So, why is the toy industry now calling for third-party testing? The short answer is Christmas. Toy makers have only a few months to regain parents' trust and avoid a financial disaster this holiday season. But there are longer-term rationales as well. Mandating third-party testing drives up production costs, which helps large companies like Mattel and hurts small toy makers—particularly those sporting "Made in America" labels. While many small domestic toy makers applaud the idea of more testing, some worry about what the big guys are up to. "I test for lead already," said Pete Bultman, president of family-owned Lindewood Inc., the company that makes Uncle Goose wooden building blocks. "But if Mattel and Hasbro and others band together to impose a mandatory testing process that would cost me a lot of money, I would just fold up and go away."
The problem, say the small fry, is how the big guys make toys. They outsource everything, and their contractors rely on subcontractors, who rely on other subcontractors to sell them goods. There's a reason the Toy Manufacturers of America changed their name to the Toy Industry Association in 2001—many of their members no longer manufacture toys, and they rarely do so in America. When a multibillion dollar company like Mattel has such an attenuated supply chain, you can be sure that a measly $63 million regulatory agency like CPSC has little idea what's going on. And when it does, there's not much it can do (even if the officials in charge want to, which lately, they haven't). Requiring third-party testing won't mean that CPSC has the money or the will to enforce it.
And enforcement is the key. At Mattel, Eckert brags about flouting the 24-hour rule simply because he knows he can get away with it. Regulators have been complaining to Congress about companies that flout their regulations since 1983. A law school professor wrote about this in 1989, and Consumer Reports reported on it in 1994, concluding that few "scofflaws" are ever punished. And in those rare cases, the most CPSC can do is to issue a fine of $1.83 million per infraction, a mere slap on the wrist for a company the size of Mattel, which racked up nearly $6 billion in sales last year.
The solution is a bulked-up, bolder CPSC, and fines large enough to make a multibillion company think twice before taunting regulators. CPSC has not had a permanent chairman for more than a year. A good start would be for President Bush to appoint one who is pro-consumer. And Congress needs to make sure that the industry's offer of third-party testing doesn't turn into a bid for immunity from civil lawsuits filed by parents whose kids are injured or killed by toys. There's a precedent for this at CPSC: When the agency's last chairman, Hal Stratton, signed off on a rule intended to improve the safety of mattresses, he agreed to an industry-backed clause that tries to restrict consumers' right to sue if they are injured in a mattress fire. If the toy companies try this trick again and Congress lets them get away with it, kids could wind up even worse off.