Playing Around with Toy Makers

Today the Washington Times posted my latest Op Ed piece on overregulation and its costs on society. Let me know what you think. Has your company experienced hardships because of the regulating we’re doing? Have you had to exit the children’s market altogether? As a consumer, have you noticed the options for children’s products has decreased at the stores? I want to hear from you. Here’s the op ed in its entirety:

Regulatory Reform: All Talk, No Action at the CPSC

 The Obama Administration has recognized that excessive and unnecessarily burdensome regulations are a drag on the economy.  As the Administration has worked to promote job creation, it has publicized its efforts directing agencies to eliminate or revise unnecessarily burdensome and inefficient regulations.  Apparently, the Consumer Product Safety Commission (CPSC) has not gotten the word.

The CPSC’s failure to get the word is no more apparent than in its efforts to implement the Consumer Product Safety Improvements Act (CPSIA).  The CPSIA was passed after agency recalls of imported products shined a light on the issue of import safety.  The goal of the law is to assure that products intended for children are safe, a goal for which there is universal agreement.  The devil, of course, is in the details, and the details of implementing this laudable statutory goal are devilish for sure. 

Under the law, permissible levels of lead in children’s products are to be reduced progressively, over time.  Currently, children’s products must be 99.97% lead free, and in August, that level increases to 99.99% lead free, unless the agency finds that achieving that minute trace level is not technologically feasible.  In an unfortunate example of politics driving science, the agency just voted along party lines, determining that there are no technological impediments to achieving that level.  That decision was based on a record that is short on facts but long on speculation.  Let’s look at what we do and do not know. 

The most important issue is public health so let’s look at the risk of lead exposure.  While it is a given that children should not be exposed to lead in their environment, it is also a given that consumer products are not a significant source of lead exposure.  Elevated blood lead levels dropped dramatically from the mid-1970’s when lead paint and leaded gasoline were banned.  According to the EPA, exposure to leaded paint in old houses and contaminated dirt and dust remain the biggest sources of lead exposure.  Other sources of lead include drinking water (because of lead plumbing materials still found in some municipal water systems), certain dietary supplements, and certain kinds of pottery, ceramics and crystal, among other things.  Even chocolate can have up to 10 times more lead than what we are mandating for various consumer products.  CPSC staff has told us that the substantial health benefits from lowering lead in children’s products have already been achieved.  The agency expects that further lowering the lead limits to pick up these trace amounts will result in minimal increased health benefits. 

If the health benefits of this policy are not appreciable, what about the costs of moving from a 99.97% to a 99.99% lead free environment?  Lead can be a trace contaminant in recycled plastics and metals.  Therefore, our staff has advised manufacturers of children’s products that, to meet the new level, they may need to avoid the use of recycled metals and plastics.  We do not know is the extent of the use of recycled materials in children’s products.  We do know that virgin plastic is between 50 and 100 % more expensive than recycled options.  Therefore, contrary to the efforts of other agencies trying to push the use of recyclables, the CPSC is pushing industry away from recyclables to more expensive materials without considering whether there is an appreciable health benefit.

With respect to metals, all of the screws, nuts, bolts, and other metal hardware used in children’s products will need to be 99.99 % lead free.  We know that steel under the statutory limit–such as surgical stainless steel – is available but is substantially more expensive than general use steel.  Lead-free brass alloys will cost manufacturers at least 10 % more than other brass alloys.  Low lead tin is available at a 10 to 15 % price premium.    There are, however, questions about availability and variability of these alloys.  The availability of a low-lead alloy does not necessarily indicate that it is economically suitable for a particular application.  There also is a concern that as we push manufacturers to use higher cost materials, they may use less durable materials, such as substituting plastic for metal. This result would present its own safety issues.  In addition, the costs of testing to assure compliance with the 99.99 % lead free limit are expected to increase significantly.

These cost increases are likely to result in a combination of price increases and reductions in the types and quantities of children’s products made available to consumers.  According to the excellent CPSC staff, some firms may reduce the selection of children’s products they manufacture, may exit the children’s market altogether, and in some cases, may even go out of business.  The CPSC staff notes that these costs will have relatively greater consequences for smaller manufacturers and artisans who have less bargaining power, and more limited production runs over which to spread testing costs. 

These are not speculative costs–they are real.  The bicycle industry has told us that, as a result of the CPSIA, they have experienced a 50 % cost increase for their product components.  They have told us that 10 out of 40 manufacturers – 25 %– have stopped producing children’s bicycles and that they expect even fewer manufacturers producing youth bicycles once the new lead limit goes into effect.  Some all-terrain vehicle manufacturers have responded to the lower lead limits by no longer producing youth ATV’s, leaving children no option but to use the more dangerous adult ATV’s.  The Handmade Toy Alliance, representing small toy makers, actually maintains a growing list of companies that have been driven out of business by this law; the list continues to grow.  This is not just some theoretical exercise; these are real people who have lost real jobs and who are being forced to pay more for products with no real safety benefit.

In brief, this drive to a pure lead-free environment with respect to children’s consumer products, especially those that children cannot mouth or swallow, will not give us more appreciable public health benefits.  No child has gotten lead poisoning from riding a bicycle.  This effort will, however, drive up the costs of materials, drive some producers out of the market, cost jobs, and reduce consumer choice.  All the talk about regulatory reform, if not backed up by action, will not change these results.  Leadership and a sensible regulatory policy that is mindful of the real world consequences of government action perhaps could.

4 Responses to “Playing Around with Toy Makers”

  1. 1 MaraDomanski July 20, 2011 at 3:04 pm

    “Let me know what you think. Has your company experienced hardships because of the regulating we’re doing? Have you had to exit the children’s market altogether?”

    Ms. Nord,

    First, thank you for your efforts to return and/or inject some much needed common sense and rationale into the ongoing chaos that is the CPSIA.

    My children’s clothing “company” remains in quotes (after three years) because it is still a hypothetical. My “company” has experienced hardships because the practical effect of the CPSIA renders my otherwise decent business plan a worthless investment.

    Despite market research which reveals the splash my new infant/toddler/girl clothing line is capable of making, my business floats dead in the water.

    My clothing brand, which is to primarily be sold online and eventually in retail stores, would start like most others these days…small and home grown. A brand I would cultivate and develop with passion, time, effort and diligence. But no matter how tightly I tune my business plan and no matter how much overwhelmingly positive feedback I get from those I test my ideas on…I cannot make any tangible steps towards becoming the entrepreneur I wish to be thanks to the CPSIA.

    Not only has it been nearly impossible to decipher what is currently required of children’s apparel companies (big or small), in terms of labeling requirements, etc…it is overwhelming to think about what is going to happen to all of those businesses who have managed to hold on over these past couple years once the stay of enforcement on 3rd party testing and compliance certificates is lifted at the end of this year.

    This law will effectively operate to make start-up companies like mine practically impossible to run. Once the stay of enforcement is lifted, the practical effect of the testing requirements will make my small but profitable business no longer viable due to the unreasonable financial burdens associated with getting testing done on my modest start-up inventory.

    For me and others similarly situated, this law will work as a total barrier to entry into the marketplace – as the financial burden of actually getting products tested is not even close to commensurate with other reasonable costs of doing business and/or producing product; in fact, it far exceeds the totality of even capitalizing my business for a year.

    I am a mother of two daughters who was so thrilled to have found what I believed was my life path…a woman thrilled at the prospect of being an entrepreneur and owning a business…a woman thrilled at the opportunity to show my daughters what is possible in this life…a woman desperate to find a vocation that allows her to be a present parent all while doing something professionally that is fulfilling to her…a woman who was proud to join the ranks of those looking to create jobs for others just like herself…yada yada yada.

    As a mother, I couldn’t agree more that the products used by our children must be safe. As an attorney, I respect the theoretical reasoning behind the requirements and understand intellectually how all of this came to pass. The results, however, are unacceptable, and there are way too many casualties of this law – many of them women who are trying to enter the market place and compete. Just look at etsy…and see how many people have been able to sell their wares and thus supplement incomes lost by spouses due to the economy. Like you have said, these are real people.

    This law and the chaos that has surrounded it for the past three years has left me and many others with their business-hungry hands financially tied. Reading your blog posts inspires me to believe that this may all shake out and I haven’t yet totally given up hope that cooler heads will prevail. But,while I haven’t had to exit the children’s market yet, I certainly have not able to enter it.

    Thank you for your efforts, Ms. Nord. Keep it going.


  2. 2 Steven Hansen July 19, 2011 at 4:12 pm

    The problem is that this was a flawed law created by the “know it alls” in congress (who have never manufactured anything) in response to panicked soccer moms (and Signed by Bush not Obama). The 600-100 ppm logic is flawed as is the whole “technologically feasible” silliness. It should only apply to items likely to go in a child’s mouth (shown by empirical evidence). Bikes and motorcycles dont. Has anyone ever seen a child actually get elevated (dangerous) lead levels in their blood from a toy? Forget dying or getting sick from lead. Unfortunately Congress chased lead as the bogeyman (thanks to misled consumers and the media) and did not even focus on the most plentiful sources of lead to kids. We need to focus on what is really harming kids. Lead is not.

  3. 3 thedomesticdiva July 19, 2011 at 2:46 pm

    Mrs. Nord…
    I read your blog religiously. I am a children’s clothing manufacturer who is being driven out of business due to CPSIA. I applaud your continued efforts to speak up about the ongoing problems with the CPSIA. Please know I am very grateful for your dedication to this issue.

    Lisa Carroccio

  4. 4 RHertzler July 19, 2011 at 1:39 pm

    Again, the voice of reason from the CPSC. Excuse the Biblical comparison, but your voice is a small source of hope crying out in the wilderness. I too, have added my voice and pen as has the Handmade Toy Alliance and many others. Unfortunately, the wilderness is vast and without dimension.

    This is the wilderness where congress debates and passes the Eshoo bill to “Eliminate” lead in drinking water. In this case, “Eliminate” means reducing the allowable lead in faucets and pipes to 0.25% which is 2,500 ppm or 99.75% lead free. The pipes and fixtures our drinking water flows through are allowed to have 25 times more lead than the toys we play with, the bikes we ride, and the block we stack.

    If common sense and reason worked in Washington DC, the CPSIA would be fixed by now and all of us small businesses crippled by this burdensome regulation would be on the road to recovery instead of on the path to ruin. Meanwhile, the regulations tilt the marketplace in favor of toys mass produced off-shore and the culture of specialty, unique, handmade toys withers.

    Thanks for your voice of reason!

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