Cooking a meal for four is not the same as cooking a meal for 20. More time and effort goes into the meal for 20 while a meal for four is much more manageable. In addition, the level of attention to each dish changes as their numbers grow. This relationship applies to the issue of small production runs compared to large production runs. As I have stated before, small runs of 10,000 items do not pose the same safety and quality risks as a run of 1 million items.
Now let’s suppose we had two chefs cooking in separate restaurants. One happens to be a little financially better off than the other. If both make the same dish, is the quality of their dishes determined by their income status? I think not. Similarly, manufacturers producing small runs should not be penalized just because of their revenue stream. Staff agreed with this in our initial notice of proposed rulemaking for testing and certification on April 1, 2010 by including a low-volume exemption in their draft package. However, the majority deliberately and with little explanation removed the exemption from the final rule. Third-party testing costs clearly impact a small run of products.
Many raised concerns how the removal of the original low-volume exemption negatively impacts various companies.
“Like small-batch manufacturers, the cost of third party testing is becoming an increasingly higher proportion of our revenue. We believe that many of these costs are unnecessary because we have greater capabilities as a low-volume manufacturer to implement quality control processes such as 100% inspection.” – Orbit Baby, Inc.
“Regardless of whether a manufacturer is large or small, requiring an expensive third party testing process . . . takes away a large chunk of the small revenue received from this small product batch, and goes against the spirit of the exemption not to mention the spirit of American ingenuity. Requiring third party testing on such small production batches will severely hinder a large company’s ability to test new markets and create new and innovative products that could advance America’s technology and global competitiveness.” – AAFA
“[T]he amortization of these costs results in price increases that cannot be borne by the manufacturer, the importer, nor the consumer.” – The Handmade Toy Alliance
“[T]he testing costs for an initial production run [of decorated glassware] would be approximately $940, not including costs associated with shipping samples . . . the returns from small production runs . . . could be greatly reduced or eliminated by the costs of complying with third party testing requirements.” – Libbey, Inc
These comments shed light on how our rulemaking imposes costs that become extraordinary if your business is small—with no corresponding gains in safety. If a small-batch manufacturer and a low-volume manufacturer are both producing the same quantity, why exempt one and not the other? What makes one production run riskier than the other?
I eagerly await receiving staff recommendations and hope that the staff stands by their original assessment and asks the Commission to amend the testing rule to include the exemption for low-volume manufacturers.