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Toy industry struggling as prime selling season starts

November 1, 2007

6 Min Read
Toy industry struggling as prime selling season starts

It’s not often that an industry asks the government to force testing on it, but that is exactly what the toy industry has done, at least in the U.S. Without a swift restoration of consumer confidence, this is a market set to take some hits.

This little fellow stood tall during an open house at Ferromatik Milacron. Toy maker Playmobil (Furth, Germany), where he and his toothbrush were made, credits its captive processing operations for its safety record.

Green Toys Inc. tapped bioplastics supplier Cereplast for a new range of toys.

One firm’s struggles will prove another firm’s opportunity, and some plastics processors and OEMs are bound to benefit from the bad press associated with lead-laden toys made in China. An outfit named Green Toys Inc. is using bioplastic sourced from Cereplast (Hawthorne, CA) for a new line of toys including a toy tea set, indoor gardening kit, and more. Cereplast’s plastics are made from renewable resources such as plant starch. Green Toys, headquartered in San Francisco, manufactures and assembles its products in the U.S.

The U.S. Toy Industry Assoc. (TIA; New York) in late August approved a program in which it said it supported a federal requirement to require toy manufacturers to hire independent laboratories to check some portion of their toys, no matter where these are made. The TIA also announced it is working with the American National Standards Institute (ANSI) to develop and standardize procedures to verify product compliance with U.S. safety standards, and to develop certification procedures for independent testing labs to conduct these tests. In July the TIA organized its 12th Toy and Factory Safety Conference for Chinese Manufacturers in Guangzhou, China, and encouraged its members—U.S. toymakers—to send their Chinese manufacturing firms to attend. Some 250 did, according to Adrienne Citrin, spokeswoman for the TIA.Only a person living in a vacuum would not know why the toy industry suddenly wants more government oversight, just as you didn’t need to attend the Shanghai Toy Expo, which closed its doors on October 19, to know what the hottest topic there was: conformance to standards. Following last summer’s spate of product recalls, many in the toy industry, concern for safety has taken on a new relevance—and safety, or at least product liability, has always been a paramount concern for toy manufacturers. The issue has become a political one as the most publicized recalls all stemmed from goods made in China, and the toy recalls all involved toys from Chinese sub-suppliers to foreign-based multinationals such as Mattel. Some Chinese news commentators, noting that product recalls are hardly limited to goods ‘Made in China’, have compared the extensive, and sometimes one-sided, media coverage surrounding the product recalls to xenophobia, so it is clear emotions are high on both sides.An opportunity for processors outside of China? Well…How will plastics processors profit from the tumult in the market? In fact, they likely will not, even though Chinese toy manufacturers who want to export to the European Union or the U.S.—the two largest markets for toys—earlier this year had to agree to meet stricter certification; only products market with the CCC (China Compulsory Certification) are allowed to be exported to these two markets. Since June 1, 2007, CCC certification is demanded prior to export of six categories of toys: metal and plastics toys, electric toys, toy vehicles, jet toys, and dolls.According to China’s association of toy manufacturers, cited in the German-language Beijing Rundshau newspaper, the added cost of the certification, which includes substantial paperwork and a mandatory factory inspection by an approved Chinese laboratory, will increase Chinese toy manufacturers’ costs by about 8%, at a time when their average profit margins are under 3%. About 80% of toys made in China are exported to the U.S. and Europe. In the U.S. alone, the traditional toy market—not including video games—stood at $22.5 billion for the period June 2006-July 2007, according to The NPD Group (Port Washington, NY). If it looks like a perfect storm, it may well be one. Either toy prices for consumers rise, and some of this increase is passed to the contract manufacturers in China or other low-wage countries, or many of these contract manufacturers will be forced to close, or leave the toy industry for other business. This would appear an opportunity for toymakers in North America, Europe and elsewhere to enter the market, but many toys are so labor-intensive to make that only manufacture in low-wage countries can be justified. Plus, many large plastics-consuming toy makers, such as Playmobil, have their own captive processing, and Mattel has indicated it may take even more of its production in-house. A likely scenario is that some toy makers whose production is primarily outsourced to manufacturers in China will have a bad holiday season, will weather it, and by this time in 2008 consumers will again demonstrate that their loyalty remains to low prices, regardless of where they are made.Phthalates issue rises yet againLike a movie zombie, the issue of phthalates in PVC toys has been laid to rest, and crept back to life, a number of times in the past decade. Here it comes again.On the positive side, plastics processors of PVC toy products received some good news in August when a report for the TIA, prepared by scientific and engineering consulting firm Exponent (Bellevue, WA) concluded that DINP is safe for use in children’s’ toys. Phthalates may be added to polyvinyl chloride (PVC) to make the rigid polymer flexible, Diisononyl phthalate (DINP) replaced DEHP in the 1980s as the phthalate of choice for these applications, but phthalates are an ongoing target of some groups because of some phthalates’ toxic effects, at least on tested rodents. But Exponent’s report states that current exposure of children to DINP-containing toys would pose a minimal to non-existent risk of health effects. Before the Exponent report really had any traction, in September a state proposal in California was made to ban PVC toys with phthalates. The proposal prompted protests from the American Chemistry Council (ACC; Arlington, VA) and the Toy Industry Assn. (TIA). DINP is present in many childrens’ toys and has previously been cleared by different bodies, including the U.S. Consumer Product Safety Commission (CPSC). With an effective date of Jan. 1, 2009, California’s Assembly Bill 1108 would bar the manufacture, sale, or distribution of any toy or childcare product containing di-(2-ethylhexyl) phthalate (DEHP), di-n-butyl phthalate (DBP), or benzyl butyl phthalate (BBP), in concentrations exceeding 0.1%. For products intended for children under three years, which can be placed in the child''s mouth, the ban extends to diisononyl phthalate (DINP), diisodecyl phthalate (DIDP), or di-n-octyl phthalate (DnOP), in concentrations exceeding 0.1%.TIA and the ACC are joined in opposition of the bill by American Electronics Assn., California Chamber of Commerce, California Grocers Assn., California Manufacturers and Technology Assn., California Retailers Assn., Chemical Industry Council of California, Grocery Manufacturershttps://www.plasticstoday.com/Food Products Assn., International Bottled Water Assn., Juvenile Products Manufacturers Assn., and The Society of the Plastics Industry.

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