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Barbie's Toxic Dream House

September 10, 2007

Photo of Barbie toys

Ok, this is getting ridiculous. How many more toys and other products made in China need to be recalled before the U.S. government regulatory agencies get on top of this and do their jobs? The most recent disaster is the recall by Mattel of 800,000 toys, many of which involve their flagship product, Barbie. Apparently, Barbie's home is a toxic waste dump of lead-contaminated paint. All those cute little accessories that round out the Barbie Dream House? Totally toxic. This is the third recall for Mattel, and shareholders are not happy.

Right now, Mattel is facing a crisis of monumental proportions for both its brand and its bottom line. The costs of the recalls still have to be calculated and will probably extend out for many years, particularly from lawsuits that will linger on. Of more immediate concern is the coming Christmas holiday and convincing consumers that its products are safe.

Mattel isn't alone in the recall category, as rivals Hasbro (NYSE: HAS) and RC2 (Nasdaq: RCRC) have also initiated recalls. And many other companies outside the retail world are being negatively affected from China's tainted goods. Yet the size of Mattel's recalls and the fact that they continue to crop up every few weeks are a concern.

The recall problem is so bad that Disney just announced that it will test all its own toys from here on out.

Problems with Chinese-made goods first appeared with the recall of Thomas the Tank Engine products made by RC2. Parents were initially outraged, and probably promised to swear off any tainted brand indefinitely. But as the list of recalled products grew, even to include well-known products such as Barbie and Disney's "Cars" line of toys, alternatives are shrinking. Mattel and its Fisher-Price division are considered particularly vulnerable, after recalling millions of toys because of lead paint concerns or pieces of toys that might be hazardous to children. Hasbro (NYSE: HAS), too, had to recall its popular Easy-Bake Ovens because of injury concerns.

Disney licenses its characters to some 2,000 companies, and it says it will test the 65,000 toys already on the shelves at a cost of several million dollars. In future, when the cost will run the company several million dollars annually, Disney intends to pass along those fees to toymakers in contract negotiations.

With the critical holiday period coming up fast, companies are working hard to reassure parents that its toys are safe to buy. Viacom's Nickelodeon announced in July it was adopting similar independent testing procedures in the wake of the Thomas & Friends recall. And retailers like Wal-Mart are also hiring independent laboratories to check the toys they sell.

The problem here is twofold. First, China is a developing country which has minimal health and safety standards, for products or for workers. They work for pennies a day. Because of outsourcing, a majority of U.S. products are made in China. When you buy that toy for your grandchild, remember, it's most likely a Chinese child who made it. It's a case of children making toys in sweatshop conditions -- for children. The New York Times had an especially horrifying investigative piece on the subject last year. But no one seems to care.

The second problem is that the regulatory agencies under the Bush administration aren't doing their jobs. Budget cuts and partisan policies have hurt the American consumer. Heck, we don't even inspect our own food properly, much less the stuff coming in from China. Tainted spinach, peanut butter or beef, anyone? Somehow, I've lost my appetite.

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