Cutting Costs at a Dangerous Price

“Wal-Mart’s not addressing the larger problem of why Chinese toy suppliers are cutting corners with lead paint and melamine,” spokesman Nu Wexler said, referring to a harmful additive found in pet food made in China. “It’s because they’re under enormous pressure from buyers like Wal-Mart, and they’re sacrificing child safety to keep costs low.”

Wal-Mart Tightens Toy-Safety Program [Washington Post]

Wal-Mart officials said yesterday they were asking toy suppliers to submit recent safety documentation or re-test their products in response to the wave of recalled merchandise from China that has cast a shadow over the upcoming holiday shopping season.

The efforts are part of a five-step plan to improve safety that the company is calling the Toy Safety Net Program. It has promised to work with the Toy Industry Association, a trade group, on new safety standards later this month and help Chinese leaders who are implementing new testing procedures.

“We know this is an issue at the top of mind with our customers, and we know we can play a role to reassure them that we have great, safe toys in our stores,” said Laura Phillips, Wal-Mart’s merchandise manager overseeing toys.

About 80 percent of the toys sold in the United States are made in China. Phillips said the majority of toys on Wal-Mart’s shelves are manufactured there but declined to give a specific figure. The Bentonville, Ark., retailer controls roughly one-third of the U.S. toy market, according to Eric Johnson, a management professor at the Tuck School of Business at Dartmouth College.

“They have an obviously huge stake in this thing as a retailer, making sure that consumers feel that toys are safe,” he said. “They are exceedingly powerful in the toy industry.”

Under the new program, Wal-Mart’s suppliers must provide evidence that their toys have been tested for safety by a third party within the past three months. Typically, toys are inspected during preproduction, production and in the store, said Kyle Holifield, director of product compliance and product safety for Wal-Mart. Suppliers that do not meet the three-month standard must undergo additional inspection.

Wal-Mart has hired three firms to help retailers test their products: Bureau Veritas of Belgium, Intertek Group of London and Consumer Testing Laboratories of Bentonville. Chuck Rogers, who oversees quality in global procurement for Wal-Mart, said he expected the number of toys tested by the company to rise to an average of 200 per day, a 15 to 20 percent jump over normal levels.

Wal-Mart’s move comes after two major recalls by Mattel this month encompassing more than 10 million toys, including such popular lines as Barbie, Batman action figures and Thomas the Tank Engine, all made in China.

Wal-Mart Watch, a frequent critic of the company financed by the Service Employees International Union, said the retailer’s efforts to improve product safety do not go far enough. “Wal-Mart’s not addressing the larger problem of why Chinese toy suppliers are cutting corners with lead paint and melamine,” spokesman Nu Wexler said, referring to a harmful additive found in pet food made in China. “It’s because they’re under enormous pressure from buyers like Wal-Mart, and they’re sacrificing child safety to keep costs low.”

Posted by Alex Goldschmidt on Friday, August 24, 2007

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COMMENTS

“We know this is an issue at the top of mind with our customers, and we know we can play a role to reassure them that we have great, safe toys in our stores,” said Laura Phillips, Wal-Mart’s merchandise manager…”

If you are a product liability attorney, you have to be in love with life right now!

And you have to be equally amazed at just how stupid, the largest retailer on the planet can be to let buffoons like this speak out as Agents of the Company.

This is the kind of ‘bloody meat’ liability lawyers live for!
Hmmm, let’s see…

There is a global problem we as a retailer are aware of…(for-see-ability anyone?)

We know the majority of toys on our shelves are manufactured by a known violator of United States standards for safety.

Oh, yeah, by the way, we also represent about one-third of the known violator’s marketplace in America.

Yet…(we so stupid it funny) in a public “published’ statement, we will say:

“…reassure them (ed: customers) that we have great, safe toys in our stores,”

Let the goodtime ‘warranty of merchantability’ rock and roll!

Welcome to the massive world of product liability lawsuits, Wal-Mart!

cazar in
Friday, August 24 at 11:16 AM

Cazar, I think you’re misinterpretting this statement. It’s pretty obviouys that Laura is not saying ‘there is a global problem that we are aware of,’ but rather something more like ‘we know that our customers are concerned about the issue of potentially dangerous toys, and we’re going to do our part to reassure them that we’ll sell safe toys in our stores.’

Does anyone have any data on how many children Mattel killed recently? How many are sick? I ask because I think that this is a bit overblown.

Scott in
Friday, August 24 at 01:20 PM

Sorry,

I just did a little more research on the lead and realize it’s more of a long term problem. Still, any data on how many are sick?

Scott in
Friday, August 24 at 01:49 PM

If 80% of toys sold in the US are made in China and Wal-Mart controls 33% of the US toy market (and Wal-Mart gets 100% of its toys from China), this means that companies other than Wal-Mart control 66% of the US toy market and that companies other than Wal-Mart import 47% of the total toys sold in the US, from China.

So we know that:

-66% of all toys sold in the US are NOT sold through Wal-Mart

and

-Companies other than Wal-Mart have a market share that is made up of at least 47% toys made in China.

These are worst case scanerios for Wal-Mart. In actuality, more than half of all toys imported from China and sold in the US market are imported by companies other than Wal-Mart.

It is and INDUSTRY and MANUFACTURER issue, not a Wal-Mart issue.

Nick in
Friday, August 24 at 07:39 PM

Respectfully,

I misinterpret nothing, that is unless Ms. Phillips is in some multiverse and not on the same globe I am.
Perhaps on her globe, China does not manufacture and export 80% of her world’s toys, therefore no ‘global’ problem there.

Let us not play games here (no pun intended), I am always suspicious of those willing to take what is ‘blindingly obvious’ and attempt to spin it back in argument.
Especially argument that makes little logical sense.

Considering the fact China does manufacture and export 80% of the world demand for toys, of course Ms. Phillips is certainly aware that is a global problem, when millions of toys are found defective.
What about all the defective millions of toys of years past, slipping through the cracks?

So what she says or does not say, becomes a specious argument, given the facts.

Now for the ‘shell game’ of spinning percentages of market share, in a rather feeble attempt to obscure fact and relevancy to the issue, one need only use common sense to overcome obtuse math.

A. Wal-Mart DOMINATES the U.S. market of toys.
B. Wal-Mart DOMINATES all U.S. importers of Chinese manufactured goods.
C. Wal-Mart’s competitors are highly fractionalized.

For those of you who understand ‘fractionalized’ markets, good. The rest, I leave you to further study.

As far as the argument that it is an industry and manufacturer issue, I could not agree more.
And if one revisits my post, you will see that underlying premise at work.

A more appropriate response from Wal-Mart (and its Agent…remember Agent, this is a key legalese term) would have been to condemn Chinese manufacturers for producing substandard goods and flooding the global marketplace with unsafe toys.
A more appropriate response, would to have called on both the Chinese and U.S. Government to hammer-out the issue within the parameters of trade agreements.
A more appropriate response would have been to put a temporary ban on all Chinese imported toys into their company.

Wal-Mart had the absolute opportunity to stand up as a global world leader of commerce, to not only stand up to the protection of children in the United States, but also children in other lands where they do not operate.

They had the opportunity, and blew it.

Instead they had an ignorant Agent, (whether vetted by their legal department or not, I hope not!) step out onto the world stage, and declare they will (by implication) warrant the safety of all toys sold in their stores.

Now whether Ms. Phillips statements remain either ‘implied’ or ‘expressed’ will be for courts to decide.
Fact is she is considered an ‘Agent’ of the corporation, and as such made statements that squarely put that corporation within the crosshairs of product liability.

Her statements about the understanding of the problem, and her ‘gushing’ remarks of “reassure’,
“great”, and “safe”, are the stuff defense attorneys cringe at, while their adversaries drool.

I would be extremely surprised if Ms. Phillips retains her job with the company, as I am sure corporate lawyers are scrambling even now to somehow retract her agency.

Other questions remain. What about the toys remaining on the shelves of Wal-Mart right now?
What about toys remaining in the dusty backrooms of stores and warehouses?
Are those going to be under some warranty of merchantability ?
Why not, considering the known facts and Ms. Phillip’s statements?

For you see, making a contract, either implied or expressed, for warranty for merchantability, is easily done when ignorant agents make public statements to an informed, and rather smart consumer.

And for now, unless Wal-Mart is willing to evacuate from their shelves, bins, stores, and warehouses, every single toy with country of origin China, they remain totally liable for foreseeable damages.
Especially those within the long history of lead’s impact upon infants and children.

I will assure you, right now, the very minute of this posting, there are scores of product liability lawyers honing their briefs for an assault upon this company.

Right or wrong, Wal-Mart in their ignorance opened this ‘can of worms’.

cazar in
Saturday, August 25 at 05:19 PM

A more appropriate response...

China food & drug czar executed after export woes

Battered by worldwide outrage over exports of poisoned pet food, toxic toothpaste, filthy fish and doctored drugs, China executed a top minister in charge of product safety yesterday.

Scandal and Suicide in China: A Dark Side of Toys

They found the body hanging on the third floor of the Lee Der toy factory.

Ken V in Texas
Sunday, August 26 at 06:14 AM

P.S. Still, any data on how many are sick?

Lead and Lead Paint

Lead poisoning is a top environmental health hazard for young children, affecting as many as 1.7 million children age five and under, according to Centers for Disease Control and Prevention (CDC) data. Adults exposed to high levels of lead, usually in the workplace, are also at risk.

Ken V in Texas
Sunday, August 26 at 07:21 AM

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