Mattel Toy Recall Problem of 2007

Mattel

This paper will discuss the Mattel Toy recall problem of 2007. I will provide background information about Mattel Toy, Inc. I will also describe the problem creating the recall and who was responsible. Next I will state my opinion of Mattel's actions in this recall situation; followed by the roles and responsibilities of the stakeholders. Finally, I will explain how consumers can protect themselves from this type of hazard in the future.

Over the past 30 years there has been an ever increasing trend to outsource manufacturing to Asia. Mattel is no exception. In an attempt to reduce production costs Mattel "began shifting production to Asia in the 1980's". (Lawrence, 2011, p. 531). Initially Mattel used outside contractors. However, concern arose over protecting the company's intellectual property. Not wanting cheap imitations of their trademark products, they soon either constructed or purchased factories in multiple Asian locations. Mattel did continue to "contract production to between 20 and 50 Chinese firms". (Lawrence, 2011, p. 532). By 2007 about 65% of Mattel products were being manufactured in China.

In 1997, Mattel developed a set of policies and procedures for its overseas contractors and factories to follow. Unfortunately for American children these initial procedures focused primarily on the working conditions of the employees and not the product safety and inspection process. Concerned with product safety as well, Mattel implemented a program to assess product safety and quality, including specific guidelines on lead in paint. This program required "...vendors to purchase paint from a list of certified suppliers or test the paint that they used to ensure compliance with the established standards...". (Lawrence, 2011, p. 532). Unfortunately, Mattel discovered that many of its China based contractors were sub-contracting work to facilities that were not adhering to the lead paint guidelines. By August 1, 2007 Mattel began a recall of 1.5 million of its products made in China.

In an attempt to reassure the American public, Mattel released numerous public statements detailing its plan to work with the Consumer Product Safety Commission (CPSC) in the U.S. and other international agencies that control safety in other countries. Mattel placed large ads in many large newspapers that are circulated worldwide. These ads detailed the products being recalled, contact information to handle all consumer questions, and instructions on how to handle the recalled products. One of the many press releases issued by Mattel stated:

"Mattel has rigorous procedures, and we will continue to be vigilant and unforgiving in enforcing quality and safety. We don't want to have recalls, but we don't hesitate to take quick and effective action to correct issues as soon as we've identified them to ensure the safety of our products and the safety of children." (Lawrence, 2011, p. 533).

The massive recalls prompted Mattel to launch an investigation. It was determined that Mattel's contractors and/or their sub-contractors had used lead-based paint on the toys they were manufacturing as a way of cutting costs and improving their profits. Even though Mattel had provided its manufacturers and contractors with strict safety guidelines pertaining to lead in toys and had made inspections approving the materials they were using, many of these businesses in turn sub-contracted the work to other businesses that had not been inspected by Mattel and had done so without Mattel's knowledge and permission. The investigation had also discovered that the businesses Mattel was contracting with had instructed the sub-contractors to use the paint approved by Mattel, but that those sub-contractors chose to ignore the paint requirement.

Was Mattel to blame? Ultimately I believe yes. Mattel was the corporation that contracted the work. They were the ones who chose the manufacturers to do business with. They were also the ones that had made inspections of the materials being used and set out clear guidelines to follow for the manufacturing process. But what went wrong? I believe that Mattel was naïve in their belief that these overseas manufacturers would follow the guidelines and requirements set forth by Mattel and the CPSC. I believe that the overseas businesses chose to cut corners when Mattel's back was turned. These businesses did what was necessary to pass Mattel's inspection and approval process; then when Mattel was comfortable and not as vigilant in its observations of the foreign production process; the overseas companies chose to sub-contract the work to cut costs and did not require the sub-contractors to follow the safety guidelines that were in place.

Did Mattel handle the 2007 recall crisis in a socially responsible manner? I do not think so. The CPSC has a key regulation that states that "companies must report a defect/recall within 24 hours of discovery". (Mattel Recalls 2007, n.d.). Initially, however, Mattel did not do that. They first learned of the "possible lead paint contamination" on "June 8, 2007". (Mattel Recalls 2007, n.d.). It was not until "July 26, 2007 [that] Mattel files full recall report with CPSC" and not until "September 4, 2007 [that] Mattel voluntarily recalls 850,000 toys with lead paint". (Mattel Recalls 2007, n.d.). This clearly indicates that Mattel was not acting socially responsible. Mattel tried to defend its delayed reporting by stating that "CPSC timeline [was] 'unreasonable'" and that it "needed to conduct an internal investigation first". (Mattel Recalls 2007, n.d.). The CPSC, however, did not see it their way; they fined Mattel $1.1 million dollars for the violation. It is clear that Mattel was more concerned for their reputation than the safety of the American children. This was not socially responsible.

Just as I believe that Mattel did not act in a socially responsible manner, I also believe that they did not act in an ethical manner.

"Business ethics is the application of general ethical ideas to business behavior. Business ethics is not a special set of ethical ideas different from ethics in general and applicable only to business. If