Thursday, October 6, 2011

HTA Presentation to the CPSC Roundable Discussion on Small Business Outreach, October 6, 2011

The Handmade Toy Alliance, (HTA) representsa broad swath of small and micro businesses involved in production, retailing and importing of specialty toys and children’s products. These businesses are the backbone of specialty children’s products culture in America. They are mothers crafting items for sale on, they aresmall specialty toy shops in towns across America, they are small businesses producing small batch toys in the USA, and they are all entrepreneurs providing new and unique opportunities for safe play.

This diverse membership struggles with assembling, reading, interpreting, understanding and implementingthe Consumer Product Safety Improvement Act (CPSIA.) The smallest microbusinesses have the largest hurdle to jump, but even our small business members have a sizeable learning curve. I’ll summarize these issues along with suggested outreach opportunities for threebusiness categories within the HTA.

Micro and Small Businesses Manufacturers
Micro-businesses are those crafting and retailing toys and children’s products in very small batches, each in very narrow product types. These businesses are family or single owner businesses with no employees and they represent 61% of our membership.In addition to selling their products online in a marketplace like, they retail their products at small craft shows throughout the country. These may be church fairs, county fairs and other artisan events where they sell directly to the public.

Small businesses are those producing children’s products in small batches, often with broader product types. They represent 7% of our membership.

The following factors combine to makecomprehensionof the law problematic:

1. Insufficient time to digest the thousands of pages of law and rulings.
2. Inability to interpret the laws and rulings for their specific products and circumstances.
3. No feasible access to legal representation to provide an interpretation the law.
4. Difficult to obtain documents required by the law – ASTM F963 – because of cost and limited availability.

These businesses need the law boiled down to the minimum required for compliance in their specific business implementation. This amounts to individual legal interpretations for each business for each product they produce. This is literally hundreds of thousands of applications of the law. (There are currently over half a million children’s items for sale at alone.)

The HTA suggests flowcharts or other easy to use methods like web-based question-answer forms for providing requirements in a logical manner. The intelligence programmed into the flowchart or form sequence leads business owners through questions ultimately arriving at requirements for their product. Either technique mustprovide the user the following information:

1. What parts of the law are applicable,
2. What tests are required and whether the test must be performed by a 3rd party;
  • what is the specific component that causes the test requirement,
  • a list of certified testing laboratories.
3. What possibility there might be for component part certification,
4. How to apply the small batch rules from H.R.2715,
5. What are the labeling requirements,
6. What are the record keeping requirements,
7. What liabilities and penalties come into play,
8. And, what form a certificate must take.

Another tool the CPSC can provide is to publish lists of components to avoid when making one of a kind and crafted children’s items. For instance; metal beads, colors that have a greater risk of containing lead, hazardous fasteners, etc. This is an easy way to keep components that are more likely to pose a risk of injury or that likely cause test failure out of children’s products from the start.

For reaching these businesses, the Internet is the primary method. Micro businesses rarely attend trade shows and most of them are NOT members of a trade organization like the HTA.The largest of the small business manufacturers may attend a trade show like ABC Kids recently held in Kentucky.

Specialty Toy Retailers
The second category is small specialty toy retailers, both brick and mortar and internet based. These businesses provide a market for small batch children’s products and an alternative for consumers not interested in products mass produced in the Far East. They differentiate themselves from mass market retailers by offering unique small batch products, usually through a single retail outlet. These businesses represent 25% of our membership.

Technically, these retailers are not required to test and certify but are subject to some requirements of the law depending on how they acquire their product for sale. Without sorting through thousands of pages of law, they need to know:

1. What parts of the law they should be aware of when working with small batch suppliers,
2. What record keeping requirements affect them,
3. What responsibilities they have when acquiring product directly from a local small batch manufacturer,
4. What responsibilities they have when acquiring product directly from a foreign manufacturer,
5. And how they can ensure their inventory is safe and compliant.

The Internet is also a primary source of information for specialty toys retailers. Many of these retailers attend at least one trade show yearly, for instance ABC Kids or the International Toy Fair in New York. These small retailers are seldom members of the Toy Industry Association (TIA) but some may be members of the American Specialty Toy Retailing Association (ASTRA.)

Specialty Toy Importers
The final category is specialty toy importers and these businesses represent 5% of our membership. It is a small percentage, but a big component in the culture of specialty toys in America as these importers provide access to mainly small batch products from Europe.

For importers the CPSIA blurs the definition of manufacturer to include the importer. The law is not always clear in how this blurring occurs. They need to know:

1. How to determine if they are considered the manufacturer of record, especially when they hold no inventory or only facilitate transport from foreign manufacturer to domestic retailer,
2. What testing requirements apply when a product is already third party tested to a European standard,
3. What record keeping requirements affect them,
4. And how to apply the small batch rules from H.R.2715.
The primary source of information for specialty toy importers is the internet and a secondary source is an industry group like the Handmade Toy Alliance.

In General
It is important to note that small batch manufacturers are constantly under production, although certainly the fourth quarter is the busiest time of the year for all of our membership. Issuing request for comments, changes and requirements during these 3 months will often go unnoticed.

The CPSC already has a wealth of information available. Unfortunately it is not always easy to find and utilize. Perhaps it would be advantageous to create a Wiki where businesses can post questions and the CPSC can post an official response. The wiki can also incorporate existing FAQs and guidance documents. Over time this becomes a valuable, searchable knowledgebase.

About the Handmade Toy Alliance
The HTA was formed in 2009 as an ad hoc group of businesses that were adversely affected by the CPSIA. During these past few years we have worked to save our member businesses from the unintended consequences of the CPSIA. We have testified before House and Senate committees and lobbied our representatives and senators. This culminated in the passing of H.R.2715 in August of 2011 which has two provisions that are an outgrowth of our work. Unfortunately, H.R.2715 is not the legislative fix our group desired, but places the fate of all of our businesses in the hands of the Consumer Product Safety Commission.

We currently have nearly 700 members but no offices, no staff, no legal representation, a volunteer board of directors who donate time and resources to the cause, and very limited financial resources. Although we work hard to help our members understand the law and to disseminate information, we are in no way prepared to be the source or conduit of comprehensive compliance information to our members. The width and breadth of the products produced by our members is enormous and the need to interpret the law for all of these single cases beyond our capability.

Today we hope to communicate to the staff of the CPSC as an advocate for our members, the magnitude of this issue and the primary problems that need to be addressed for educating our membership. We appreciate this opportunity to voice these concerns and look forward to working together to implement suitable solutions.