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Don’t throw yourself under the (CPSIA) bus
Posted by Kathleen Fasanella on Jan 19, 2009 at 6:20 pm / CPSIA / Trackback
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.
