Friday Rant: Mattel — Proving That a Few Chips of Lead Paint is Worth $50 Million+

Just a few years back before anyone thought that Chinese suppliers would make a regular thing of cutting corners and putting lives at risk by shipping tainted toys, food- and baby-products and drywall, there was an original incident that stopped everyone in their global sourcing tracks. And it got us at the time to at least start thinking about the product quality risks associated with demanding ever-cheaper products from China without sending in the requisite supplier development and quality resources. What was the incident you ask? It was Mattel's initial lead paint recall (which happened around the same time as the first Thomas the Train/RC2 lead paint recall as well).

Fortunately -- or unfortunately, depending on your perspective -- this original issue is still in the headlines as a lesson to all of us about how costly valuing only price on the global sourcing front can be. Earlier in October, the AP ran a wire story suggesting that Mattel's lead paint settlement with consumers could exceed $50 million. But that's only the beginning of the total costs associated with the initial lead paint fiasco.

In the wire dispatch, the AP notes that "Mattel Inc. and its Fisher-Price subsidiary have agreed to settle a consumer lawsuit for what could total more than $50 million over the 2007 recall of millions of toys made in China that were found to contain high levels of lead. As part of the settlement, there's even a line item for paranoid mothers -- rightly so in their paranoia, mind you -- who independently tested their toys (and possibly children). To wit, "Members of the settlement may recover all out-of-pocket expenses incurred for lead testing, up to $600,000 for the class." Many Spend Matters readers might have forgotten that this original lead paint incident was not an isolated occurrence. According to the story, "the six Mattel-related recalls in 2007 involved more than 2 million toys, and were part of a slew of recalls by several dozen companies which resulted in a total of 21 million toys being recalled."

I wonder if as consumers, we've yet learned our lesson from the ultimate downstream risks of driving retailers and consumer products companies to source and manufacturer cheaper and cheaper toys and other items in China and elsewhere. Ultimately, I believe this case -- and all the related ones around the same time -- were not only a reflection of the blind trust we put in Chinese suppliers to manufacturer low-margin products to specific specifications without watching their back for ways they might try to eek out an extra RMB or two per item.

They are also a reflection of our cultural demands as a society to live far beyond what our real means can support -- buying ever larger quantities of stuff for our children and ourselves without thinking through the true costs of our demand. If you need a culprit in this, I'd look first in the mirror before blaming Mattel and China (unless of course you're a trial lawyer, who clearly welcomes such consumer spending orgies leading to tainted and dangerous products that can result in a windfall).

Jason Busch

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