Mattel and Toy SafetyOn September 12, 2007, members of Congres.docx

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. Mat- tel soon
became concerned, however, that outsourcing put the company’s
intellectual prop- erty at risk, as outsiders could learn to make
imitation Barbie dolls and other trademarkedproducts. Believing
it could handle manufacturing more securely by operating its
own factories, 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, production 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
company 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 contractors, 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 numer- ous changes in its own
plants.2
Although its Global Manufacturing Principles focused
exclusively on working condi- tions, 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 company’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
complying 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 char-
acters, 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 company 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 subcontractors were cutting corners to save
money and time. Lead paint was at least 30 percent 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, Mat- tel’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.)
Regulation in the United States and China
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 commission’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 percent 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,”
fea- turing 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.
The Senate Hearings
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 associa- tions 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 consumer 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 industry 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 inspection 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 products 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. 3. Develop U.S. government–administered, third-party safety
certification programs for all products.
4. 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. 5. Require that importers post a bond to ensure they have
sufficient resources to recall their products should they prove
dangerous or defective.
6. 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. 7. Authorize mandatory recall authority for all government
agencies.
8. 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 adver- tise 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 peti- tioned 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.
American National Standards Institute
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 Orga- nization 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 association 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 comprehensive 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 program 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 operating 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
product 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

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 strengthened 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.

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