This Christmas, A Lump of Lead?

By Jyoti Thottam

It's September. Do you know where your children's Christmas toys are coming from?

Even if you haven't thought about it yet, U.S. toymakers are so worried about losing the confidence of wary parents this holiday season that the industry has asked the Federal Government to require mandatory safety testing at the toy companies' expense. It's a remarkable admission of just how thoroughly this year's massive recalls of goods from China have shaken up Toyland.

Mattel's recent recalls of more than 19 million toys--including a Sept. 4 warning about lead paint in 675,000 accessories for its iconic Barbie dolls--were the largest in the history of the world's largest toymaker and have put the entire industry on high alert. "This year's recalls were not a happy thing for us," says Carter Keithley, president of the Toy Industry Association (TIA), a trade group whose 500 members make about 85% of all the toys sold in the U.S. Even companies that haven't been hit with recalls are scouring their production lines for problems, and testing labs say they have been deluged with work. "We're looking at everything right now," says Wayne Charness, a senior vice president at Hasbro.

Recalls are meant to act as a safety valve, a quick way to get potentially dangerous products off store shelves before they do harm. Instead, the wave of recalls this year from China--the source of 80% of the world's playthings--has cast a cloud of suspicion over any toy carrying the MADE IN CHINA label. Keithley met with U.S. toymakers at a safety conference in China in July, and he says they all had one concern: "How can we tighten this up?"

Their solution is a three-part safety plan, announced Sept. 5: a federal requirement to make safety testing mandatory; new, industry-wide standards for testing procedures; and certification for independent labs. Keithley says the labs may devise a logo to be stamped on toys indicating that they meet federal standards. Most large companies in the U.S. use both internal and third-party testing, but there is no legal requirement and therefore no uniform method of testing or seal of approval that might restore consumers' trust. For many products, including toys and children's jewelry, the Consumer Product Safety Commission (CPSC) sets standards for safety but does not require companies to do testing and doesn't test the toys itself. "No one's asking for proof," says Sue DeRagon, associate director for toys at Specialized Tech Resources, a testing lab in Enfield, Conn.

That could change this fall. Democratic Florida Senator Bill Nelson introduced a bill that would require toys to be third-party tested to make sure they meet safety standards-- or be banned from import to the U.S. (Hearings are scheduled for Sept. 12.) Toymakers are supporting stricter regulation in part because "it would create a level playing field," says Joan Lawrence, TIA's vice president of standards and regulatory affairs. Today, the only penalty for failing to meet the standards is a recall, so some companies don't test at all.

Voluntary testing and recalls have clearly failed to stop lead-painted children's jewelry from entering the U.S. market. After the CPSC recalled 150 million pieces of toy jewelry in 2004, new guidelines "urged manufacturers generally to reduce the lead content of their products." Since then at least 21 million more pieces of children's jewelry--including 6 million this year alone--have been recalled because of lead-poisoning risk, ranging from $3 fake-diamond rings sold at Big Lots! to $95 Juicy Couture charm bracelets. The CPSC recommended a federal ban on lead exceeding 0.06% by weight in children's jewelry late last year; California, Illinois and the city of Baltimore have already enacted bans.

Unfortunately for anxious parents, the new rules on toys will not be ready for the 2007 Christmas shopping season. Most toymakers have just a few weeks left before their holiday orders are shipped. So instead, the TIA is sending its members a detailed list of precautions to make sure their holiday toys are safe. Near the top is strict oversight of every contractor and subcontractor that touches toys at any point on the path from factory to shelf. That's what tripped up Mattel, which traced its problems with lead paint to subcontractors who used unapproved lead-based paint. To plug that quality-control gap, Mattel has begun testing finished products in addition to testing the paint, plastics and other materials that go into its toys. The company is also increasing the frequency of random checks.

Other companies are making similar changes--and don't be surprised to hear about them in this year's holiday advertising. Hasbro has reduced the number of contractors it uses, to keep tighter control of the production process, and it too has increased the number of spot checks. That's good news for the checkers. "Our phones are ringing off the hook," says DeRagon of the STR testing lab, which tracks toys from initial design to batch testing of wet paint to audits of contractors' factories.

Until the new rules are in place, should parents stick with gifts crafted close to home, particularly if the extra safety measures raise the price of Chinese imports? U.S.-made toys may still use imported parts, but manufacturers have more control over how they're put together and can test them more easily. "On the surface, there is reason to believe they're safer," says John Quelch, a professor at Harvard Business School. However, he notes, every big toymaker that does produce in China is going flat out to avoid the nightmare of a holiday recall. This Christmas could end up the safest one of all.