Friday, January 30, 2009

CPSIA - Some Random Thoughts

There are many developments brewing as we approach the dreaded "National Bankruptcy Day". I hear that large inventory write-offs are about to be announced by certain public companies under pressure to remove product from store shelves by their mass market retailer customers. This "war" between suppliers and retailers has long been predicted in my letters and in this space. As enormous piles of money gets shamefully shredded, presumably leading to significant job losses at manufacturers, their factories and their downstream retailer-customers, we can only hope Reps. Waxman and Rush are satisfied with their handiwork, making America "safer". It's all worth it, right?

In the dreaded news category, we are also hearing about increasing informal recalls of product ahead of implementation of the new standards. "Recall" may be too harsh a word for it, but by hook or by crook, companies are retrieving product from the marketplace, and then either reworking it or trashing it. The author remains confident that these actions are entirely motivated by legalities, not by any social conscience or any shred of evidence that the products in question are dangerous. Having been raised to treat money with respect and because these days it's clear that money is a limited resource, I regret such waste, but even more, I regret the implication of such informal recalls. I feel that these recalls will be taken by the marketplace (dealers and consumers) as some form of implicit acknowledgement that there was a serious safety problem in the first place. It is natural that anyone seeing sophisticated companies acting in such a broad and panicky fashion would draw this sad conclusion. This will make our opposition more difficult as it will feed the resolve of supporters of the CPSIA to hold their ground, and will likewise whip up fear among the most skittish consumers. Sadly, there is nothing we can do but watch helplessly - every such recall will hurt, both financially and dynamically, making us all look bad for no good reason.

The pendency of the new standards makes me think about how much safer we will be in a few short days. Obviously, the new standards are in our best interests, otherwise why would wise Congress take these draconian steps if not to protect us! So, if these standards are needed to protect us, I wonder how it is that we have survived this long without such necessary protection. It's certainly true that children have been checking books out of libraries for many, many years with only paper cuts to show for their reckless behavior. And thrift stores have sold children's clothing and strollers for years without incident, but apparently no one knew the "dangers" that lurked within. Indeed, all of these items have been considered safe until February 10, when magically they will become unsafe unless proven otherwise.

Let's focus on the last six months, when we all began to adjust to the new standards. If there was such a raging safety problem, why did recalls abate in 2008 (versus 2007)? The new standards were not in place in 2008 . . . . Why aren't we seeing many claims of injury from all the dangerous children's products still legally available in the market? Even more to the point, what about the ten zillion products already sold and in use in the United States? Surely the population of existing product already sold is enormous, dwarfing the inventory in the supply chain at any given time. Shouldn't we be seeing outrageous injury statistics right now, currently, that would only abate over time as the population of "safer" products slowly overtakes the quantity of older product in use by children everywhere? Hmmm. I don't recall seeing any such statistics or notice of such injuries anywhere. Any idea why that might be?

Here's a theory: There never was a problem with children's product safety. While I, and everyone else, regrets the death of one child from a lead jewelry bangle, that one tort does not mean that everything made for children was defective or that each American business catering to children needs Big Brother watching over its shoulder to ensure "safety". If safety really was a problem, there would be a problem TODAY, right now, and NOTHING in the CPSIA could change that fact for years - unless the law made the product already sold illegal and required its immediate disposal (which it does not). In other words, plainly, the "dangers" that the CPSIA intends to "cure" once and for all, never existed and don't exist.

Imaginary problems are best solved with imaginary cures. Unfortunately, the CPSIA is real.



Gigi said...

First of all thank you for your very informative posts.

As a retailer of children's products, I just had an unpleasant thought as what could happen next. For stores, the immediate effect of the law is a huge increase in liability. Liability is nothing new to stores: this is why we all carry liability insurance. However, what happens when our insurers catch wind of this law?

We have all seen what has happened to the cost of insurance in the medical profession. Is that the future of retail?

Wacky Hermit said...

Rick, you want a good laugh? Dianne Feinstein believes CPSIA affects "more than 15,000 products".
In related news, McDonalds has sold more than 6,000 burgers!

She's off by what, about 3 orders of magnitude? I imagine you've got somewhere on the order of 15,000 products just in your warehouse.

Connie said...

That is awesome Wacky. Shows her depth of knowledge on this subject. When it comes to dealing with Congress, why can't I get the following quote from "A Few Good Men" out of my mind:

"Should we or should we not follow the advice of the galactically stupid?"

Watch the Youtube video and you'll see why this quote is relevant.

The Happy Tomato said...

In reading this, finally, I realize my #1 CPSIA grievance is....WASTE.
As a teacher who would q-tip out the dregs of the glue bottle, a mother who blanches to see the mac-and-cheese skid off the high-chair tray in to the trash can, and a small business owner who squirrels and twirls my resources responsibly, the damnable WASTE caused by this law is sickening: time, resources, innovation, and yes, money.
Sure, the value of "money", "resources" & "innovation" are subjective--depending on how much you have of each--but NO ONE can manufacture the TIME we are wasting now (and later, cleaning up the post NBD-wreckage)
We're a wide array of voices and we're ALL plunking coins of various sizes into the Tired Jar right now--but just wait.
If Congress won't listen to Cuba Gooding, Jr, you'd think they'd listen to Kronos.

Donna said...

Rick, I found your comments all too coincendental. I just got thru saying the same thing to my son about how you will find rallys of people wanting to burn books if the book industry has to comply. Simply because the consumer isn't aware of what is really happening. They will think there is a real danger all because our government seems to think there is despite the efforts to set them straight.

eric said...

Product testing as specified by CPSIA requires separate testing of each of the component parts of a children's product. Yet the language of the law does not permit testing of the separate components before assembly to qualify as testing of the product.

This is inherently illogical, unreasonable, and unsupportable. The public does not benefit from this requirement. Public safety is not improved. But laboratory income is increased.

Given that each separate test incurs significant cost, one wonders whether the authors and sponsors of the bill receive direct or indirect benefit from the few labs included on the short list of accredited testing laboratories.