Don’t throw yourself under the (CPSIA) bus

By now, those of you following on twitter or here in the forum may have read the letter that the most strident legislative backers of CPSIA namely Waxman, Rush, Rockefeller and Pryor, sent to Nancy Nord of the CPSC. Many have taken this letter as a good sign because it’d mean that the law’s primary proponents have publicly acknowledged there are grave issues with the law. Within our own community, the letter is seen positively because it specifically requests a “small company” exemption. Other than that they faked you with a classic bait and switch -a bone they’re thrown to get you to shut up- hinging all your hopes on a possible exemption would be a grave strategic error. Unknowingly, you will be throwing yourself under the bus. Many of us suspect that the idea of a small company exemption is a strategy to placate the masses. They are hoping you will rest easy and stop annoying congressmen and senators with phone calls and letters or continuing to lobby the press for attention. Fewer of you will be going to the media with your concerns and the negative news stories will dry up if you think there’s a fix in the works. This is the last thing that should happen. Do not rest easy.

For starters, have you given any thought to how “small company” will be defined? According to the SBA -the Small Business Administration- small (in the needle trades, SIC 315) means a firm with fewer than 500 employees. Using the governmental standard would mean that nearly everyone who makes children’s products would be exempt from the law but this implies that retailer’s more stringent interpretations of CPSIA don’t matter (more later). Small would include firms like Hanna Anderson and Gerber as well as all of you. In fact, there are probably fewer than 10 firms in existence that have more than 500 employees because children’s wear is dominated by small companies (68% have fewer than 20 employees). Now, because a “small” business exemption would include nearly all producers, it is not likely that this is the definition that would be used under any proposed CPSIA amendments.

The reason is, it’s no secret that there is a direct correlation between safety and company size. Contrary to what many think, it is tiny companies that have more products failing than large firms as Jennifer Taggert -who’s tested thousands of products- can tell you. In other words, special interest groups know that giving the tiniest companies an exemption would actually increase the proportion of dangerous products on the market, so why would it pass? It won’t. As such, the consensus seems to be that the mention of a small company exemption is for politically expedient reasons. Do not be misled, it’s a bone thrown to you to keep you quiet. A small company exemption is likely to fail and in the mean time, having relaxed, the movement loses traction. Other than my own below, here is another analysis from Mr. Fashion-Incubator as to why a small business exemption is unlikely.

Still, I’m willing to debate the potential of a small business exemption because I want to show that you still don’t win even if it were true. Let’s presume the amendment does pass and “small” is defined by really tiny, say a company with 1-5 employees. You’re still not off the hook, here’s why:

  • If you’re selling to big box stores (some tiny companies do!), they require their standards be followed which are much stricter than the CPSIA. You wasted your time having faith in an amendment that doesn’t help you.
  • If you’re selling to independent stores, you’re in trouble because many of those stores will likely go broke themselves because between all of the tiny producers they buy from who either can’t get testing or can’t afford it and considering the tough economic climate, there won’t be enough product at moderate price points to stock the shelves.
  • Let’s just say you’re really tiny and sell consumer direct on Etsy or your own site. You’re still in trouble only you don’t know it yet.

I’ll explain; assuming you can get a 1-5 employee small company exemption, demand for your products is going to go through the roof because you’ll still be in business and you have an advantage price-wise that others don’t. I’ll bet you’re thinking that sounds great, right? Success is very seductive. Like most people in this position, you’ll look for ways to maximize your opportunity meaning growth. Unfortunately, you’ll then be side swiped two ways.

  • One, you’ll be growing under crisis which is never good news (and you may end up failing because success kills more companies than slow sales).
  • Second, lo and behold, you’ll add on staff and grow your way out of the exemption that gave you your growth impetus in the first place. You don’t know this yet and call me crazy all you like but usually when you get to this stage of growth, you learn that selling consumer direct is kind of a hassle so you begin to look for wholesale customers, only there won’t be many anymore or the few stores that do survive, will be gob smacked with many of your competitors who have a lot more experience, relationships and more competitive pricing so you won’t get any orders meaning you’re actually in a worse position than before because you will have lost your exemption.

In summary, even if you qualify for an exemption to come, retailers will have gone under or you’ll grow out of the exemption very quickly. What everyone is forgetting here is the affect of this law on retail. Everyone is so busy licking their own wounds that they don’t realize that even if small companies skate by, retail stores -who buy most of their stock from companies larger than you- will go under so they won’t be around to take on your line. If retail goes under, tiny companies will either fail themselves or at best, stagnate. This why a small company exemption will not work and throwing larger firms under the bus in an effort to save your own hide will backfire.

Due to liability concerns, retail is demanding much stricter standards than what the CPSIA requires. In addition to what I said retailers should do, Earnshaw’s said this. And they aren’t the only ones as I mentioned before. Wal-mart put all their vendors on notice to supply lab results -not just GCCs- for anything shipped over the last three seasons. Fail to comply and they’ll ship it back. Burlington Coat Factory is demanding GCCs for everything shipped since January 1, 2006. Failure to comply means being assessed a chargeback that presumably feeds into an escrow pool in the event they’re sued by consumers. I received an email from someone who sells to Macy’s last week; they are demanding vendors produce a GCC within 24 hours of request. Or else. And yeah, I get it that most of you don’t sell to Macy’s, Wal-Mart or BCF but it affects you because if the apparel companies that do sell to them go under and they also sell to smaller stores you want to sell to and constitute the majority of their stock, those stores will go out of business too meaning you have lost a customer or at least a potential customer. Just as all boats float in a rising tide, they all flounder with the lack of one. In this case, decreased competition in the market place is destroying your chances rather than increasing your opportunities. Don’t you see that?

You don’t have to take my word for it, here’s some choice testimony from independent store owners. This is why their standards are stricter than what the CPSIA requires:

Many small stores like myself don’t have the power to send anything back…but regardless if you can or can’t send back, we will still be empty come Feb 10. In fact, most spring lines that are shipping right now are testing using XRF rather than 3rd party to save some time and expenses I presume, and since it’s not required of them until then. But that means come August, retailers like myself will be in the same predicament and will have to empty their shelves yet again and throw away their inventory come August! So I’ve made the decision not to accept any new inventory without 3rd party tests from now on. Sadly that looks like I’ll have a pretty empty store since we focus on handmade and smaller boutique labels for kids.

Another store owner said:

I have only received one Certificate of Compliance from a single manufacturer that applies to 2 of my 4000+ products. Several of my smaller manufacturers have told me that there is no way that they can afford the testing and they will probably go out of business. Some of the larger ones are “looking into it” but it will be several months before they will have anything and then it will only be for their new shipments, not for anything I have in my inventory now. Many of my suppliers are small custom crafters who are stunned to hear about this and of course will not be able to provide certificates. Other manufacturers are simply refusing my calls .

The only thing the most recent letter sent to the CPSC proves is that Congress does know there’s a problem with CPSIA but rather than rest easy, we must step up the pressure now more than ever. Everyone has targeted CPSC for outrage but the hold up is Congress; there will be no change of CPSIA! Are you aware there was a meeting held for congressional staffers last week? Here’s a report from sources who attended the meeting.

Even more outrageous, unnamed staffers are reported to have stated that no hearing would occur until an additional CPSC Commissioner was appointed, and that CPSC would be “unable” to appear at any earlier hearing. In other words, they have no intention of holding hearings in advance of the February 10 implementation date, despite the reams of data they possess on the many serious problems their law is causing. Actually, it is my understanding that the CPSC has requested such a hearing, but that request apparently fell on deaf ears. Spin, spin, spin – and then tell everyone that all discordant views are misinformation or the confusion of [fill-in-the-blank] people. Finally, to cap it off, we understand that House staffers are simply “too busy” to attend meetings with industry and the CPSC to discuss the details of the real life impact of the law.

In other words, CPSC has availed themselves to deal with the problem but it is Congress -in spite of their politically self serving letters- that is gumming up the works. So Waxman, Rush, Pryor and Rockerfeller write a letter that’s released to the public, and everybody thinks the ball’s back in CPSC’s court. It’s not. CPSC’s request for a meeting has been refused. So while you think CPSC is the bad guy and the heat is off Congress, this can only amount to grandstanding to get you all to shut up. By the time you realize Congress is not going to move on it, it’ll be too late. Actually, word has it it’s not even Congress per se but a few key congressional staffers with the power to do this. I can’t mention names but it brings to mind the immense power that eunuchs held behind the thrones of Imperial China.

So what can you do?

You can email but avoid putting the word “CPSIA” in the subject line so they can’t create an email filter to dispose of them easily. Also, be smart with your subject line, do not write “HELP” or whatever in all caps. Even I delete those thinking those are spam. Write a professional subject line.

  • In addition to emailing your legislators, send an email to all these congressional aides who like the eunuchs of Imperial China, hold the power over what your congressman or senator sees.
  • If you’ve posted an Etsy protest page listing the costs of your product with testing, it is requested that you email that. Do not email a link to your page, they won’t go. Paste in your photo and the text.
  • Email your testing price quotes.
  • Fill out the Economic Impact Survey
  • Continue calls, letters and emails to the media. Of everything you are doing, this has the greatest impact. Do not be persuaded that Congress is acting on this; they are not.

Feel free to use this text file to create a hyperlink that will automatically open an email window much as I did above and post it everywhere.

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28 comments

  1. Trevor says:

    Ooooo. Kathleen. So good. *rubbing my hands together* I have been waiting so patiently to see the BUS in print. It is so clear, perfectly versed. It makes so much sense. Thank you for urging us along to continue the push!!
    Off to read what Mr F-I has to say! :0)

  2. Esther says:

    Thanks for writing this Kathleen, you saved me from writing another snarky blog post on the topic myself! There is another looming problem with the small business exemption. At some point in the future I expect to see “Certified lead free” or “CPSIA compliant” or some other such label. All those indie designers and crafters clamoring for an exemption will not have the competitive advantage without a label too. Parents will notice the labels on the products in the big box stores and will expect it from Etsians too. The small business exemption will be nullified because these micro-cottage businesses will have to jump into the game and play like the big guys. How is a crafter going to explain that it is ok to expose their child to potentially harmful substances because they have fewer than 5 employees? It just doesn’t make sense.

  3. I DO NOT want a small business exemption. I repeat, I DO NOT want a small business exemption. What I want are clear guidelines, reasonable testing procedures, and an efficient way of making sure my products are safe. I am in this for the long haul, and eventually want to play with the big boys. You can be darn sure that when all of my testing is in place, I will be advertising the fact that I am “certified lead free.” Thanks Kathleen for this galvanizing post, and I am going to draft yet another letter this afternoon to all of the staffers who have the real power.

  4. Kathleen says:

    In an article published yesterday, a CPSC spokesperson confirms:

    We don’t anticipate any major changes to the law,” says Arlene Flecha, a spokeswoman for the U.S. Consumer Product Safety Commission. “It was created by Congress, and our role is to enforce it. It wasn’t intended to shut down any business. The intent is to protect children.

  5. 1) Sounds like Congress and CPSIA are busy trying to throw one another under the bus. Everyone else is just trying not to get caught in a pile-up.

    2) What are your thoughts on the impact of retailers? Let’s say that the CPSIA is repealed except for resetting permissible lead and pthalate levels. Nothing is said about how or what to test or who is responsible for it. Are you suggesting this wouldn’t make any difference because retailers would still require testing?

  6. bente says:

    I am reading carefully everything and I wish I could do more.
    Was just trying to send a message to a congressman; John Cornyn (R-TX).
    It doesn’t get through. Where else can I send my message?
    Thank you dearly for all your time and wisdom Kathleen.

  7. Maura Townsend says:

    What Melissa said, above. But I’d like to clarify:

    There should be provisions for regulation of testing fees, as a part of the CPSC testing lab certification. Sliding scales for small and micro businesses should be a part of that. At this time, there is no regulation whatsoever of the now mandatory testing fees, and that leaves the labs free to charge whatever they like.

    Component testing MUST become a part of the equation – if I can send in a swatch/sample book for lead testing, I can get on with my work. I can afford to test my fabric/finding/notion stock, without adversely affecting my costs, especially if the testing costs are REGULATED.

    ASTM nontoxic materials should be allowable, if the MSDS is sent along with the other component test results.

    I’d love to test my work. I’d be delighted to be able to do so. I cannot afford to do so (or, in the case of my unique items, cannot at all) the way it is mandated at this time.

  8. M says:

    I’ve heard from at least one person who called several testing labs and was told they didn’t evern want to deal with small businesses because it wasn’t cost effective.

  9. S H says:

    I think that all of this gibberish the gov’t spewed out before thinking all had good intent, but obviously NONE of them has had ANY retial experince or wholesale for that matter! As a wholesaler, I have asked each of the companies that supply my components to supply me with documention that states that the items I am using comply. I am only putting the components together, not altering them in any other way, so this should be enough. If they are doing masses of testing on each of their lots, why should I have to retest it all??? I need to get into the 3rd party testing business! LOL! If I can prove that ALL of the COMPONENTS I am using meet the CPSIA requirements, I think I’ve done my part…so sue me!

  10. OF COURSE the authors of this law don’t want to have hearings. Of course their staff is protecting their base of support so strongly.

    They know that if this law came up for review or debate, the other congressmen, the news media and the general public would see how full of holes it really is.

    They know that any intelligent person would want to scrap the law and start over with someone, who is a bit more knowledgeable about manufacturing and retailing, writing the bill.

    This is all about hanging on to power and not losing face.

  11. K K says:

    I’ve just read the letter and I do not see anywhere where it mentions a small company exemption. What am I missing? I see small company education and outreach, but nothing about exemption. I’m NOT in favor of exemption either, but the basis of most of your argument that that was put in to appease us…I don’t see.

  12. Laurel says:

    I did email the Congressional aides as suggested– This is a response I received from one that works for a PA Rep that VOTED for the CPSIA….

    —-
    Subject: Re: Request for Advice- Recent legislation
    Date: Tue, 20 Jan 2009 02:00:45 -0500
    From: Pxxxxx@mail.house.gov
    To: lxxxxx@hotmail.com

    When the new world order come in tomorrow, you can express outrage. But before you get “outraged” give us a chance to do something. Otherwise REMOVE ME from any “outraged” lists. Change is coming, let it happen before you hate your government again.
    ————————–
    Sent from my BlackBerry Wireless Handheld

  13. Joanna says:

    I read the letter and couldn’t find any mention of a small business exemption, either. The issues covered are “(1)Applicability of testing and certification requirements to certain children’s books and certain children’s apparel; (2) Guidance to resellers of children’s products such as thrift and consignment stores; (3) Component part testing; and (4) Guidance to small business generally.” In the brief section addresing (4), the letter mentions “education” and “outreach” but says nothing about exemption.

    Guidance to small business would be a good thing, no? Providing clarification and guidance to help small companies comply? I don’t see the problem there. And it says nothing whatsoever about micro-sized business, just small. The law, right now, is skewed in favor of big business in that only they have the resources to be able comply; reaching out to small business not with an exemption but with clear directions about the “legal and practical implications of the law,” how is that not a good thing? I just don’t see where the issue with that is.

  14. Kathleen says:

    Joanna and KK are absolutely correct. I’m guilty of having got caught up in the rampant calls for exemptions permeating the web -as this letter has been interpreted to imply- meaning a toe hold in the door. The rhetoric and calls for small business exemptions -particularly from one organization I won’t mention- is deafening. My three points remain intact in spite of my oversight

    1. The letter was a classic bait and switch strategy as well as passing the buck onto CPSC.
    2. Do not rest easy or let them off the hook just because they’ve expressed “concerns”.
    3. A small business exemption helps nearly no one.

  15. Jody says:

    The ONLY changes that will allow me to survive (short of Congress scrapping the whole law and starting over as Rick Woldenburg suggests and with whom I do agree) are:
    1) An exemption for textiles with colorants/dyes (not classes of products, but classes of materials and textiles with surface coatings which would be subject to the lead in paint regs anyway)
    AND
    2) components testing, which would allow me to test those items I might use that could reasonably pose a risk to children (painted buttons, zippers, etc.)
    AND
    3) supplier certifications (which would allow me to identify and select compliant supplies from reputable suppliers)

    It will take all of these changes for me to survive this (i.e. to conduct my business legally). I am a micro-manufacturer that uses lots of different materials in a given style and produces very small lots. Still, if the above changes were to be made, I could survive. I can purchase buttons, zippers, elastics, etc. in sufficient quantities such that I can spread the cost out over numerous styles if necessary to afford their testing. It is the testing of my textiles that is going to kill me.

    I confess that I did take heart with the recent letters. But, I know backpeddling when I see it. It didn’t occur to me that it was a bait and switch, but I’m lucid now. As I’ve said all along, Congress is the problem – they created this mess and CPSC now has to implement it. We need to step up our efforts on both fronts.

  16. bente says:

    Laurel: it looks like you got a reply from somebody that didn’t even read your e-mail.
    What does the changement of gouvernment have to do with this? I guess you will have to send a new one…(to get that person even more outrage!) Who seams angry here is the person recieving all the e-mails: he even uses capital letters to express his feelings.

  17. Diana says:

    So, now that our new president has halted all pending regulations until his administration can review them, does that affect the CPSIA?

  18. Diana: CPSIA is a law, and it is passed, so it is neither a regulation nor pending.

    The CPSC had, however, proposed some exemptions to the law. These would fall under the category of rules and regulations, and they *are* pending. So as of now, CPSIA stands and the exemptions are halted.

  19. Ingrid B. says:

    This may sound silly… but has anyone tried to reach out to Oprah? Many of us are aware of the law because we are in retail or make/buy/sell homemade. If I ask any of my friends if they aware of this law, most of them say “no” even though this law affects them as well. Oprah does informative shows and perhaps a show on this could motivate the masses and put more pressure on congress.

  20. olive hue says:

    I get all of this, and I agree that a small business exemption is just plain bad for everybody. What I want is clarification about what will and will not be affected. I do not craft clothing or toys, and like many who have commented on Etsy and other sites, I am an artist who creates prints to hang on the wall, not to GIVE to children to play with.
    I get the wording in the law that talks about “posters” because I’m sure there are a lot of little girls out there kissing their Jonas Brothers posters and all…but it seems to me individual artwork, whether paintings, prints or whatever, should not have to be tested. I can’t find anything where anyone speaks to that. It is just not practical for me to test a $10 print, nor to have my inks tested! It would cost me more than the inks are even worth!
    Does anyone know of a site or blog that addresses this specifically?

    Thanks

  21. Thank you for the tip Kathleen. I posted about it on my blog and JUST finished sending all of the emails and printing out the letters. Then sent the call to action to a bunch of others on my email contact list.
    It is 1am here now and I am pooped! But feel good knowing I have done my part.

    Can’t wait to see what you guys come up next for us to do!!

    Thanks again!

    Lisa, owner
    Kidcessory Haven Inc

  22. bente says:

    Olive, I use paint and ink in my t-shirt designs. The supplier have already made the tests. You can usually find the lab-report on their web-side or just ask for it.
    The problem here is that doesn’t count. I guess this is where the essence of the stupidity of this law lays: that we have to test it our self while it’s all tested before at the same lab!!!

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