U.S. Toy Industry Group Plans Stricter Standards (Update2)

By Heather Burke

Feb. 18 (Bloomberg) -- The U.S. Toy Industry Association, whose members include Mattel Inc. and Hasbro Inc., said its board unanimously approved a plan for a new testing system following the recall of tens of millions of Chinese-made toys last year.

The proposal includes more-stringent procedures for analyzing safety during the design and manufacturing of toys, as well as the testing of finished products, Joan Lawrence, a vice president for the group, said today. The proposal applies to the industry, not just the association's members, Lawrence said.

The $22 billion U.S. toy industry was rocked last year by the recall of tens of millions of Chinese-made products, many for containing excessive lead paint or magnets that could be swallowed. Toymakers and retailers have implemented stricter standards and Congress has introduced legislation to overhaul consumer-safety laws.

``The industry takes the issue of the recalls in `07 very seriously,'' Lawrence said in a phone interview from New York. ``We have created a very aggressive program to fix the lapse we saw in the safety-assurance process.''

The new standards come during the American International Toy Fair, held Feb. 17 to 20 at the Jacob K. Javits Convention Center in New York. More than 1,200 exhibitors will show their 2008 line to 15,000 buyers and 21,000 toy-industry professionals, the association said yesterday in a statement.

Toys ``R'' Us, Wal-Mart

Toys ``R'' Us Inc., the largest U.S. toy-store chain, said last week it would adopt standards for surface lead paint that are stricter than the U.S. government's. It would also require manufacturers to increase testing of their products by outside laboratories for all shipments on or after March 1.

Wal-Mart Stores Inc., the world's largest retailer, is implementing the same lead-paint standards for new toys as Toys ``R'' Us. As of March, Wal-Mart will require all new and reordered toys to be tested by independent labs, spokesman Nick Agarwal said today.

Toys ``R'' Us, based in Wayne, New Jersey, and Mattel, the world's largest toymaker, are also ending the use of nickel- cadmium batteries. Toys ``R'' Us said it told manufacturers to stop using the batteries in toys made exclusively for the retailer by year-end.

Nickel-Cadmium Batteries

Mattel, maker of Barbie dolls and Hot Wheels cars, is starting a pilot program to replace all nickel-cadmium batteries with nickel-metal hydride ones because they are manufactured more safely. The company plans to phase out nickel-cadmium batteries by the end of the year because of the ``potential environmental risks involved,'' spokeswoman Lisa Marie Bongiovanni wrote in an e-mail today.

Last year, Mattel recalled more than 21 million toys containing excessive amounts of lead paint or magnets that may detach. RC2 Corp. pulled back 1.7 million Thomas & Friends wooden railway toys with lead paint.

U.S. toy sales in the U.S. fell 2.2 percent in 2007 following the recalls and a slowdown in consumer spending, the NPD Group Inc., a market-research firm, reported Feb. 12.

Last week Senate leaders worked out a compromise on consumer safety legislation, clearing the way for the first overhaul of the laws governing toys, lighters and other products in almost two decades. The measure must be passed by the full Senate. The House passed companion legislation late last year.

Criminal Penalties

The measure would raise potential fines on companies to $20 million, 10 times the current maximum, require outside testing of toys and impose criminal penalties on those that violate safety laws.

The Toy Industry Association's proposal is meant to work in conjunction with the Congressional legislation, which calls for the U.S. Consumer Product Safety Commission to create a certification program or to designate an outside group to do so, said Lawrence.

``That legislation would give our program teeth,'' said Lawrence. ``They're really meant to work hand in hand.''

Acting Consumer Product Safety Commission Chairwoman Nancy Nord said at the Toy Fair today that there is ``no excuse'' for companies to not comply with the lead-paint ban, said agency spokesman Scott Wolfson. She said there will be civil penalties against companies that violated the law in 2007, he said. The agency hasn't decided the details of the penalties, Wolfson said.

The Consumer Product Safety Commission recorded 61 toy recalls covering 25 million units for the year ended Sept. 30, 2007, said Wolfson. In 2006, there were 40 recalls, he said.

U.S. markets were closed today.

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net.