ranked among the safest of all consumer products in the home. In fact, many nations around the world emulate the U.S. system and understand our toy safety standards to be the premier standards. This is not to say there is no room for improvement. It is our mission to continuously search for new ways to further strengthen our safety systems and standards. . . .
As we entered the summer months and up until as late as last week, toy recalls were in the headlines daily. These recent recalls clearly demonstrated our safety system needed to be strengthened. Although, as I stated, we have some of the best standards in the world, we were left wanting in assuring the application of the standards. This lack of assuring application of standards left our companies, the industry, and most importantly our children exposed. . . .
As companies continue to test current product to clear violative product from their supply chains, TIA has, with the approval of our member companies, set out to provide a long-term program to address the “assurance gap.” To that end, I would like to share the framework for our new mandatory testing program for toys sold in the United States.
The new mandatory program will
1. Require all toys manufactured for the U.S. market to be tested to U.S. standards;
2. Standardize procedures that will be used industrywide to verify that products comply with U.S. safety standards;
3. Establish criteria to certify that testing laboratories are qualified to perform testing to U.S. standards using industrywide protocols;
4. Require the development of testing protocols and certification criteria through the cooperation of all stakeholders and apply them consistently;
5. Necessitate that TIA work with Congress, CPSC, and ANSI to implement the legislation, rules, and protocols to ensure industrywide adherence.
It is the toy industry’s strong belief that with this new mandatory testing pro- gram our industry will be even better equipped to protect the integrity of our products and the safety of American children.
Toys “R” Us
Jerry Storch, chairman and CEO of Toys “R” Us, a toy and baby products retailer oper- ating in 35 countries, with 842 stores in the United States, testified,
As the recalls this year unfolded, it became clear to us that change was needed. Like many of you, we were frustrated by some of the large recalls earlier this year, especially by what appeared to be an unacceptably long time frame between discovery of a problem and the actual consumer recall. . . .
It is our belief that a combination of strong safety practices when toys are manufactured and reinforcing federal legislation can help provide the answer. We also believe a strong, well-financed Consumer Product Safety Commission (CPSC) is needed, rather than a patchwork quilt of potentially contradictory state legislation.
[W]e believe the recall process itself could be improved in two ways: First, we support legislation shortening the time frames during the period between identification of a problem and the eventual recall of that product. We are troubled by the possibility that we could be continuing to sell toys that some- one knows may have a problem, while we remain unaware until we receive word that a recall is coming—usually just a day or two at most before the recall.
Second, we believe that production code stamping of products and packaging would significantly help in tracing potential safety issues. It would make it easier for retailers and parents to identify recalled product, and avoid the guessing game when a mom or dad is trying to remember whether they bought the prod- uct before or after the recall date.
To our knowledge, based on the recalls this year, the problem was not that testing wasn’t happening, or that testing wasn’t being done properly, but rather that testing was not done frequently enough. Prior to recent events, toy makers would test the initial batch of a product, then periodically retest batches to make sure the factory was still complying. What appears to have happened in the recent cases is that someone replaced the compliant paint with noncompli- ant paint at an unknown point between tests. Therefore, while we have long required testing from our vendors, we are moving to require that our vendors submit to us certification of testing for each batch coming to Toys “R” Us, and we have been told many vendors are already moving to this practice. To rein- force this direction, we strongly support strengthening third-party testing requirements. Specifically, we advocate for legislation requiring accredited certification of testing facilities. It is a sensible way for all of us—including retailers and consumers—to know that the manufacturers have or use quality testing facilities.
Mattel also took its message to Capitol Hill. Robert A. Eckert, Mattel’s CEO, told the committee,
Like many of you, I am a parent. I, like you, care deeply about the safety of children. And I, like you, am deeply disturbed and disappointed by recent events. As to lead paint on our products, our systems were circumvented, and our standards were violated. We were let down, and so we let you down. On behalf of Mattel and its nearly 30,000 employees, I apologize sincerely. I can’t change the past, but I can change the way we do things. And I already have. We are doing everything we can to prevent this from happening again.
Eckert continued later in his remarks,
Obviously, we know that parents are looking to us to see what we’re doing to improve our system to make people live up to their obligations and meet our standards. We have acted quickly and aggressively by implementing a strength- ened 3-point safety check system to enforce compliance with all regulations and standards applicable to lead paint. . . .
I would like to conclude by reiterating my personal apology on behalf of Mattel and to emphasize our commitment to parents. The steps we have taken will strengthen the safety of our products. Parents expect that a toy carrying the Mattel brand is safe. Ensuring safety is crucial to the long-standing trust this company has built with parents for more than 60 years. There is simply nothing more important to Mattel than the safety of children.
