Thursday, May 13, 2010

CPSIA - What a Job Program!

I have apparently been quoted as "admitting" that the CPSIA is a "job creator". I wonder what kind of person could so profoundly misunderstand, or intentionally misconstrue, my testimony at the April 29 hearing. Even more to the point, I wonder what kind of saps those people think they are fooling. It really insults intelligence, if you ask me. Other than testing companies, plaintiff lawyers and government agencies, it is hard to find a company or industry that thinks the CPSIA will help them employ more people. The law does not create economic activity - just wastes lots and lots of money.

Quick aside: I find this remark, even if in made in passing, to be bizarre. Is someone really defending the CPSIA by asserting that it actually benefits the economy? The purpose of the law was never to help companies like ours - if anything, the law was motivated by Congress' absolute malice toward manufacturers of children's products. The volume of data to the contrary is overwhelming. To portray the law as a generous act of economic stimulus is so far removed from truth as to invite the term "Big Lie". Inez Tenenbaum was quoted today attempting a similar act of legerdemain when she contended that markets will be lifted by surging consumer confidence under the CPSC's watchful eye. This recasting of reality is dangerous - if these people ever find anyone they can persuade with nonsense.

For those of you who missed it, I noted in my oral testimony at the April 29 hearing that our QC department grew from one to four people. In addition, we have a CPSC Bar attorney on retainer and work with another Washington law firm on other representation matters relating to this mess. This has been taken as my "admission" that the awful CPSIA creates jobs. Yippee, we're saved!

I write this blog myself. No CPSIA jobs there, unfortunately.

I testified that our company's testing costs increased 8x because of the CPSIA, with the prospect of another 3x increase to come after the CPSC lifts its testing stay in 2011. [I get lightheaded at this thought.] We have also seen sharp increases in QC personnel costs plus other frictional operational costs relating to safety under the new law. It's ugly. We estimate the total annual cost increase SO FAR to be $450,000 for our company. This money has to come from somewhere. We are unable to increase our selling prices in a recession, yet the costs must be recouped. Guess how we did it.

Our headcount records speak to the stimulative effect of the CPSIA. As of July 31, 2008, immediately prior to passage of the CPSIA on August 14, 2008, LR employed a total of 162 full-time team members. After only four months of magical CPSIA job creation, the ranks of our employees fell to 145 by December 31, 2008. By year end 2009, our headcount had shrunk by one more, to 144 people. As of March 31 of this year, after almost 20 months of CPSIA fun and games, we had 141 employees. At least our QC department is growing . . . .

I will freely admit that we are probably creating jobs galore in China where we do all of our product testing. It's too expensive to test in this country. The reported 8x increase in our testing costs reflects our intense effort to control costs. I have no idea how many jobs our testing created in China. Nonetheless, I am sure Mr. Waxman's handiwork is stimulating the Shenzhen region nicely.

So is it really fair to say that I "admitted" that the CPSIA creates jobs?

I don't mind being misquoted or even to have my testimony under oath twisted beyond recognition. It's not a problem for two reasons - first, no one is being fooled, and second, the truth is obvious in this case.

So guys, if it helps you to misquote me or to attribute absurd "admissions" to me, go ahead. Everyone knows how "stimulative" this law has been. Our Casualties of the Week have documented business deaths attributable to this law for months. The HTA put a list of victims of the law into the record for the April 29 hearing. I have published over 400 blogposts that add measurably to the data on the costs and consequences of this awful law.

The truth is well-known. And the people who twist it are also well-known. And their efforts won't soon be forgotten - especially when we go to the voting booth in November. Can't wait!


April said...

What an interesting concept. I guess I DO have the CPSIA to thank for my job. But my single position as researcher, testing program "reasonableness" monitor, and testing budget stretcher seems less important than all the companies that have chosen to close doors or drop entire product lines. I'm sure those employees are not thanking the CPSIA.

smower5 said...

I wonder what fantasy world Inez Tenenbaum lives in, thinking that the CPSC could do anything remotely close to "helping" the market. Anyone on this planet knows that is the farthest thing from the truth!

Anonymous said...

It certainly seems to be helping the Mattel s of the world. And since that seems to be the only folks that appear worthy of the time of the CPSC perhaps she really is speaking the truth, well her truth at least.

halojones-fan said...

The other issue is that QC jobs are "noncreative". I know how insulting that sounds, but let's face it--the artist creates, the production engineer figures out how to make it real, the QC inspector reads the labels of paint cans. Shifting the money from creative to QC might "create jobs", but only in the sense that a slave plantation had plenty of jobs.

Anonymous said...

I run a 63 employee company with 5,000 SKU's, 2,800 customers and 800 vendors. Between customer communications (with GCC's required in the customer's desired format), vendor communications, testing administration and continuous CPSIA related training, I estimate that it takes one person day per year per product for my company to comply ADMINISTRATIVELY with CPSIA. 5,000 SKU's devided by 250 business days a year (we have 10 holidays) results in 20 man-years of work per year and thus would require 20 new and/or existing employees doing nothing but administrating CPSIA in my 63 person organization. That means I either reassign 31.75% of my workforce or hire 31.75% more people. Using normal payroll burden rates and $32,000 a year positions (too low for some of the work), we're closing on $1,000,000 a year in additional operating expense to administrate CPSIA which is about 10% of our sales, give or take - and I haven't paid for testing one of those 5,000 SKU's yet.

I'm pretty confident that 5,000SKU's will become 1,000 someday, that 63 employees will become 25 and those that remain will earn a marginal living beating their heads against the compliance wall, safety be damned.