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What It’s Like In My World: Two Views
By: Paul Kiewiet, MAS, CIP, and Dave Engel, MAS
Issue: 2009may
Living With The Consumer Product Safety Improvement Act Of 2008
Last August, Congress signed into law the Consumer Product Safety Improvement Act of 2008 (CPSIA), which made significant changes to consumer product safety laws. This month, PPB invited principals from a distributor company and a supplier company to share their views and experience on the operational challenges of compliance, costs and how the law has affected their businesses so far.
The Distributor’s View
By Paul Kiewiet, MAS, CIP
Imagine, if you will, a situation where a promotional product injured a consumer. Imagine that the consumer was a child. Perhaps the product did not meet flammability standards and the child was burned. Or, maybe the product contained dangerous levels of lead and was accidentally or carelessly swallowed. Or maybe the product had sharp edges, small parts or could pinch, cut or choke a child under the wrong circumstances. These may be long shots, but any of them would have wide-ranging consequences and represent very real, personal tragedy for real people.
If one of those situations occurred with a national brand product, a recall of the product would be expensive but pretty straightforward. But what if it were to occur in our industry? What about in an industry where a manufacturer may sell a potentially dangerous product to several of our suppliers who in turn custom decorate and deliver those products to hundreds of distributors, who sell them to thousands of end buyers, who distribute them to tens or hundreds of thousands or even millions of consumers? Would it be possible to recall a dangerous product in our industry?
Those are all scenarios that most of us have never thought about and, until a few years ago, were not even considered possibilities. But they are now. Former President George W. Bush signed a law that makes us all liable for making sure these types of things do not happen.
The new law impacts everyone in the promotional products industry, from manufacturers to suppliers to distributors to end buyers—CPSIA affects each and every one of us. As distributors, we cannot just pass the responsibility up the chain. The law specifically identifies that everyone who makes, distributes or sells consumer products is responsible for compliance.
What makes this new law especially challenging for our industry is that many of our items are used for purposes other than for what they were designed. Is it a flying disc or a paper plate holder? Is it a toy or a desk accessory? And one of the great strategic marketing values of our industry is also one of our greatest new liabilities: Our products have terrific pass-along value, are viral and get used not only by the recipient but by others as well. So while you may have planned your client’s tradeshow strategy around a clever promotional product for adults, that doesn’t stop them from bringing that item home to delight their children.
Also, how we decorate products may make them more appealing to children. If your client has a logo known and loved by children—mouse ears, a famous tiger, golden arches and many others that come to mind—you may have a children’s item on your hands.
As a distributor, I view it as my responsibility to educate both my end-buyer clients and my suppliers about the importance of compliance. All of us are in this together. This is an opportunity for my suppliers to demonstrate their professionalism and their partnership, but these are not one-way streets. This is also the time for distributors to demonstrate their professionalism and partnership. For all of us to create and add value, we need more transparency and more dependence on each other to protect each other, our clients, everyone’s brands and, of course, the ultimate end-user recipients of our products. Beyond the frustrating ambiguity of this law and the bureaucracy that it represents, we need to look at the intent and the spirit that remains—we want to deliver safe products that deliver results. None of us want to be responsible for the possible outcomes described in the first paragraph.
So what is a distributor to do?
1. Know the law. Become familiar with the standards outlined in the new law. Be able to speak to your clients and your suppliers about it. Accept it for the reality that it is. You don’t need to like it. You don’t need to agree with it. But you do need to comply with it. Choose to view this as an opportunity for you to be more valuable to your clients and more professional. Learn it and use it as a competitive advantage.
2. Be aware that every product that you distribute could be considered a children’s product if decorated with logos or graphics that give it child appeal. Yes, there will be times when you will be selling products that are not children’s products and may not be subject to federal consumer product safety bans, rules, regulations, standards or other red tape. But if you err on the side of being strict, you’ll avoid getting yourself or your client in hot water.
3. Honor the supply chain and make these new regulations an industry competitive advantage. First, choose your suppliers and become true two-way partners with them to protect each other and your clients and their consumers. Second, know your exposure if you have explored options to source outside our supply chain. How confident are you of their compliance efforts? You’re putting yourself and your clients and consumers at risk. And last, understand that your suppliers are experiencing extra costs for testing, for using quality manufacturers and for product testing and for new labeling and tracking procedures. These are going to incur costs that will need to be passed on and they will need your loyal support to make this work for all of us.
4. Let your clients know what you and your supplier partners are doing to comply and to protect them, their consumers and their reputations. It should make them think twice about buying direct or using unknown and unproven vendors. It should make internet-direct sourcing a very frightening and risky move on their part. Some in our industry have complained or at least commented on the ability to enter into this market as being too easy. Folks, the CPSIA has changed all that. Know and embrace this law and you’ll become the professional your clients need.
For me, as a distributor, managing product traceability will be the biggest challenge. For an industry that didn’t allow distributor salespeople to attend tradeshows until relatively recently, getting suppliers to provide the names, addresses and contact information for their factories may not be easy. (That’s an understatement bordering on sarcasm, in case you read that last sentence too quickly.) This law is going to require a major paradigm shift that includes true transparency, trust and partnership.
I have a client who requires traceability for all premiums when the tracking label portion of the law goes into effect August 14 of this year. This requirement is for a permanent mark on any consumer product primarily intended for children ages 12 and younger. Permanent means that stickers or hangtags will not be sufficient. The information must allow for tracing the source of the product, the date of manufacture and details such as batch or run number. This requirement will apply to all children’s products regardless of country of origin. In addition to the corporate social responsibility audits, our suppliers and their factories can expect traceability audits to become a standard requirement of major consumer product companies buying from our industry.
It is heartening to see that some of our supplier partners are taking a leadership position to comply with the CPSIA and make it easy for distributors to access testing. With more and more of us using suppliers’ online catalogs and websites, they can post this information on downloadable PDFs and keep the information up to date. It is my personal choice to work with suppliers who embrace this new reality and realize the value that they provide by working toward both compliance and cooperation. This is not something that any of us asked for, but it is our new reality. It is critical that, as an industry, we adjust to how things are and how they are going to be, rather than longing for the good old days.
This law with all of its ambiguity and unintended negative consequences is with us. It is unlikely to be overturned. It passed in the U.S. House of Representatives 498 to one. Your U.S. Senate passed it by a unanimous margin. This shows the power of consumer groups and just how quickly issues can escalate. It’s made me more aware of PPAI’s Legislative Alert and has made me a bit of an activist when some of these new laws, regulations and issues are making noise in Washington and in our individual states. You cannot sit quietly and wait for others to speak up. Make your voice heard locally, regionally, in your state and with your representatives in Washington.
If we accept the new reality and the new level of partnership that we need in our industry, we can turn this into an industry competitive advantage. By recognizing what our suppliers do best, letting them be the experts, rewarding them with loyalty and allowing them to profitably provide these higher levels of testing and compliance, we make the industry stronger, strengthen our channel of distribution, make promotional products more valuable and become more professional ourselves. We also raise the bar of admission, protect our clients’ brands and reputations and make the world a little safer. Progress isn’t always easy. And change is difficult. But as a wise person once said, “If it weren’t for change, we wouldn’t have butterflies.”
Paul Kiewiet, MAS, CIP, is president of Kalamazoo, Michigan-based distributor BrandKiwi, an affiliate of Mercury Promotions and Fulfillment. He may be reached at 269-806-4489 or paul@brandkiwi.com.
The Supplier’s View
By Dave Engel, MAS
As a consultant to suppliers in the industry, my company has been devoting almost 50 percent of its time to the CPSIA since November 2008. In particular, we have advised clients on how to interpret the Act and what actions they need to take to be in compliance.
The most difficult aspect of this has been trying to understand exactly what it is that the Act requires. Initially, as of November 12, 2008, we were required to issue General Conformity Certificates (GCCs). With one of our major clients, we ensured that for all importations after November 12, 2008, a GCC was prepared and made available to the import broker. In addition, we worked with the client to establish a system whereby every sales acknowledgement indicated that the surface coatings did comply with the appropriate regulations and that a GCC was available to the distributor by merely clicking on a link.
Then, at the end of January 2009, a one-year stay was implemented regarding some third-party testing and certifications. While the testing and issuance of GCCs were stayed, the requirements to adhere to the lead, phthalate and other rules, bans and regulations are still in place.
We are also faced with determining what is a “child intended” product, what isn’t and what could be. This is one of the most perplexing dilemmas. Since we decorate our products with various imprints, how can we determine whether a particular order of products will be going to a child?
It is with all of this in mind that I try to guide my clients and advise them of what I would do in their situation. I first determine if there are any products in the line that are or could be intended for use by children 12 years of age or younger. In virtually every case the answer is yes. I will discuss two of these cases.
Case 1
One of my clients provides products that can only be described as toys. Regardless of their intended use in a promotion, these items are generally accepted as products used by children as toys. Using an X-Ray Fluorescence (XRF) machine, we screened for lead content in every SKU in the line as well as every discontinued SKU. The reason for screening the discontinued items is that they were manufactured some time ago and these products are more likely to have a higher lead content. They might have been manufactured prior to the increased vigilance required by CPSIA.
In order to ensure both current and future compliance, my staff and I tested the products, when feasible, using the strictest lead levels of 100 ppm, a requirement coming by August 2011. This way we were able to determine which products were okay for the distant future, which products would be okay until August 2009 when the requirement will be 300 ppm, which ones were only okay for the current level of 600 ppm and which ones failed completely.
Products that failed completely had to be discarded. Products that passed under current requirements but not for future required levels were identified, and overseas vendors for these products were notified as to which components or full products will need corrective action before repurchasing.
Case 2
Another client is a supermarket of promotional products with a product line that runs the full range of products, except apparel and food. We immediately realized that most of the products in their undecorated status were not intended for use by children. However, once an imprint was added that was geared to children or to children’s use, the products could fall in the “intended for use by children 12 and under” category.
With this in mind, all components of all products in inventory were tested for lead content. This resulted in more than 6,000 component tests. Again, the strictest test level of 100 ppm was used. Fortunately, the greater majority of components and products passed, even at this level. In cases where the components failed at the August 2011 level but passed at the current or August 2009 level, the products were deemed to be safe for lead content and the vendors were notified of the necessary corrective actions.
Those items that failed at the current level are earmarked for our customer service department to notify all distributors who order these products that they are not safe for use by children 12 years of age or younger.
These are two examples of how our company has approached this situation with two different types of industry suppliers. In the first case, all of their products were considered child related and, in the second case, most of their products could be considered child related if promoted and imprinted as such. The intent to identify lead content was the same, but the resulting actions differed.
Costs Related To Testing
Testing for lead content is not free. If your company works with a laboratory, you may find that your costs range from $45 to $125 per test, depending upon the number of tests that the laboratory performs. One alternative is to purchase or rent an XRF machine. The purchase price is between $35,000 and $40,000 per machine, while renting it will be about $1,750 per week. To this cost, you must also consider the cost for training an operator and the operator’s time in conducting the tests. The good news is the tests are fast. But, considering the volume of tests required, the time spent on this step becomes significant.
An alternative is to find someone who conducts lead tests for suppliers at a nominal cost. We have found that by doing this we are provide a service with significant savings for suppliers.
Use Of The XRF Machine
The CPSC recognizes the XRF machine as a viable means of screening for lead content. However, it is not a substitute for third-party or accredited testing laboratories. It is very useful in determining which items may need further testing and which items are acceptable. The XRF machine may be used in a reasonable testing program for use in preparing the GCC.
While the CPSC has stayed the requirement of some third-party testing and certifications, we firmly believe that a supplier should, whenever possible, be prepared to issue certification to a distributor indicating the purchased product complies with the CPSIA requirements.
In order to issue any type of certification to distributors, our company must first obtain test reports from the entity that conducted the tests. Laboratories issue their reports to us as part of the testing cost. A feature of the XRF machine is that a Certificate of Verification for each test conducted may be printed from a highly encrypted spreadsheet. Not only will the results of the lead content test be indicated, but the test results of other elements in the product are also included.
Once these test reports are available, we advise our clients to market this fact to their distributors and suggest they can provide certificates, if requested.
Going Forward
The CPSIA allows us to establish parameters for a reasonable testing program for general conformity certifications. We can determine the frequency and methodology for the testing, as long as it is sufficiently strict to detect variations. All of our clients are establishing such programs.
In general, we advise that they request periodic tests from their established vendors, both overseas and domestic. Test reports for samples and the initial production are requested from new vendors.
Periodically, products are spot checked through either a laboratory or an XRF machine. It is extremely important that all vendors are made aware of the CPSIA requirements, are held responsible for them and understand their production will be spot checked. They will be held accountable for any production that does not conform to the requirements of the CPSIA. If they are unwilling to adhere to this policy, they may be dropped as a vendor by their customers.
In many cases, this act may have a significant influence over the type of products that are added to a supplier’s line. To avoid the problems associated with the products intended for or related to children, certain products or categories may be avoided or eliminated. There are products such as stress relievers that may not be intended for children in their promotional application, but the fact that they are imported under the duty-free toy tariff will cause problems in declaring they are not intended for children.
In the future, the costs for testing may become prohibitive for industry suppliers. If, when the one-year stay is lifted, we must perform all of the tests that the act requires, many of our company’s products may increase significantly in price. These are costs that neither the customer nor industry supplier will absorb.
I believe all we can do is to remain vigilant regarding our products, plan future courses of action and become more knowledgeable on what is and isn’t required of us as promotional products suppliers. The act was not drafted with a clear understanding of how our industry functions, but it does have a significant impact on us.
Dave Engel, MAS, is president of Shelton, Connecticut-based supplier Greystone World Resource Development. He may be reached at 203-924-7474 or greystintl@aol.com or david.engel@gwrdassociates.com.
CPSIA Timeline At A Glance
As of February 10, 2009, products designed or intended primarily for children ages 12 and younger may not contain more than 600 ppm of lead content by weight for any part of the product. This includes existing inventories of children’s products with lead content that exceeds 600 ppm. In addition, it is unlawful to manufacture for sale, offer for sale, distribute in commerce or import into the U.S. any children’s toy or childcare article that contains concentrations of more than 0.1 percent of di-(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP), benzyl butyl phthalate (BBP), diisononyl phthalate (DINP), diisodecyl phthalate (DIDP), or di-n-octyl phthalate (DnOP). This ruling includes existing inventories.
Note these upcoming deadlines:
August 14, 2009—Lead levels in children’s products will be limited to 300 ppm total lead content by weight for any part of the product. Likewise, lead limits in paint/surface coatings for children’s products will be limited to 90 ppm.
August 14, 2009—To the extent practicable, CPSIA requires the placement of permanent, distinguishing marks on children’s products and packaging to enable both the manufacturer and the ultimate purchaser to ascertain the specific source of the product by reference to those marks.
August 14, 2011—Lead levels in children’s products will be limited to 100 ppm unless the CPSC determines that a limit of 100 ppm is not technologically feasible for a product or product category.
Follow this link for a full list of key dates.
Where To Find More Info
Go to PPAI’s website at www.ppai.org and click on Member/Business Management/Product Safety for a dozens of documents and links to help you understand the requirements including a CPSIA presentation, Guide to Navigating the CPSIA, Q&A and webinar, plus information on lead, phthalates, coalitions, GCCs and much more.
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