E.U. Deems “Made in China” Unsafe
European toy companies prove that manufacturing products with unsafe matierals in dangerous conditions are NOT prerequisites for staying profitable. If that’s the case, why does Wal-Mart still choose to outsource the majority of its products to countries where these conditions still exist?
In Europe, Some Toy Makers Shun the China Label [New York Times]
Playmobil of Germany has long promoted its colorful plastic pirates, firefighters and farm animals as better-than-your-average plaything — toys to be handed down rather than chewed up. Now it can add another selling point: they are made in Europe, not China.
Attila Britting building models at Brandstätter in Bavaria. The company, maker of Playmobil toys, has passed on a move to China.
The same goes for Lego, the Danish maker of toy bricks, and for Ravensburger, a German puzzle and game manufacturer, though it does produce small quantities of nonpaper toys in Chinese factories.With Mattel and the American toy industry reeling from recalls of millions of Chinese-made toys, most because of lead paint, some of Europe’s best-known toy makers find themselves in the fortuitous position of having bucked an industrywide trend of moving production to China.
“Looking back, it feels like it was right to make that decision,” said Andrea Schauer, managing director of Geobra Brandstätter, which makes Playmobil toys. “At the level of quality we need,” she said, “we didn’t have enough manpower to inspect factories in China.”
With parents fretting about the safety hazards of toy cars and trains and Barbie accessories, the not-made-in-China label could prove to be a boon to these European toy makers, particularly in their domestic markets, where the corner toy store has not yet been elbowed out by retailing giants like Wal-Mart or Toy “R” Us. “A lot of the sales still rely on the expertise of the guy whom I call Fritz,” said Sean McGowan, a toy industry analyst at Wedbush Morgan Securities in New York. “To the extent that parents are at all concerned about this, Fritz is going to steer them toward Lego and Playmobil.”
Even in the United States, analysts say, there could be a modest bounce for toys not made in China, be they European or American, if parents take the time to look at labels during the coming holiday shopping season. The drawback, some worry, is that consumers might spurn toys altogether.
“When parents say, ‘My kid wants a cars toy or Thomas the train,’ are they going to look at where it was made?” asked Tim Conder, a toy analyst with A. G. Edwards & Sons. “Or are they just going to say, ‘I’m not going to buy it?’ ”
Steering clear of China was not an easy choice for Playmobil or Lego. Other European manufacturers, like Brio of Sweden, which produces wooden toys, have moved the bulk of their production to China. About 80 percent of all toys sold in the United States are made there.
For those who remained in Europe, the decision to keep most manufacturing there was driven more by economics than safety concerns, though the difficulty of controlling quality in far-away factories was also a factor.
“We looked at various options,” said Iqbal Padda, executive vice president in charge of the global supply chain at Lego, noting that at the start, it was widely accepted “that it has to be China.”
Ms. Schauer said Playmobil, a family-owned company in Zirndorf, Germany, faced intense pressure to move production to China. Most of the industry was moving there, she said, and German banks did not want to lend money to companies to build toy factories at home.
What the companies discovered, though, was while China’s unit labor costs were a fraction of those in the West — the equivalent of $1.50 an hour compared with $30 an hour in western Germany — the distance between China and the companies’ biggest markets eroded some of that cost advantage.
In addition, Lego and Playmobil need to respond quickly to fickle consumer demand. To ramp up the production of a surprise hit — a Playmobil World Cup soccer player, for example — would be costly in China, where factories are set up to churn out vast volumes of toys with long lead times.
“Toys are not the fashion business, but they are like the fashion business,” Mr. Padda said. “The need to be able to react to what is going on in the market made us choose” Europe.
Today, Lego makes 65 to 70 percent of its bricks at a high-technology factory near its headquarters in Billund, Denmark. To save money, the company, which has struggled in recent years, is shifting production to two plants in Hungary run by Flextronics, a Singapore-based electronics manufacturer. A new Flextronics plant will open in Juárez, Mexico, this fall.
Less than 3 percent of Lego’s production comes from China, and it has no plans to set up a factory there.
Ravensburger said it produces 85 percent of its toys in its home factory in Germany and a company-owned plant in the Czech Republic. “In-house production,” it said, “provides the best possible quality control for us.”
Playmobil, a third the size of Lego and a tenth that of Mattel, has also resisted outsourcing, except for a few electronic parts, like the flashing light atop its police car, which is made in China. In addition to a flagship factory near its Bavarian headquarters, it owns two plants in Malta and the Czech Republic.
Sales of Playmobil toys are growing at a double-digit rate, Ms. Schauer said. In a twist, it plans to export its European-made toys to Chinese cities like Shanghai and Beijing next year.
Still, Playmobil and its European rivals are not about to gloat over Mattel’s misfortune.
“We don’t want to throw stones, in case we’re sitting in a glass house,” said Ms. Schauer, whose company last had a recall in the United States in 1982, involving toys made by an American contractor.
Playmobil’s medieval knights and Roman warriors are coated with shiny paint — brilliant reds, jaunty yellows and such — which Ms. Schauer said contained lead, albeit well below levels hazardous to children. To ensure the safety of its coating process, she said, Playmobil kept close watch over its manufacturing process.
It is clear that Europeans trust Chinese contractors less than their own employees.
In a statement on Playmobil’s Web site, its founder, Horst Brandstätter, said, “Outstanding quality can only be reached when production is carried out under one’s own eyes, by people who have developed brand awareness over a long time, and learned to produce the highest quality.”
As Ms. Schauer put it: “You cannot blindly believe in German manufacturing. But when you are so close to the factory, you can jump in your car and be there in 20 minutes.”
Not all Europeans agree that factories need to be nearby. Brio, based in Malmo, Sweden, moved the bulk of its production to China in 2004 after it passed from family ownership to a Swedish investment firm. But the chief executive, Thomas Brautigam, said the company exerted rigorous quality control over its three factories in Guangdong Province.
“We checked every single paint jar when this happened, but found no problems,” he said, referring to the Mattel lead recall.
Brio, Mr. Brautigam said, adhered to stricter quality standards than the industry norm and chose Chinese partners that abided by those standards, even if it meant forgoing the lowest-cost option.
“Most people are aware that you can’t judge everything that comes out of China the same way,” he said. “It would mean that 85 percent of all toys have problems, which is absurd.”
Posted by Alex Goldschmidt on Tuesday, September 18, 2007
COMMENTS
“...why does Wal-Mart still choose to outsource the majority of its products to countries where these conditions still exist?”
Because, Alex Goldschmidt, the toys in question are not Wal-Mart’s products. That is, unless Wal-Mart bought Mattel, and noone heard about it…
Bill in
Tuesday, September 18 at 11:51 AM
Silly, it’s all about Mattell’s matierals…
tjc in NY
Tuesday, September 18 at 12:23 PM
“If that’s the case, why does Wal-Mart still choose to outsource the majority of its products to countries where these conditions still exist?”
It is a quite puzzling statement by the author, for it intimates that Wal-Mart is the actual manufacturer of the products in question.
We know that not to be the case.
What I think has happened here is purely a lack of editorial ability.
Someone writing who perhaps not fully adept at writing, perhaps an intern.
The correct piece should read:
“If that’s the case, why does Wal-Mart still choose to import the majority of its products from countries where these conditions still exist?”
However mistakes can sometimes be fortuitous.
They can, provide an avenue, in that the examination of them, they may lead us into more refined thought and critical analysis.
In the world of commerce, we often see large companies partner with suppliers through a variety of ways.
Much like say GM may partner with Goodyear to provide unique tires for a Corvette.
So it is not out of the question to think some possibility that Wal-Mart, may have, or continues to have a relationship with Mattell, in that Mattell manufactures a line tailored to their largest customer’s wants.
In fact it more credible than not.
However such relationships are not easily transparent. There could be merely mutual verbal agreements between top level officers.
There could be contractual agreements, but held proprietary for competitive reasons.
None of these type agreements are required to be transparent.
Many years ago I worked for one of the largest chemical manufacturers in the world.
It was not uncommon to manufacture to ‘spec’ for a particular customer, who was a ‘wholesaler’, who in turn supplied their major customer a ‘retailer’.
Nothing all insidious about this, it is common business.
The product was not ‘private label’ either
And since 80-90 percent of production, wound up in the hands of one particular ‘retailer’, the ‘wholesaler’ and ‘retailer’ needs were fully satisfied.
cazar in
Tuesday, September 18 at 03:42 PM
Bill,
When WalMart says “JUMP!”, you are suppose to say “How High?”
Scott Warns China Wal-Mart Suppliers Re ‘Standards’
Greg Levine, 10.20.05
Scott said the discount giant would be more involved in its overseas suppliers’ businesses, to be sure they are accountable. He said Wal-Mart Stores (nyse: WMT - news - people ) will work with them to hone in on new products that meet demand for higher standards, such as new apparel lines based on organically grown cotton the chain plans to sell next year.
The CEO then took a strident tone towards its Pacific pipeline. “The factories in China are going to end up having to be held up to the same standards as the factories in the U.S.,” Scott said. “There will be a day of reckoning for retailers. If somebody wakes up and finds out that children that are down the river from that factory where you save three cents a foot in the cost of garden hose are developing cancers at significant rates--so that the American public can save three cents a foot--those things won’t be tolerated, and they shouldn’t be tolerated.”
http://www.againstthewal.com/archivepage.htm#Scott_Warns_China_Wal-Mart_Suppliers_Re_Standards__
Nothing like holding WalMart management to their word.
“...more involved in its overseas suppliers’ businesses, to be sure they are accountable.”
WalMart/Edelman ‘war room’ imbeciles- It’s Mattel’s problem. It is China’s problem. Responsibility for WalMart supplier contracting for all this crap, let’s blame the unions.
SanDiegoView in
Tuesday, September 18 at 04:34 PM
cazar,
“The correct piece should read:
“If that’s the case, why does Wal-Mart still choose to import the majority of its products from countries where these conditions still exist?”
Wouldn’t the more correct piece read:
“If that’s the case, why does Wal-Mart still choose buy products from companies who choose to import the majority of its products from countries where these conditions still exist?”
As these products were from Mattel and were sold in stores other than Wal-Mart, (ie: toys-R-Us), I think one could agree that this is not a Wal-Mart problem, but rather a supplier problem!!
RDS in
Tuesday, September 18 at 06:32 PM
SDV,
“Scott said the discount giant would be more involved in its overseas suppliers’ businesses, to be sure they are accountable. He said Wal-Mart Stores (nyse: WMT - news - people ) will work with them to hone in on new products that meet demand for higher standards”
And, this is a ‘bad thing’ how?
RDS in
Tuesday, September 18 at 06:37 PM
cazar,
“Someone writing who perhaps not fully adept at writing, perhaps an intern.”
You got that right…
http://www.bu.edu/phpbin/news-cms/news/?dept=4&id=39838&template=82
Bill
Bill in
Tuesday, September 18 at 08:07 PM
...that Mattell manufactures a line tailored to their largest customer’s wants.
The practice is widespread enough to be known as manufacturing to Wal-Mart specs.
Wal-Mart not only dictates delivery schedules and inventory levels but also heavily influences product specifications. In the end, many suppliers have to choose between designing goods their way or the Wal-Mart way.
“Wal-Mart really is about driving the cost of a product down,” says James A. Wier, CEO of Simplicity Manufacturing, a lawn-mower maker that decided to stop selling to Wal-Mart last fall. “When you drive the cost of a product down, you really can’t deliver the high-quality product like we have.” ~ Business Week
Ken V in Texas
Wednesday, September 19 at 02:55 AM
“As these products were from Mattel and were sold in stores other than Wal-Mart, (ie: toys-R-Us), I think one could agree that this is not a Wal-Mart problem, but rather a supplier problem!!” RDS
I do tend to agree with you RDS, however one need be aware there are many ’deals’ which occur (as I described with the chemical company) were large corporations partner in an informal way (say memorandum) to produce to ’spec’ a product line.
Since these deals are usually buried inside these companies, they are not transparent to outsiders.
A funny thing happened on the way to the hardware store….(this a true story)
About a year ago I needed a new kitchen faucet.
Moen was about the best I’d seen over the years, that was the brand I wanted.
First stop, Home Depot, right across from the Wal-Mart where I worked.
I saw the display I liked, picked up the box, and opened it.
The thing was, well ‘cheesy’, poorly fitted.
I read the box, and cursed. Made In China.
“Damn are we getting everything now from there?”
At $49, It was not the quality I expected, nor wanted.
Then came Lowes. I found the same model different box, $54.
Assembled in USA. What the F***? I knew that to be code for “put together in US, probably from foreign import parts“.
Quality seemed fair, but by now based on my past experience (with manufacturing) this was beginning to have an ’odor’.
$74.00 poorer, but happier, from a True-Value (how ironically appropriate) I purchased a ‘Made in USA’ Moen Kitchen Faucet, the same model.
Now what happened here?
I knew what happened. Of course, I’d seen it some 30 years prior.
Moen was willing to use different manufacturing methods and sources in order to meet the price point needs of its various buyers.
Home Depot, the Wal-Mart of building supplies, with it’s aggressive pricing was purchasing the Moen ‘brand’ for a competitive advantage price point.
And Moen was willing to furnish that ‘brand’ through an imported product.
Sorry for the long post, but I think you can get the picture.
cazar in
Wednesday, September 19 at 06:53 AM
cazar,
“Moen was willing to use different manufacturing methods and sources in order to meet the price point needs of its various buyers.”
Really, isn’t that what successful businesses are supposed to do, offer a variety of products aimed at various buyers? Isn’t that why GM and FORD offer a LINE of products at different prices? In looking for that faucet, I would bet that you saw faucets from $49.00 to $100+, to fit consumers needs, isn’t that a good thing, CHOICE? If you were able to find the faucet you wanted, why shouldn’t others be able to buy the faucet they choose, if they want the $49.00 one? The one thing you and others fail to see, is that if no one wanted and bought that $49.00 faucet, it would soon disappear from the shelves and the day that consumers decide that what Wal-Mart sells is not what they want, they will start shopping elsewhere!!
RDS in
Wednesday, September 19 at 10:44 AM
RDS.
Thank you for your response.
And you are correct about how manufacturers produce ‘lines’ of products aimed at various buyers.
That is common knowledge, to say the least.
But let me suggest, with no offense to you sir, that while you used logic like a ‘skipping stone’ over water, you failed to understand why the stone sank.
I was not shopping a Ford ‘Focus’ comparatively to a Ford ‘Taurus’.
Those are two unique and separate ‘lines’ and price pointed automobiles.
Both of which manufactured for their potential demographic buyers.
In what I call now the ‘Moen Escapade’, I was not searching out various ‘models’, I was looking for ONE PARTICULAR MODEL, which I liked.
Most certainly I saw CHOICE, ranging from say $39 to $200, but I wanted this PARTICULAR MODEL, which because of its style, and fitness for my use, I wanted IT.
And it was this PARTICULAR MODEL, not ‘line’ nor ‘alternative’ which I sought out.
There is no argument from me sir, as to why manufacturers build separate ‘line’ products.
My point, which you deftly circumvent, was that apparently some manufacturers are building the SAME LINE IN DIFFERING DEGREES OF QUALITY, so as to fulfill certain RETAILER’S DESIRE FOR PRICE POINT COMPETITION.
cazar in
Wednesday, September 19 at 12:01 PM
cazar,
If you are saying that Moen had 3 different qualities of product, with the same “style name” and part number, made in 3 different places, I would have to say that that is totally dishonest and they should not do that!! But, if you are saying that they have 3 different models with the same ‘design’, but with different names, at different prices, based on where they were made, then I see no problem with that, because it is a price to quality issue!! This would allow a lower price for the same “Look”, for people who can’t afford the higher quality item!! Most stores, like Lowes, have display models, so you can ‘see’ the quality of the model you are looking for!!
You mentioned the Ford Focus comparision to a Ford Taurus, but the way the companies get around this, is by having different lines of the same body style!! With Ford, it is Ford (lowest priced), Mercury (medium priced) and Lincoln (higher priced)!! GM, has Chevrolet (lower priced), Pontiac (medium priced), Buick (higher priced)!!
RDS in
Wednesday, September 19 at 04:46 PM
The parent of Moen faucets, Fortune Brands, is a fascinatiing company. They make some of the following brands:
Waterloo Tool Storage Products
Master Lock
Simonton Windows
Therma True Doors
Moen Faucets
MasterBrand Cabinets
Jim Beam
Canadian Club
Maker’s Mark
Dekuyper
Geyser Peak Winery
Knob Creek
Starbucks Coffee Liqueur
Titleist Golf Clubs
Footjoy
Pinnacle
Cobra
Scotty Cameron
etc.
I like their diversified product lines-home products, golf gear and booze. This is a GUY company!
Of course, I seem to remember a Fast Company article from a few years back that mentioned Master Lock. The article blamed Master Lock employees who shop at Wal-Mart. “It’s Wal-Mart in the role of Adam Smith’s invisible hand. And the Milwaukee employees of Master Lock who shopped at Wal-Mart to save money helped that hand shove their own jobs right to Nogales. Not consciously, not directly, but inevitably.”
Blaming Wal-Mart for the fact that their are cheaper alternatives to Master Lock? Quite a stretch.
Nick in
Wednesday, September 19 at 05:46 PM
We know now you like guys,and you proved it is true.
Sam in LA in
Thursday, September 20 at 09:25 AM
“If you are saying that Moen had 3 different qualities of product, with the same “style name” and part number, made in 3 different places, I would have to say that that is totally dishonest and they should not do that!!”
RDS.
I am no Consumer Reports tech, I will say that the Chinese model was clearly inferior, and I suspected the ‘Assembled in USA’ model.
And yes, there were three apparent sources for the exact same ’style name’ and ’model’.
But why would this surprise you?
This is very common, among all manufacturers, including car companies.
I for many years liked Nissans, owning some six or seven.
A good friend of mine back then was an engine designer, he advised me to only purchase a Nissan with a “J” Vin, as opposed to a “N’ Vin.
He told me when in school he was inside nearly every engine made, and the Japanese were ridiculous fanatics. That the same engine made in Canada, versus the same from Japan, were incomparable.
He told me there were die cast gears in the Japanese engines which were polished to mirror-like perfection, while the North American same remained die rough.
He spoke of friction physics and things I really don’t understand.
Bottom line he said the same engine from Japan, was far superior.
Yet these were the exact same engine models, manufactured in separate locations on the globe.
cazar in
Thursday, September 20 at 02:20 PM
cazar,
“He told me there were die cast gears in the Japanese engines which were polished to mirror-like perfection, while the North American same remained die rough.”
Remember when people claimed ‘Made in Japan’, was considered ‘junk’? Now, people here, are saying that North American products are the ‘best’, yet you said your friend said that North American products were inferior, say it isn’t so!!
RDS in
Thursday, September 20 at 06:19 PM
“North American products...inferior” ~RDS
Only someone like RDS could say this with glee in his “voice”!
ScrewedbyWal-Mart in Anytown, America
Thursday, September 20 at 07:07 PM
“Only someone like RDS could say this with glee in his “voice”!” ~ Screwedby
Wow, now Screwedby has the ability to hear the voices of the posters here!! He probably does hear voices, but not from the posters, those ‘voices’ are in his head!! He even said once that he could ‘picture’ what I looked like, so he has ‘visions’ too!!
I didn’t say North American products were inferior, cazar’s friend did!!
RDS in
Friday, September 21 at 01:24 AM
RDS,
“Remember when people claimed ‘Made in Japan’, was considered ‘junk’?”
You hit the nail on the head—most of the people, here are too young (or too blind) to realize we’ve been going “offshore” for a while, now.
In the 60’s, it was Japan
In the 70’s/80’s, it was other, smaller Asian countries (e.g., Korea, Taiwan)
...and China from the 90’s, forward
And that’s not even considering the NAFTA/CAFTA factor.
For those of you who are truly down on China, give it about 5-10 more years—once the Chinese economy gains steam, there will be another country waiting in the wings to give low-cost manufacturing/exporting a go…
Bill
Bill in
Friday, September 21 at 08:59 AM
Bill in:Didnt you say in another post that you werent” present” for the ‘60’s(something about flags on peoples backsides?) and thats why that decade wasn’t included in your post?I think it was in a post by Screwed ,commenting on your omission of the 60’s.
ddrb in
Sunday, September 23 at 11:49 AM
(yawn!)
For those still not getting-it, the meaning of what I said was that I “wasn’t present”, when your boy Screwed “called me down” on the 60’s thing.
I addressed Tom’s question, elsewhere—there’s no need to repeat myself for your amusement.
Bill
Bill in
Monday, September 24 at 07:18 AM
Bill in:Your comment was’nt amusing the first time,thank you .I wonder how screwed likes being called my BOY?I suggest that posters go to ken v,s post ,addressed to you,about the definition of condescencion---You evidently were not raised in the South!
ddrb in
Monday, September 24 at 10:42 AM
“ken v,s post ,addressed to you,about the definition of condescencion”
Let’s see...Ken V - King of Condescension!
You’re right, ddrb— it fits him to a “T”—thanks!
Bill
Bill in
Monday, September 24 at 01:59 PM
Bill in:You mean bill,that you have to depend upon a droll troll to come up with your quips for you?But your welcome anyway,my boy!
ddrb in
Monday, September 24 at 04:21 PM
Ken V.:Le Roi c’est toi!Mais j’ai tout le temps connu ca ,porqoui ca pris aussi longtemps pour tout les autres?
ddrb in
Monday, September 24 at 05:14 PM
Ummm...you’re more perceptive than most?
(J/K! You flatter me needlessly.)
Ken V in Texas
Tuesday, September 25 at 11:00 AM
Bill in:Sounds like ENVY rhymes with Ken V.. .Billy Boy!
ddrb in
Tuesday, September 25 at 03:13 PM
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