Richard Gottlieb

What will be the long term costs of the new safety laws?

The Toy Industry Association did an outstanding job and a true service to Toy Nation by calculating the cost to the toy industry of the 2008 Consumer Product Safety Improvement Act. According to a survey conducted by the TIA and reported by Playthings in a March 11, 2009 article entitled, “TIA: Safety Act puts $2B crimp in toy biz:” “[T]he 2008 Consumer Product Safety Improvement Act has already cost U.S. toy businesses at least $2 billion and could cost the industry 10 percent of its overall retail value in 2009.”

In reading the article, it appears that the bulk of the $2 billion are one time costs due to “[an] excess of $1 billion worth of inventory [that] has already been returned to manufacturers from retailers or is currently sitting in warehouses as non-salable or is being withheld for CPSIA verification before sale.” Another “$800 million in previously compliant inventory is in jeopardy of being returned by retailers to manufacturers.”

The article ends by reporting that the TIA is working on a more in-depth analysis. In doing so, I hope they look beyond this year’s one time impact so that we can gauge what the annualized costs are going to be once the problematic products have passed out of the system and we have adjusted to the new safety laws. 

I am particularly concerned about those entrepreneurial small toy companies that are so important to the industry. What is going to be the continuing impact on them as we move forward? Is there anything that can be done to assist them? I look forward to seeing more from the TIA.

Posted by Richard Gottlieb on March 19, 2009 | Comments (1)