Weeks after Mattel rocked our world with its stunning back-to-back recalls of over 10 million toys, a picture is emerging of how lead paint got onto the toys in the first place. According to this NY Times article, Mattel had old ties to manufacturers in China and did not do enough oversight of the suppliers those manufacturers used to make their products.
Mattel has been manufacturing in Asia far longer than many companies (the first Barbie was made there in 1959). That led to long-term relationships with certain Chinese contractors, many spanning decades. Paradoxically, that appears to have contributed to Mattel’s problems: the longer it outsourced to a factory supplier with good results, the looser the leash became.
According to the article, Mattel allowed its most trusted manufacturers to do their own quality control testing, with spot-checks by Mattel only four times a year. Lee Der Industrial, the supplier involved in the first recall, had worked with Mattel for 15 years. The Early Light Industrial Company, the contractor that made the Sarge cars in the second recall, has supplied toys for 20 years, the article says.
In both cases, the Chinese companies broke Mattel’s rules on what paint they were allowed to use. Mattel has certified only eight paint suppliers. Lee Der bought lead-tainted paint from an uncertified company. Hong Li Da, the subcontractor, used uncertified paint when a tub provided by Early Light ran out.
Officials at Mattel say that production costs for labor and materials have risen substantially in the last three to five years, which may have led the manufacturers to try to cut corners, unbeknownst to the company. “We insist that they continue to use certified paint from certified vendors, and we pay for that, and we’re perfectly willing to pay for that,” one official said.
Mattel makes about half of the toys, including Barbie dolls, in factories owned by the company. The other half are made by 30 to 40 outside vendors, the article says. Mattel admits it was not watching those companies closely enough.
Mattel vetted the contractors, but it did not fully understand the extent to which some had in turn subcontracted to other companies — which in turn had subcontracted to even more. Mattel required its vendors to list subcontractors, so Mattel could visit them, but Mattel is investigating whether that procedure has been followed. A number of companies whose factories Mattel had never visited may have had a hand in making the toys that were shipped around the world.
With its image tarnished, Mattel is still in the process of trying to understand what the hell happened. The article says that company officials in Hong Kong are “trying to figure out how many subcontractors became part of its lineup.” It is also looking to find “a common thread” among the lead recalls in China.
Heads have already begun to roll. Four subcontractors have been fired and more are being investigated. The company has also begun to enforce a rule that subcontractors cannot hire two and three layers of suppliers below them. And the company plans to test every batch of paint that is used on its toys.
“We do realize the need for increased vigilance, increased surveillance,” said Jim Walter, a quality control officer at Mattel on the day of the recall announcement.
Umm, yeah. Those are toys for children you’re selling buddy. You should have recognized the need for vigilance before you let your manufacturers do God knows what and stick your name on the label. Not only have you jeopardized kids’ health, you screwed your shareholders in the process. Now that’s gotta hurt.