Mattel and Hasbro have been in the news this year, recalling millions of toys deemed unsafe for children. Where is the concern for the safety of those who make them, asks Scott Clouder?

Forty eight years after her debut, and without a wrinkle to be seen on her bizarrely-proportioned plastic features, Barbie is still the flagship plaything for Mattel, making it the world’s number one toymaker.

California-based Mattel also sells Fisher-Price toys and Hot Wheels and Matchbox cars. Second in line to the toy throne is Hasbro Inc, which markets My Little Pony, Action Man, G.I. Joe, Mr Potato Head, Tonka Trucks, Playskool, Playdoh, Transformers and the Monopoly and Trivial Pursuit board games.

Recalls

Both companies have been spotlighted this year because of toy recalls on an unprecedented scale. A total of 20 million Mattel toys were recalled on three occasions when the company suggested that the lead-based paint and small magnetic parts of some toys were potentially harmful to its child consumers.[1] These recalls, euphemistically described by Mattel as “supply chain disruptions,” dented the company’s fortunes; gross profit margin fell by 1% following the incidents.[2]

The recalls, which also affected one million of Hasbro’s products, all stemmed from toys produced in Chinese factories. That isn’t a huge surprise because 60% of the world’s toys are manufactured in China.[3] The question is, does this say more about the multinational companies that commissioned the toys, or the country (listed by Ethical Consumer as an oppressive regime) that made them?

Codes of Conduct

Lack of compliance with the quality, safety and workers’ rights expectations of Western consumers and companies is a problem for all toy companies. But as market leaders, Mattel and Hasbro have the power to spearhead change.

Mattel has done just that in the past. Back in 1997 it drafted a code of conduct for its supplier factories, and established a non-profit auditing body, the International Center for Corporate Accountability, administered by City University of New York. These acts inspired the International Council of Toy Industries to adopt its first code of conduct the following year.

Before readers get the impression that Mattel is some kind of ethical trailblazer, it should be noted that the code of conduct was a damage limitation exercise that came hot on the heels of an NBC television expose showing Barbie dolls being made by 13 year old girls in an Indonesian factory.[4]

Lack of Compliance in China

Since Mattel first launched its code of conduct in 1997 the toy industry has become even more competitive. Giant retailers (such as Wal-Mart and Toys R Us) have forced prices down, leading corporations to manufacture as cheaply as possible in countries like China.

At the same time, consumer awareness, and concern for worker’s rights has grown. Companies like Mattel and Hasbro passed the pressure on to supplier factories – demanding better working conditions but lower manufacturing costs.

A China Labor Watch factory audit in August 2007, described this pressure: “In order to maintain even modest profits, many of these factories have no choice but to accept toy companies’ low prices. Sadly, workers’ salaries and general treatment are the only flexible factor of production—especially when wage, pension, and safety laws are ignored.

Many foreign companies spread their orders to tens or even hundreds of supplier factories in order to ensure that the total amount of their goods only consist of a certain portion of every supplier factory’s production... Thus, if workers begin to file complaints or lawsuits, or when labor organizations make criticisms, the accused company can pass on the blame”.[5]

As the manager of one factory put it “We are under enormous stress. Customers place late orders, they change their orders... they pay their bills late. At the same time they ask us to provide better training for our staff, better health and safety, and better accommodation. We cannot do it all.”[6]

The total demand for toys has seen limited growth, a situation which increases competition between rival brands. Marketing costs therefore consume what Eric Clark, author of “The Real Toy Story”, calls “the monstrous gap” between the cost of manufacture and the final selling price of each toy.[7]

Failing audits?

Time and again, the audit process of Mattel’s factories falls short. The company’s own 2007 Global Citizenship report revealed that: “An individual stockholder filed a resolution requiring Mattel to report yearly on the investment in and improvement of working and living conditions in Mattel’s owned and contract manufacturing facilities.

Because we publish the results of independent monitoring activities, as well as undertake a number of initiatives to promote responsible manufacturing practices throughout our supply chain, we recommended that stockholders vote against this proposal. In April 2006, less than 7% of the votes cast by stockholders supported this resolution.”

In other words: “We think we do just about enough, thanks.”

By taking the lead role in the mainstream toy company world, Mattel gets to set the CSR agenda – implementing the auditing policies and method it wants to, and then gaining plaudits for being first. For instance, the company seeks to enforce legal minimum wages, but a living wage?

As the company’s senior vice president of quality assurance put it: “Is it Mattel’s responsibility to determine and pay a living wage? I don’t think so.”[8]

Hasbro’s supplier code of conduct specifies a maximum ‘standard’ working week of 48 hours, which fits with Ethical Consumer’s best rating. However, it fails to specify exactly how much ‘overtime’ would be allowed on top of that.

This omission may be seen as forgivable for a company that is writing its first code of conduct, unaware of the loopholes which factory managers might exploit. However, Hasbro has been auditing its supplier factories since the early 1990s, so its current policies should be all the more stringent for this experience.

The China Labor Watch report of August 2007 found that Duoyuan factory, in Guangdong province, which makes Hasbro’s ‘Twister’ games, “enforces mandatory overtime and workers are required to comply with work arrangements.... On average, employees work about three hours of overtime daily, and can sometimes be made to work through the night... Moreover, each worker average[s] a total of 300 hours per month.”[9]

Deceiving Inspectors

AOYAGI, another Chinese factory producing for Hasbro, was said to train workers to deceive inspectors.10 Falsifying records and persuading workers to lie to auditors is almost as widespread as factory audits themselves.

Gary Beadell, managing director of auditing group Level Works, estimated that at least 90% of factories he saw in China falsified at least some of their records.[11]

Even advocacy groups like China Labor Watch admit that conditions in some factories in China’s famous Pearl River Delta have improved in recent years.

An LA Times feature in 2004 that was very critical of Mattel in some areas could not fail to be impressed by other facilities built by the company in countries such as Indonesia. But if things are getting better, why are so many workers being exploited and abused? 

Privatising human rights?

It all comes back round to the competing demands of cheap goods. Charles Kernaghan of America’s National Labor Committee calls codes of conduct the “privatisation of human rights”, suggesting that company-led factory audits head off enforceable laws backed by sanctions.

Whilst worker’s rights remain just a matter between each company and each factory manager, they are essentially in private hands.

Codes of conduct are viewed by factories as just another constraint to be complied with, by any means necessary.

If Hasbro or Mattel aren’t willing to pay for production costs that include a decent life for the workers then they are merely paying lip service to corporate responsibility.

As China Labor Watch puts it, “The case of multinational toy companies shows that corporate codes of conduct and checklist auditing are not enough by themselves to strengthen workers’ rights if corporations are unwilling to pay the real price it costs to produce a product according to the standards in their codes.”[12]

Take Action:

• Urge Mattel and Hasbro to: pay a living wage and pay for worker rights’ training for factory workers and management. This training should be implemented by trusted local human rights, women’s, and/or labour organisations.

References

1 Wall Street Journal, Toys: Recalls Hurt Mattel’s Profit; Toy-Safety Anxiety Eases, Chief Says; Brazil Sales at Risk? 16/10/07

2 ibid

3 The Guardian, Buzz back in China’s scandal-hit toy industry 20/10/07

4 Clark, Eric, The Real Toy Story 2007, p202

5 FinancialWire, Attorneys for a Michigan police and fire pension fund alleged in a shareholder lawsuit that Mattel Inc. 11/10/2007

6 China Labor Watch, Investigations on Toy Suppliers In China; Workers are still suffering, August 2007 p5

7 Clark, Eric, The Real Toy Story 2007p 217

8 ibid. pIV

9 Los Angeles Times: Sweat, Fear and Resignation Amid All the Toys; Despite Mattel’s efforts to police factories, thousands of workers are suffering., 26/11/04

10 China Labor Watch,Investigations on Toy Suppliers In China; Workers are still suffering, August 2007 p9

11 Ibid. p21

12 Clark, Eric, The Real Toy Story 2007 p215

13 China Labor Watch, Investigations on Toy Suppliers In China; Workers are still suffering, August 2007 p2

From Ethical Consumer, Issue 110, January/February 2008