CPSIA: How to move forward, coping with crisis

I tried to address this before but questions remain. Another entry you might find helpful is Overwhelmed, what to do when you don’t know what to do.

I am feeling deep down this is really bad, bad, BAD for children’s apparel (well actually all children’s products). Right? I know you are in the trenches and can’t tell me what to do, but can you tell me if I am over reacting? I’ve read everything you have posted & last night watched Rick Woldenburg Tube video, which is what has me really realizing I would love to be able to follow the crowd of folks who are saying that it will all be fine and not ever come to pass, but my gut is telling me otherwise. It is like there is a hurricane coming and some are fleeing, some hunkering down and other just going about business as usual.

I wish I could say your fears are unwarranted. I am suspended between temerity and terror assuming I’m not first thinking I’ve dreamed up this whole thing. Rick said in his video that of the people who know, most are either panicked, depressed, or in denial. In recent entries, Dave Bayless provides something to ponder in taking improbably events seriously (“Black Swans”) and the tendency of people to confuse risk with uncertainty. I think it is the uncertainty that is paralyzing so many here because we could act definitively if we knew the final outcome. I’ll get to options in a minute.

It is my OPINION -not fact- that the law is unsustainable whether it’s because it can’t be enforced with smaller vendors or the number of bankruptcies. Either way, my OPINION is that they will change the law. It is my understanding that the powers that be also realize this hence yesterday’s announcement of a request for comments (pdf). Let’s assume the rules do change, when will that be? Will it be soon enough to prevent the biggest problems or after the gravest losses have occurred?

Let’s consider the question under six scenarios.

  1. The rules don’t change in time -tiny enterprises
  2. The rules don’t change in time -small companies
  3. The rules don’t change in time -large firms
  4. The rules do change in time -tiny enterprises
  5. The rules do change in time -small companies
  6. The rules do change in time -large firms

This scenario -the best I can come up with- is fundamentally flawed because the outcome is already impacted by uncertainty due to the nature of production scheduling except for the tiniest of producers. For the sake of expediency, our “due” date is August 15, 2009 meaning it’s only after that date that our uncertainty will finally impact the consumer. A pivotal difficulty in talking with consumers is explaining that what we do or don’t do today affects their shopping at the start of school next year.

Firms small or large would traditionally be getting their collections together now for presentation at market in January and February. Buyers order from these options for delivery at the end of July and beginning of August. However, not knowing the outcome of this law means wondering whether you should even produce a line to show. I don’t know what market will be like in February. I’m sure there will be plenty of exhibitors and buyers who won’t know anything about this although word will get out soon after.

Small firms that don’t know about the law:
If the law does change, the people who knew nothing could be ahead of everyone who is paralyzed with uncertainty provided they can scrounge up the testing because it is my opinion that we’ll be impacted with some form of testing. The only issue is the type of testing required. Hopefully it will be permitted to use vendor supplied certificates for components. That’s our best hope. Those not knowing about the law could still be in for a peck of trouble. Assuming we will be permitted to use certifications from our textile suppliers, some people may need to re-fabricate their lines if they can’t get certs from their vendors. If not, their options are to test the components themselves. Within this paragraph are hints at possible choices if you are willing to assume risk (again, see Bayless’ article on uncertainty vs risk).

Small firms that do know:
If the law does change, you’re lean and have taken a bit of hiatus but worked on a line on the side in hopes of a good outcome, it is conceivable you can still produce a limited line in time for fall provided you can supply immediates. Come summer, the demand for immediates is going to sky rocket. The industry has been moving in this direction all along. It’s possible this crisis will be the impetus to bring this matter home to roost once and for all. Paradoxically, this may force smaller companies to move up another level (and in some ways, to less flexibility) because everyone who has been sending their work out to contractors will find the need to develop an in house sewing operation overnight. Either way, this one or the paragraph above, costs to the consumer will be higher. The customer will be paying for uncertainty.

Large firms, they all know about the law:
Over all and contrary to popular belief, large firms will take the biggest hit. If you’re not familiar with why large firms are most impacted, you must read this and this. The firms that will perform best are those that supply the equivalent of commodities. Still, this will be unsatisfactory to consumers considering the limited range of choice. A point in their favor will be if the CPSC expands the use of firms outside of their accreditation provided these in house labs stand the scrutiny of peer review (they likely do). If the rules do not change quickly, the outlook for many large firms is bleak. However large, they don’t have the flexibility to sit out a season or two and wait for the law to change but let’s assume they can. From the time the reset button is pushed, they have a 12 month lag time to get back into the market because it takes them that long to get a line together (another reason that of those that do survive, they’ll need to become leaner manufacturers).

Large firms also have the option of producing with the presumption of needing third party testing which means their costs will be higher. All the while, the smaller fish are eating into their territory and in two ways. First, if third party testing ends up not being needed, these large firms still would have incurred these costs in product development so their margins will be thinner than ever. If they’re competing with faster smaller fish who waited till third party testing wasn’t needed, they have a comparative price disadvantage too. These are just more of the reasons I say it’s inappropriate to be divisive between small vs large producers because as bad as things will be all around, small producers actually have more to gain if larger players have to stand still.

Tiny enterprises, self described (many are no different from us)
Which brings me to the tiniest of producers who stand the most to gain. Yes they do. Yes, I get that their homes and livelihoods will be dramatically affected in the same ways one would be impacted if one suddenly lost their job (no different than stitchers being put out of work when the largest producers go under). Some of them are making up household budget shortfalls and may have to go to work leaving their kids in daycare, definitely an unpalatable choice. Some may have difficulty securing work. However, of everyone, they have the most flexibility because they can react to produce basically the day market conditions change. I do predict some big changes in this market though. It will be more difficult for them to use fabrics they buy at the store because they most likely won’t be able to get certifications from retailers. In some ways it could be good because it will force them to overcome some trepidation and attend a wholesale fabric show. If you know where to shop, minimums just aren’t that high and you do have to know how to talk to people.

With respect to the tiniest of producers, I think an issue that has not been discussed openly is the conflict born of entitlement, often expressed in blogs and forums across the web as “freedom”. As the system existed, they had the freedom and entitlement to conduct their affairs as they saw fit and it won’t be that way anymore. It is only natural to resent that. We all resent forced change but it’s not practical to wallow in it or throw fits about it. Even under ideal modifications, this law will force many to either become more professional or get into something else. If this is something you love, it can only rankle being forced to put on a suit that’s too new or big for you. The truth is though, the only difference between many Etsy and eBay sellers and members of our forum is not company size but professionalism (for some reason, visitors and forum guests think we’re all big companies).

It boils down to forcing a commitment where there once was freedom and explains why men resist proposing marriage. This law may force the decision among tiny producers to become more serious about it. I don’t know how they can comply with the labeling requirements if they’re not using better management and tracking methods. And it’s not that they must use full-bore practices used by the largest firms (we don’t) but they’ll need to mature and adopt accepted standards that stand the test of time (in my book). For what it’s worth, if I were a tiny producer, I’d resent any of these options. It doesn’t seem quite fair if you’re used to doing things your own way and want or need to be flexible. It doesn’t feel fair to take something away from you that you’ve always had. But there are options. It may be possible for some of our members to sell yardage they’re not using to smaller producers and pass along the mill’s certifications. We just have to work together -which is another reason to mind your rhetoric. Nobody will sell you anything if you’ve been posturing with them vs us.

In the end, only you can decide how to act. Only you know if you have the resources to present a line on the basis of what amounts to speculation and hope for a pay out. You must be proactive and reality based. Like it or not -and we won’t- changes are coming down the pipeline. They won’t be palatable and it’s highly doubtful they’ll exempt enterprises based on company size because this is a safety issue. For example, the tiniest restaurant has to meet the same safety standards as the large ones. In the end, there’s few winners least of all consumers who will have to pay for it all.

Other entries in this series:
Safety Regulations that affect ALL children’s manufacturers
National Bankruptcy Day
Unit vs Component Testing
What must be tested
Confusion run amok
Splintering serves no one
CPSIA and small manufacturers
CPSIA Survey: The costs of a recall
CPSIA & CPSC: Activism and what you can do

Related in the forum:
The War Room: CPSIA & Consumer Safety. This is a very active section with nearly 60 different threads and over 1,000 postings. Open to the public.

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  1. Kathleen…what an excellent post. Guess I fall under “Small Companies That Do Know.” After my initial shock, I’ve decided to forge ahead in hopes of doing well with immediates. I’m not going to do much to produce my Fall/Winter samples…just add a few fabrics and lengthen the sleeves.

    I feel I will be in a good position as many of my small competitors will seize operations and many large firms will not be able to react in a timely manner.

    Thanks for sharing your views and our possible options. I think I’ll sleep better tonight.

  2. Pam says:

    Fantastic summary Kathleen. You have it completely nailed down correct in my opinion. All bases covered in the article, all angles are all spot on. You hit me exactly where I live, in wait. The only point I would like to make is that the final say on how the law will shake down on August 16 has to be written and stated fully by the CPSC by May 16 (90 days prior to it going into effect). So we all get to wait until May unless they decide to make the judgement after all the comments are received by Jan. 30.

  3. vicki says:

    As always, you articulate exactly what I needed to hear. Thanks for keeping us informed and explaining for everyone. I appreciate it, will re-read, digest, think, plan and figure out a game plan.

  4. Lynn says:

    Kathleen, Having not yet produced my first line (hoping for spring), all of this is pretty scary. That being said, I really appreciate your extremely detailed information about it. Don’t know what I’d do without your web site. Thanks so much!

  5. Laura says:

    Thanks for all the informative articles about this issue. One issue that was not mentioned was the recycled movement. For designers whose entire line is based on using vintage fabrics or reworking discarded garments into new products, it is impossible for them to comply with the new laws because they cannot continue making their products just by attending a wholesale fabric show. From what I’ve read here, it seems that the CPSIA will absolutely put these eco-friendly designers out of business. Since each item uses different textile source materials, even in-house testing would be utterly cost prohibitive. The “upcycling” movement has gotten great press coverage over the past year, including CNN and the New York Times. People who care about climate change and the environment want to buy products from these recyclers, but am I correct in the understanding that the CPSIA outlaws this entire category of products? Is there any hope for those who make altered/recycled textile items, or should we just give up a successful business midstream?

  6. Kathleen says:

    …the demand for immediates is going to sky rocket. The industry has been moving in this direction all along. It’s possible this crisis will be the impetus to bring this matter home to roost once and for all. Paradoxically, this may force smaller companies to move up another level (and in some ways, to less flexibility) because everyone who has been sending their work out to contractors will find the need to develop an in house sewing operation overnight. Either way, this one or the paragraph above, costs to the consumer will be higher.

    I’ve been saying this forever (but nobody listens to me). California Apparel News says much the same today:

    cash-strapped retailers have taken to placing late orders and relying more heavily on at-once business—placing a premium on speed to market, something that would require costly air freight for American brands sourcing overseas. Domestic manufacturers, with their more forgiving minimums and geographic desirability, are suddenly looking more and more reasonable to brands, despite their higher prices

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