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Toymakers: Up in Arms Over Product Tests


Few small craft shops and artisan toymakers noticed last summer when Congress passed a sweeping new product safety statute known as the Consumer Product Safety Improvement Act. The law, drafted after millions of lead-tainted imports were recalled in 2007, mandates strict testing for lead and other hazards in any product aimed at children, from toys to clothes to kids' books, starting Feb. 10. But small producers say the change, while well-intentioned, will force them out of business by requiring costly testing for small batches of goods. Now they're mounting a massive campaign online to change the regulation—the only way many producers see to save their businesses.

How big is this grassroots effort? A proposal to amend the law on Change.org, an independent site identifying priorities for the Obama transition, was voted among the top 10 proposals, garnering 12,280 votes. A Facebook group for the cause has more than 10,000 members. They've got the attention of lawmakers and national media—The Wall Street Journal (NWS) ran an editorial embracing their cause. While some trade groups, such as the Toy Industry Assn. and the National Federation of Independent Business, are also working on the issue, a loose confederation of self-organized business owners is at the forefront of the fight.

These freshly minted activists say that's because the law hits small producers the hardest. More than 46,000 businesses that have no paid employees made apparel or sold children's toys or clothes in 2006, with average sales of $40,000, according to the latest Census data. The mandate to test every batch of every product, while practical for mass-market manufacturers, threatens to put crafters who make small batches or unique items out of business. Olivia Omega Logan, who runs the Baby Candy T-shirt company from her home in Aurora, Colo., says she was quoted a price of $50 to $100 to test components of her kids' T-shirts by a third-party lab, which will be required in August as the law stands now. To test each part—fabric, thread, snaps, designs, and tags—of her 75 discrete items, known as stock keeping units (SKUs), would cost between $18,000 and $37,000 for each run, she estimates. Her total revenue in 2008 was $38,000.

Small-Producer Exemptions

Dan Marshall, co-owner of Peapods Natural Toys in St. Paul, Minn., a retailer that buys from small manufacturers and crafters, says the law should account for the size of producers, just as certain small-scale growers are exempt from food labeling laws. "Do we need the same level of diligence with somebody who makes two dozen of something as we do with somebody making 12 million of something?" Marshall says. Many want a system in which producers who use materials tested by their suppliers would be exempt from testing themselves.

Lawmakers who pushed the new act, including Senator Mark Pryor (D-Ark.) and Representative Bobby Rush (D-Ill.), urged regulators in a Jan. 16 letter to clarify how they will implement the requirements for small businesses, including whether component testing can satisfy the law's mandate. The Consumer Product Safety Commission is seeking comments on such a proposal through Jan. 30, but it's unclear whether any change could be adopted before the Feb. 10 deadline.

Medical experts say that exemptions from final product testing need to be grounded in evidence, because exposure to even small amounts of lead can cause delayed speech, delayed development, and a loss of IQ points in children. "Industry has an obligation to provide safe products. That's their responsibility, and they can't argue that, well, it's too expensive," says Dr. Jerry Paulson, a lead expert at Children's National Medical Center in Washington. He says he wouldn't oppose a component testing system if producers demonstrate that it will prevent exposure.

Social Networking

Marshall and others are rallying support for such a change. When he learned about the breadth of the law in November, he set up a Web site called the Handmade Toy Alliance, which now has 200 members. Others created the issue page on Change.org, a forum on the social network platform Ning, an online petition, among other efforts to get the attention of media and officials. Business owners blogged and Twittered furiously and e-mailed their customers to enlist them in the effort. "When we notified our customers of the Change.org page and the Facebook page, we would just hit the refresh button on our browsers and see the numbers go up by hundreds," says Michael Secore of Craftsbury Kids, a two-person, handmade gift shop in Montpelier, Vt.

The entrepreneurs who took up the cause were able to put social media tools to work so adeptly because they built their businesses on the same technology. Many are one-person, home-based enterprises that long ago figured out how to leverage the Web to connect with customers, suppliers, and like-minded business owners. It was an easy step to mobilize their existing community to take on the tasks, such as contacting officials and reporters, normally organized by top-down trade associations or lobbying groups. "We don't have any lawyers, we don't have any lobbyists, we don't have any PR people," says Jill Chuckas, who runs Crafty Baby, a 10-year-old, home-based baby products maker. "What's in our arsenals really is technology."

It's not clear yet how successful they'll be. "There are absolutely cases where citizen activism has said to the state, essentially, your plans for enforcing something that seems to be good for an industrial system cannot be applied to…a cottage industry," says Clay Shirky, professor at New York University and author of Here Comes Everybody: The Power of Organizing Without Organizations. But he notes that the ad hoc campaign, as an after-the-fact reaction to the law, hasn't served small producers the same way formal lobbyists represent big industries. "The crafters have no one inside the Beltway saying, 'Oh, the Federal government's about to draft legislation,'" Shirky says. The Consumer Product Safety Commission plans to propose rules for exemptions, but they won't be done before the deadline for initial testing, spokesman Scott Wolfson says. Omega Logan says she thinks the effort is working but fears it may fall short. "I think they're hearing us, and I think they're making exceptions," she says. "I just hope that when it comes down to it, the exceptions really do help."

Read BusinessWeek's New Entrepreneur blog and follow the Small Biz team on Twitter.

Tozzi covers small business for BusinessWeek.com.


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