CPSIA - My First Response to Rep. Dingell (re 3-4-09 Letter)

Dear Rep. Dingell,

In response to your letter of March 4 to the Commissioners of the CPSC, I wanted you to see the following policy of Toys R Us. This directive is Toys R Us' new safety procedure and testing requirement. This policy, which has no basis in safety management, is borne of lead mania and TRU's strong interest to avoid possible liability under the CPSIA. The new policy by TRU likely means that our company will have to STOP doing business with them once implemented. These rules are utterly unaffordable and divorced from the safety reality of our products. Were we to attempt to comply with the TRU requirements, we would lose so much money that we would have to drop the items involved. All roads lead to Rome, this new set of rules will force us to abandon the TRU marketplace.

The CPSIA and the mania that drove it is destroying the children's product marketplace. The rampant fear of liability, driven by shocking CPSIA penalty provisions (civil and criminal, not to mention asset forfeiture and whistleblower provisions), has created an economic incentive for mass market players like TRU to take extreme positions to protect themselves. They feel that they have a target painted on their backs anyhow - in a post-CPSIA world, these highly-leveraged private equity-owned companies no doubt feel there is no choice but to eliminate ANY possible risk of liability. This is not a pro-consumer, pro-safety position - it is an anti-commerce position. It all flows from the CPSIA.

What will a TRU marketplace look like without a specialty manufacturer presence? This is what I think:

a. Far fewer specialty items. That is, very little that is not TV advertised. Lots of classic mass market items, little else. Products serving niche markets like education and special needs will disappear or will become so high-priced that they will be dropped.

b. Much less product diversity. Lots of mass and generic toys, few products of substance. It will be like 31 Flavors reduced down to Vanilla, Chocolate and Stawberry. Great if that's what you want. Not so great if you have your own taste buds.

c. Weakened small business community. Volume purchases by TRU and companies like TRU are both a sweetener for small businesses, and often a growth stimulus. This market will essentially be closed for all "small" products. The cost of entering the market will be quite high.

It is also worth noting that the divide between companies serving the mass market and specialty markets also extends to factory sources. Yes, Mattel uses a different grade of factory than we do. Not necessarily more sophisticated or safety-conscious, but scaled for much larger volumes. We are too small for their manufacturing base, and they are too large for our factory partners. When TRU creates a rule to deprive us of a valuable market, we are not the only small business losers. Our factories eat from the same trough as we do. The ripple effect of these rules will only deepen the distress in the supply chain, and will topple more dominoes up the chain and around the world. It's not a pretty picture.

d. Weakened mass market companies. A fear-driven economy is not a growth economy. If TRU thinks the right way to plan its business is to structure around minimizing liability, I predict their offerings will disappoint. Tickle Me Elmo cannot satisfy every need, and eventually a weakened market will wither. This is the danger in a law which adds so much liability exposure - all over nothing. The case for mass exposure lead poisoning is imaginary.

I don't want to live in a plain vanilla world. I am a mocha chip man, myself. Please help us restore our technocolor world by scrapping the CPSIA and replacing it with a more balanced, economically-sensitive bill. Congress can achieve great things in a true partnership with industry.

Richard Woldenberg
Chairman
Learning Resources, Inc.
Vernon Hills, IL
rwoldenberg@learningresources.com
Tel 224 436 0265

From: SafetyAssurance@toysrus.com
Sent: 3/2/2009 4:15:33 P.M. Eastern Standard Time
Subj: Important Notice - Changes in Quality Assurance Programs for 2009


February 23, 2009

Dear Valued Partner:

As you are aware, Toys “R” Us, Inc. maintains an uncompromising commitment to product safety. We recently conducted seminars in Hong Kong, Toronto, and New Jersey to explain some changes in our Quality Assurance Programs for 2009.

Some of these modifications are summarized below for vendors that were not able to attend the seminar.

Our Product Standards Are Unchanged

· Total lead standard for surface coatings continues at 90ppm.
· Total lead standard for substrates continues at 300ppm (more stringent requirements for selected categories such as PVC shoes/raincoats, jewelry, etc.)
· We will test in accordance with regulatory guidelines regarding accessibility and exceptions.
· All items within scope of AB 1108, CPSIA, or EU phthalate directive must be “P4” compliant (i.e. not contain greater than 0.1% w/w of DEHP, DBP, BBP, or DnHP). Mouthable items must additionally not contain >0.1% DnOP, DIOP, or DINP (“P7” compliant).
· Phthalates will be tested in surface coatings; also inaccessible components may be tested under certain circumstances.
· Packages used for children’s items that are intended – as determined by the lab- to store the product and/or be used by the child with the product will be subjected to use and abuse and the same analytical testing requirements as apply to the product.
· R Us direction is that we will continue to reduce the PVC in our packaging. PVC Packaging should not be used if there is a viable feasible alternative. Vendors should work with the Buyers and Sourcing Departments to determine feasibility and develop alternative packaging.

Program Highlights

· Third party sample selection continues.
· Test frequency change – full testing 2x/yr, more frequently if failures are found; less frequently for private label items if test history is good and facility is certified to ISO 9000 or TSCP Tier 1.
· If last full COC testing was conducted prior to November 1, 2008, samples will be tested to the full COC test requirement under the 2009 program (“Batch” testing no longer applies).
· Items designated as Global which have had a Global Design Review or Product Development Evaluation will be COC tested to global standards. (US, Canada, Europe, and Australia)
· Regional items such as EPB will be tested initially in the EU to EN standards, and an LOE will be issued upon successful completion of this testing and the technical file; items will also be tested once in HK under COC program for second six-month period.
· Date coding is required for all products – product, packaging, and master carton.

If you have any questions about this process please contact me at: safetyassurance@toysrus.com

Thank you again for your continued support and partnership.

Sincerely,
Alan P. Kaufman
VP, Quality Assurance, Safety & Packaging