Mattel Takes the Blame for Toy Recalls

Recent toy industry recalls have less to do with shoddy overseas manufacturing than with design issues in the U.S.

Veteran character actor Harry Shearer has a regular feature called the "Apology of Week" on a Los Angeles radio show he hosts. Toy giant Mattel (MAT) has been hosting its own version lately, the Apology of the Day.

No sooner had Chief Executive Robert Eckert finished expressing contrition at congressional hearings (, 9/13/07) Sept. 12 and 19 regarding lead paint in toys, that word came of another Mattel mea culpa. The company's executive vice-president of worldwide operations, Thomas Debrowski, expressed remorse to Li Changjiang, the head of China's quality control agency, for the recent spate of product recalls (, 9/5/07). "Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys," Debrowski said, according to media reports from China.

Mattel's latest public penitence reveals a fact largely overlooked in the swirling controversy over toy industry recalls: Most of them don't have to do with shoddy overseas manufacturing. The majority involve products that were just designed poorly to begin with (, 8/14/07), most likely right in the U.S.

Placing Blame

The finger-pointing at China began earlier this year with a wave of news about tainted pet food, toothpaste, and tires manufactured there. More stories followed about toys made with hazardous lead paint. Mattel announced three major recalls, involving some 20 million items. The company said a number of toy cars and Barbie-related accessories had been colored with lead paint, a violation of company procedures. The contractors involved were dismissed, and Mattel significantly stepped up its pre- and post-manufacturing inspections.

But, as the El Segundo (Calif.) company freely admits, most of the recalled items—17.4 million—had nothing to do with lead paint. Instead, they were manufactured with a new generation of high-powered magnets that if swallowed by children could cause serious injury or death. (The recalled toys with lead paint numbered 2.2 million.) Mattel was hardly the only company caught up in the magnet issue. A child's death prompted a major recall of Rose Art Industries' Magnetix building sets in March, 2006.

Design Failures

Many other toy recalls have also been design-related. In February, Hasbro (HAS) recalled nearly 1 million Easy-Bake Ovens when it was discovered that children could easily get caught in them and burned. The recalls continue. On Sept. 21, the U.S. Consumer Product Safety Commission announced the recall of 1 million cribs made by Simplicity of Reading, Pa. If assembled improperly, one side of the crib can detach and suffocate children. The cribs have been linked to three deaths and seven "infant entrapments," according to Simplicity's Web site.

In a study released at the end of August two professors from the University of Manitoba noted that of the 550 toy recalls that have occurred since 1988, 76% of them were due to design-related problems. Only about 10% were directly attributed to manufacturing defects. The percentage of defective toys manufactured in China has been rising, but so has the percentage of overall Chinese-made toys. Indeed, the percentage of recalled toys made in China last year—80%—mirrors the percentage of all toys built there.

"It would be far too easy to attribute this summer's recalls to China's poorly regulated export manufacturers," Representative John Dingell (D-Mich.) said as the latest hearings began on Sept. 19. "Regulatory deficiencies, shoddy business practices, and the forces of globalization all play a substantial role in this catastrophe. There is enough blame to go around."

Hari Bapuji, one of the two Canadian business-school professors who conducted the recent recall study, says the problem of unsafe toys won't be solved simply by stepped-up inspections. Toy manufacturers will have to do a far better job designing the toys from the start. Bapuji thinks the industry is getting the message though. "In the short run there is a problem," he says. "In the long run they will come out of this stronger."

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