Mattel Recalls 1.5 Million Lead-Tainted Toys Made in China

Mattel Inc., the world's largest toymaker, said it's recalling 1.5 million China-made Sesame Street, Dora the Explorer and other children's products from 32 countries as they may contain ``excessive levels'' of lead.

Elmo's Guitar, Ernie Splashin' Fun Trike and 81 other types of 967,000 Fisher-Price-branded toys sold in U.S. stores since May are included in the recall, the U.S. Consumer Product Safety Commission said today in a statement posted on its Web site.

The recall by Mattel, which makes 65 percent of its toys in the world's most populous nation, follows a June request by RC2 Corp. asking consumers to return lead-tainted Thomas & Friends Wooden Railway products. A recent study showed almost a quarter of Chinese-manufactured toys failed a quality test.

``Mattel has for many years been a leader in product safety,'' said Sean McGowan, an analyst at Wedbush Morgan Securities in New York. ``This serves as a reminder that even the most diligent companies are vulnerable to the materials that get supplied to their factories.'' He rates the shares ``buy.''

U.S. officials have raised alarm about tainted products from China, which produces 80 percent of the world's toys, including seafood containing harmful drugs, toothpaste with an ingredient found in antifreeze and pet food containing a chemical used to make plastic.

Made In China

Mattel, which also makes Barbie dolls, said the affected toys were made by a contract manufacturer in China. The El Segundo, California-based company said it's investigating the incident and plans to review manufacturing procedures with all its products made by vendors.

No injuries have been reported from the products which contained the lead in their paint and were sold at prices ranging from $5 to $40, the CPSC statement said.

Lead may be toxic if ingested by children and can lead to serious health effects, the CPSC said. Consumers should take the toys away from children and contact Fisher-Price to arrange a return. They will receive a voucher for a replacement toy up to the value of the recalled one, it said.

Manufacturers of foodstuff, drugs, farm produce and health products that fail quality standards will be fined up to 200,000 yuan ($26,460), according to a Chinese government statement on July 26. Producers may have their licenses revoked and company officials may be jailed, the statement said.

``When it comes to things like food and children's toys, the level of consumer aversion to a health and safety problem is very high,'' said Alan Oxley, managing director of Melbourne-based ITS Global, which advises companies on trade policy.

Previous Recalls

Today is Mattel's biggest recall since 2.5 million Fisher- Price baby swings were taken off the market in 2000 after children fell out and were injured, according to CPSC spokesman Scott Wolfson.

The toymaker's biggest recall occurred in 1998 involving 10 million Fisher-Price Power Wheels ride-on cars and trucks, Wolfson said. The vehicles could overheat and cause fires.

``We require our manufacturing partners to use paint from approved and certified suppliers and have procedures in place to test and verify, but in this particular case our procedures were not followed,'' Jim Walter, Mattel's senior vice president of worldwide quality assurance, said in a statement posted on Mattel's Web site.

In a phone interview later, Walter said he would personally meet with all the company's contract manufacturers to explain company policy. Company spokeswoman Lisa Marie Bongiovanni confirmed the global recall in an e-mail.

Shares of Mattel rose 67 cents, or 2.9 percent, to $23.58 at 4:22 p.m. in New York Stock Exchange composite trading before the announcement. They have risen 4.1 percent this year.

Safety Problems

A survey released in May found 23 percent of 105 locally manufactured toys failed a quality test, China's General Administration of Quality Supervision, Inspection & Quarantine said in a report on its Web site.

Some toys have ``safety problems'' that may potentially hurt children, the report said. The survey covered 240 local manufacturers of toys, children's clothing, infant milk powder and jelly.

The China consumer goods scares indicates that Chinese manufacturers are making a transition, ITS Global's Oxley said.

``They're moving quite strongly from being the best low-cost producers in the bottom end of markets into an area where they're getting high-value products, where brand recognition is quite important,'' he said. ``It means that their systems have to adjust to be able to get the benefit of branding by companies such as Mattel.''

source:bloomberg.com