Mattel Could Announce Second Recall of Chinese-Made Toys

By | August 15, 2007

Less than two weeks after Mattel Inc. recalled 1.5 million Chinese-made toys because of lead paint, the toy industry is bracing for another blow that could give parents more reason to rethink their purchases just before the critical holiday shopping season.

Mattel is set to announce the recall of another toy involving a different Chinese supplier, according to three people close to the matter who spoke on condition of anonymity because of the sensitivity of the situation.

Details of the latest recall were not immediately available, but one of the three people confirmed early Tuesday that Mattel plans to recall several hundred thousand die cast cars because their paint may contain excessive amounts of lead.

Scott Wolfson, a spokesman for the Consumer Product Safety Commission, declined to comment. Mattel officials did not immediately return phone calls.

The U.S. Consumer Product Safety Commission scheduled a news conference Tuesday in Washington to announce what it said was “a major recall.”

A new Mattel action would mark the latest in a string of recalled products from China, ranging from faulty tires to tainted toothpaste. With more than 80 percent of toys sold worldwide made in China, toy sellers are nervous that shoppers will shy away from their products.

On Aug. 1, Mattel’s Fisher-Price division announced the worldwide recall of 1.5 million Chinese-made preschool toys featuring characters such as Dora the Explorer, Big Bird and Elmo. About 967,000 of those toys were sold in the United States between May and August.

Mattel, based in El Segundo, Calif., apologized to customers for that recall and said the move would cut pretax operating income by $30 million. Fisher-Price “fast-tracked” the recall, which allowed the company to quarantine two-thirds of the tainted toys before they reached store shelves.

In documents filed Aug. 3 with the Securities and Exchange Commission, Mattel noted that additional information became available in July on “other smaller product recalls and similar charges were recorded.” Those recalls involved design problems, according to company officials questioned last week.

Mattel officials have maintained that a European retailer discovered the lead in some of the lead-covered Fisher-Price products in early July. On July 6, the company halted operations at the factory in China that produced the toys and launched an investigation.

Days after the Fisher-Price recall, Chinese officials temporarily banned the toys’ manufacturer, Lee Der Industrial Co., from exporting products. A Lee Der co-owner, Cheung Shu-hung, committed suicide at a warehouse over the weekend, apparently by hanging himself, a state-run newspaper reported Monday.

Lee Der was under pressure in the global controversy over the safety of Chinese-made products, and it is common for disgraced officials to commit suicide in China.

After Mattel announced the recall of its Fisher-Price toys, it launched a full-scale investigation into all of its factories in China, sending a team headed by Jim Walter, Mattel senior vice president of worldwide quality assurance, to meet with suppliers there. Such stepped up controls could have led to the latest lead paint discovery, according to one source who wanted to remain anonymous because of the sensitivity of the issue.

The toy industry has been jolted by a series of recalls this year, but the Fisher-Price recall is considered the most damaging to the industry’s credibility because it involved the largest toy maker and involved popular Nickelodeon and Sesame Street characters.

In June, toy maker RC2 Corp. voluntarily recalled 1.5 million wooden railroad toys and set parts from its Thomas & Friends Wooden Railway product line. The company said that the surface paint on certain toys and parts made in China between January 2005 and April 2006 contain lead, affecting 26 components and 23 retailers.

In July, Hasbro Inc. recalled Chinese-made Easy Bake ovens, marking the second time the iconic toy had been recalled this year.

Before this month, Fisher-Price and parent company Mattel had never before recalled toys because of lead paint.

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