Jim Walter, the head of quality for Mattel Inc., which recalled millions of China-made toys last year over lead paint and small magnets that pose a hazard when swallowed, said Mattel has increased the number of people in China who monitor vendor plants there.
Walter said the world's largest toymaker is following the policy of ``trust, but verify.'' Mattel sources half its China-made products from independent contractors, and half from Mattel's own plants in Guangdong Province, China's toy-making capital.
Mattel has hired 80 to 100 additional people to monitor vendor plants in China, Walter said March 10 at the Plastics News Executive Forum, held March 10-12 in Tampa. He said Mattel employs ``in the high hundreds'' of professional staff in Hong Kong and China.
Walter said Mattel has long-standing relationships with a number of vendors in China.
``And we do trust them. We work very closely with them whether they be in China or anyplace else,'' he said. ``But there is a sense that you do have to be present. And Mattel took steps, for example, to ensure that we had a presence in every single one of our vendors. Every day. And this requires a significant increase in our staffing to do so.''
The problem of lead paint came when some subcontractors used paint from noncertified suppliers - a failure to follow Mattel procedures, he said at the Executive Forum.
As Mattel's senior vice president of worldwide product integrity, Walter is in charge of product quality, safety and reliability.
The lead problem involved a very small number of contractors, out of the total supply base, and a small number of toys relative to the number of products Mattel makes, he said.
The lesson is that companies with far-flung, global manufacturing operations need to have direct involvement on a daily basis, Walter said.
``It emphasized to me, the fact that you cannot be 99 percent accurate here. You cannot be 99.9 percent accurate here. You have to be 100 percent accurate, 100 percent sure. And that requires a level of vigilance that, frankly, us and a number of people in our industry and other industries were not exerting at the time,'' Walter said. ``I also want to emphasize, as far as I'm concerned, this is not a China issue, for us. This is not a Mexico issue. This is an issue associated with manufacturing, and manufacturing in places where you may not be, every single day of the year. And it's a way that companies like Mattel have to manage business while operating in various places around the globe.''
He said Mattel officials are checking and documenting materials, including paint, and manufacturing processes. ``We have much greater control on subcontracting. We must visit, and we must train every single subcontractor prior to use.'' Also, every production run gets tested, to make sure toys are safe.
Walter, who gave a keynote speech to kick off the forum, also participated in a panel on sourcing products in China.
Another speaker, lawyer Dan Harris who co-writes the ChinaLawBlog.com, agreed that U.S. companies need a physical presence at plants in China, for quality control.
``Not only do you need good local people on the ground, but you also need your own people on the ground. Because, the good local people can help with dealing with China, but you need an American to oversee what's going on in China, to help the Chinese understand what needs to be done from an American perspective,'' said Harris, a partner in the Harris & Moure law firm in Seattle.
Mattel voluntarily recalled the toys in question. Lead is considered a health hazard. Walter called hazards of small, powerful magnets ``an emerging issue'' for toy safety that the industry is now recognizing.
During his speech, Walter showed clips of television news reports about Mattel's recall. The firm was blasted by the media blitz. Reporters grilled Mattel Chairman and Chief Executive Officer Robert Eckert.
``The press coverage was unprecedented,'' said Walter, a chemical engineer with an MBA in finance. ``The impact on a number of people at Mattel, myself included, was unprecedented.
``We don't pretend that that wasn't deserved, and we took steps to address those issues.''
Walter currently serves as chairman of the Toy Industry Association's safety standards steering committee. The New York trade group is working with the American National Standards Institute to develop standards covering design, product testing and factory audits.
TIA wants the industry regulations to mesh well with new toy safety legislation expected this year from the U.S. Congress, he said. From industry's perspective, one set of national regulations is much better than rules set by individual states.
Another speaker was Jeremy Haft, president and founder of BChinaB Inc., a contract manufacturing and logistics firm in Washington.
``One thing these product recalls show is that China has a long way to go before it meets United States quality standards,'' said Haft, who details some of these issues in his recently published book, All the Tea in China: How to Buy, Sell and Make Money on the Mainland.
And it's not just toys. He cited the recent scare over contaminated heparin, a blood thinner, sourced from plants in China.
Harris urged Executive Forum attendees to understand, and keep track of, fast-changing laws in China. He also said U.S. companies that source products in China should register their intellectual property, trademarks and patents with Chinese authorities - even if all the products get exported back to the United States. Failure to do that allows competitors in China to register, and later they can block your products, he said.
Harris said U.S. companies often don't have much recourse when a Chinese supplier delivers poor-quality products.
``Contracts can only do so much when it comes to quality. I'm sure Mattel had great contracts. But you have got to always be monitoring the quality of your products,'' he said.