With greater clarity finally arriving in the last few days from federal authorities, the sporting goods industry was spared the full brunt of new child safety laws banning products containing certain chemicals starting last Tuesday, February 10. But with several issues still left unresolved, 2009 promises to be another year of scrambling for manufacturers and retailers trying to understand appropriate compliance with the new product safety laws.
The new laws passed in August 2008 arrived after the government recall of some 40 million toys in 2007 for excess lead.
Under the Consumer Product Safety Improvement Act (CPSIA), manufacturers had faced a February 10, 2009 deadline to certify that their products met strict new standards of 600 parts per million for lead and 1,000 parts per million for phthalates.
The new laws also mandate laboratory testing and eventually require each product to bear a label stating how and where it was made.
Just days before the new limits were to go into affect, the U.S. Consumer Product Safety Commission (CPSC) delayed the testing and certification requirements for one year. It also finally declared that sporting goods were exempt from the ban on phthalates in toys, except for toy versions of sporting goods. Both these moves saved costs and a possible wide scale destruction of tainted merchandise.
But the vendor community remains up in arms around many aspects of the ban.
For some, the major issue involves the added costs of compliance. This may include expenses tied in quality control hires and technology, third-party testing, legal and professional counsel, and creating a website specifically for certification. It also includes time spent exploring and lobbying the issues. These extra expenses particularly pose a threat to smaller companies.
For others, the big issue is what to do with the leftover inventory. When the new limits were announced in mid-August, commitments were already made with factories overseas and those couldn't be adjusted. Since the product had been made at the time in accordance with the law, manufacturers now feel they're being unfairly punished due to the law's change. They feel more time has to be given to clear any tainted inventories.
“We all want to do the right thing but just be fair and give us time when you change a law,” said Richard Scarpelli, VP of operations at Regent Sports Corp.
Other issues still requiring greater clarity include third-party and supplier testing, importer certificates and the tracking labels that will soon be required on product and packages. But one core issue remains; “How will the ban be applied to products that do not fit neatly into a specific category?”
For a number of products, the definition of what constitutes a “toy” under the phthalates ban still remains vague. Around phthalates, the law defines a toy as “a product intended for use by a child 12 years of age or younger for use when it plays.”
The wording of the law becomes particularly difficult to assess for products that can be used for both “pretend play” as well as in a game. For instance, the small rubber footballs typically given away at trade shows might logically be considered a toy, but a slightly larger version that's often used by kids in games could be considered a sporting good. Other “gray” product examples would be goggles and kickboards, which are sometimes used for doing laps and other times used for fun.
With the new lead requirements, it is also still unclear in many cases what products are primarily used by someone 12 and under. For instance, a kids' tennis racket with a smaller handle that's lighter than an average racket may also be used by children over 12, especially females, and even adult women.
In these questionable cases, it's now up to the manufacturer to determine whether the product is subject to the new lead limits in childrens products. While the CPSC is promising further guidance, the SGMA is urging its members to use a little common sense.
“If you make the Sponge Bob baseball glove made of pleather, that's a toy. A Nerf Hoop set is a toy,” said Bill Sells, SGMAs VP, government relations. “If you make a kids first-time t-ball glove that's being used to play organizational sports with adult supervision, that's not a toy. People have to be reasonable.”
Ultimately, the cost of compliance is expected to raise costs in the industry.
“We have spent an enormous amount on legal fees, laboratory testing and website development for the purposes of compliance. We may need to add personnel as well,” said Bob Yoksh, VP of operations at Cramer Products. “In short, our costs and therefore our prices will go up.”
But Yoksh's biggest concern is legislation possibly coming down the road.
“It looks a lot like what we have seen in Europe,” says Cramer Products Yoksh. “The mistakes of a few have placed an enormous burden on an entire industry and for arguably questionable real benefit. The burden for delivering safe products is and should be on the manufacturer and we support that. However requiring third-party testing and certification adds a much higher burden to manufacturers.”