Manufacturers Spent Time, Money Getting Lines in Compliance
Jane Kitchen -- Kids Today, 8/30/2011 5:34:08 AM
While most crib manufacturers have been aware and prepared for the June 28 deadline, that doesn't mean that the changes came easily.
Kevin Walker, president of crib manufacturer Creations, said his company spent time and money on retesting and retro-fitting products. "Crib testing is not inexpensive," he said.
Walker said Creations also had to set up an assembly line in California, open 1,800 boxes of cribs in inventory to attach the new assembly instructions to the springs, and attach the lock washers to the hardware.
Add to that the cost of 25 lock washers per crib and Fed-Ex-ing retrofit kits to retailers, and Walker estimates the whole business of getting his entire line compliant might have cost the company $50,000.
"I know the retailer feels the final pressure," said Walker. "...But the entire stream is faced with a financial problem that they didn't anticipate. We're all in this together."
Walker said the increased costs to get the entire Creations line up to the new standards, combined with price increases from Asia, mean that he has to pass on price increases to his customers, with wholesale prices set to go up 5% July 1.
"We're trying to offer some really great deals to help soften the price increases," he said. "We're trying to get this whole thing stabilized."
Walker said he saw a slow-down in sales rates in the three months leading up to June 28, which he believes is a result of retailers selling off their noncompliant merchandise at dramatic discounts.
"I believe there have been a tremendous number of cribs being sold at a tremendous discount," said Walker. "It will be interesting to see how the next three months compare to the last three months."
Joe Shamie, president of Delta Children's Products, said his company has been prepared for June 28 for over a year, and he's glad about the equalizing factor of the new regulations.
"What we're happy about now is that all the manufacturers have to come up to speed on the standard," he said. "We're all on the same level playing ground."
Shamie said he's also seen increased costs as a result of the new crib regulations.
"There's definitely an additional cost to both production and testing," said Shamie. "It's much more involved testing and machinery."
Delta has its own testing facilities in both the U.S. and China, and Shamie said every day there is a product on their test machines.
"It's a huge investment," said Shamie. "We've invested millions, and we'll continue to. Safety is the right thing to do, and safety is good business, too. With great difficulty, most retailers are realizing that there's an additional cost."
Shamie said he thinks the new crib regulations will help business in the long run.
"I do believe there will be an uptick in crib sales," he said. "How much remains to be seen."
A few manufacturers, such as Young America, said they were not impacted much by the changes.
"Our model isn't one where the retailer buys products and inventories them," said Ward O'Quinn, product manager for Young America. "By virtue of our business model, we were more flexible."
Young America made the decision not to provide retrofit kits for existing inventory, in part because the number of cribs that were affected was minor, and in part because they worried about the retailer retro-fitting the crib incorrectly.
While it forced their retailers to restock their floors with compliant cribs, most of what was affected was floor models.
"It wasn't like our retailers had 50 or 100 cribs in their inventory," said O'Quinn. "They maybe had between three and five cribs to a store."
O'Quinn said he's happy to see the safety changes, and that it will "help take the concept of the commoditization of cribs away."
Because of Young America's Intertek testing process, the company was already testing to high standards.
"We may have been out ahead of that a little bit," said O'Quinn.
He explained that Young America's Safe T3 process means that every day, the company is random-sampling cribs in the plant to check for tolerances, see how parts are fitting together, and look for any of the myriad issues that could go wrong in the manufacturing process.
"These internal audits allow us to assure ourselves, our customers, and the consumer that the cribs we put out there ultimately are safe, and it's a salient feature that allows us to differentiate," said O'Quinn.
Scott Krueger, president of Westwood Design, also said his company has not been terribly affected by the new standards, in part because Westwood has always tested after every production run.
"We see no change in our testing costs," he said.
But Krueger, who is highly involved with the ASTM , was contemplative about what the changes mean for the industry.
"In every new system, there has to be the first person or thing to go through the fire," he said. "Cribs happened to be the first."
Krueger said that being first meant that the change to new regulations was a bit of a "trial by fire," but he thinks both the industry and the CPSC have learned quite a bit from the process.
"There is now a hyper-retailer awareness on changing regulations and the need to get involved," said Krueger. "Right at the end, the retailers got involved, and they got involved magnificently. It was very effective - not at changing anything at that late date, but at changing things moving forward. Both sides got to be good at listening."
As a result, said Krueger, "The combined efforts of rulemaking by all parties involved means that going forward, the process is going to be much more streamlined, clarified, and well-attended. I'm encouraged about the process going forward."
Krueger said the process has also led to a more effective blending of the ASTM and the CPSC, pointing to the fact that with the new regulations on toddler beds, the ASTM does not have a separate regulation than the government, and the CPSC is not requiring retroactivity on toddler beds at the date the new standards go into effect.
"I really believe in the learning we went through," said Krueger. "This is good for the industry...but the real beneficiary is the American consumer."
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