Legislating Montana Small Businesses Out of Business

By Beacon Staff

Normally this could wait until my next column’s deadline, but with so many small business owners in Montana making and selling handmade items for kids – it can’t wait another minute.

If you sell or make handmade toys, clothing, backpacks or certain other children’s items, it’s possible that you will be out of business as of Feb. 10, 2009.

While it would be easy to dismiss this as Mark overdosing on journalistic enthusiasm, I’m disappointed to say that isn’t the case.

You probably remember the flurry of toy recalls during the 2007 Christmas season. As you might expect, it embarrassed and angered Congress. The CPSIA was the result, a shoddily-written feelgood piece of legislation that had good intentions but has the potential to cause more unemployment than your least favorite presidency.

Don’t get me wrong: This law (more accurately, something like it) was sorely needed to deal with foolishly designed toys (such as baby toys made with easy-to-swallow parts), and repeated instances of imported items containing lead and other substances known to cause illnesses in small children. You could also blame the U.S. importers who didn’t have their eye on the ball when importing toys from their own Chinese-based manufacturing plants.

What wasn’t needed was a failure to include some common sense testing and labeling exemptions for items made from all natural products. That alone would have left the good parts of this law in place, while preserving the majority of the handmade toy and clothing businesses.

Unfortunately the CPSIA contains no exemptions of that nature. Perhaps that is because work at home folks and other small businesses don’t have a big lobby in Washington. The major toy manufacturers, who are mostly major toy importers these day, have a substantial presence in Washington.

Meanwhile, the folks who make wooden toys now have a fledgling organization on their side: The new Handmade Toy Alliance is still fairly small and may not be a big influence agent inside the Beltway at this time.

UPDATE:Those in the sewn children’s products business also have a group to help them: Fashion-Incubator.com has over 8,000 members and is actively pursuing a solution on Capitol Hill. Kathleen Fasanella at Fashion Incubator also provided additional links for those seeking to take action. See the end of this article for that update.

While you might think that small business minded representatives from Montana would be wiser about this than their urban counterparts, you’d be wrong. Sens. Baucus and Tester both voted in favor of the House/Senate compromise version HR 4040 (the bill that became the CPSIA), and Rep. Rehberg voted yes on the House version HR4040. Frankly, I have to wonder if anyone in Congress even considers the impact of laws on small businesses and home businesses. Why? The combined House and Senate votes on this legislation yielded only three “No” votes.

Three. More people failed to vote on this measure, including Senators Obama, McCain and Clinton, than voted against it.

Want details? The House vote is here, the final Senate vote is here.

The Consumer Product Safety Improvement Act (CPSIA), passed on July 31 2008 and signed into law by President Bush on August 14 2008, makes it illegal to manufacture or sell toys, clothing and other items for children that do not meet the act’s testing and labeling requirements. Even better, the Consumer Product Safety Commission has been given an additional $620 million so they can enforce this law, whose details were largely left up to the commission.

In many ways, that’s great news. Maybe it means that we won’t be seeing more imported junk toys coated with lead paint in our stores.

Again, there’s only one problem: There is nothing in the Act that eliminates the testing and labeling requirements for those that use all natural materials when they make things for sale.

You might be thinking that you really don’t care. Maybe you don’t have kids or you only buy toys and clothing from major American manufacturers (er, I mean “importers”). Or maybe you don’t own a store that caters to kids, so why would you care?

If you own a business in the Flathead, I’m going to suggest that you might start caring. Here’s why:

Here are a few examples of businesses that will be impacted by the CPSIA, otherwise known as “reasons to care:”

  • If you’re like Mrs. Santa, who makes wooden toys in her workshop in Evergreen, you get to pay $4,000 per toy to a testing lab to assure compliance with the CPSIA.
  • If you make the classic gray sock monkeys and sell them at Depot Park during the Hockaday’s big craft event, during Columbia Falls Heritage Days or during the litany of events in downtown Whitefish – you have three choices: sell them in violation of the law, close up shop or pay the fee to have your items tested. Each SKU = $4000, most likely. If you’re running the Hockaday, your biggest fundraiser of the year is at least partially threatened by this act.
  • If you own a small toy store, have items that cater to kids, or you sell antique toys, like Station 8 in Columbia Falls, or the Imagination Station in Whitefish – you have to pay to test every toy you import from Europe, or make sure that it has been tested (CPSIA-compliant items are labeled as such). Note that the requirements for toys imported from Europe exist despite the fact that for years Europe has had tougher toy safety standards than ours.
  • If you buy and sell science kits for homeschoolers, the CPSIA applies to you as well.
  • If you’re a school who buys such kits, ditto your suppliers.
  • Every large U.S. toy manufacturer who actually *does* still manufacture items here at home – and had nothing to do with the toy recalls from 2007 – still has to pay to test their toys. Actually, I’m ok with that one.
  • If you enjoy shopping for your kids at craft fairs, online at Etsy.com or eBay, or you like buying used toys and clothing – sales of items that do not conform to CPSIA regulations and that have not been tested will be illegal to sell – thus reducing your ability to choose.
  • If you sell items for kids on eBay, all your existing untested or non-compliant inventory has to be gone by February 10, 2009 or it cannot be sold.
  • Retailers, you too can be held liable for selling any handmade toys or children’s items that are not tested by a CPSIA-compliant lab and labeled per the CPSIA.

If you don’t own a business that has anything to do with kids – here’s your reason to care: if the owners, employees and family members of the businesses described above do business with you, they might not be spending money in your store after February 10th.

So … Do you care yet?

Even if you’ve managed to afford to have all of the items tested and labeled, you have 56 days (as of Monday December 15th) to sell your existing inventory unless it is tested and labeled per the CPSIA: remember, your existing inventory falls under this law, whether you are a retailer or a manufacturer, regardless of size.

The full text of the law is here: HR 4040 or if you prefer a PDF, here. Check out the CPSIA frequently asked questions (FAQ) list at http://www.cpsc.gov/about/cpsia/faq/105faq.html.

I would suggest contacting those in Congress who represent you as there is very little time to get this law modified. The House will not be in session again until January 3rd, 2009. The Senate will be in session on Tuesday December 16, 2008.

President-elect Obama will not likely have this on his short-term radar. Even if he does, there are 20 days between his inauguration and the date that this legislation becomes effective. Somehow I suspect toys and small business owners will not be on his short list of things to fix.

Whether it is on the President-elect’s short list of action items or not, it should be on yours.

You have 56 days.

Update: The following block of information came from Kathleen Fasanella of Fashion-Incubator. She’s been at the forefront of this issue for the sewn products industry. The information she provided begins here:

Anyway, may I also suggest visiting our War Room for up to the minute updates and focused activism? With a large member base, we have a considerable range of tools our members can use to lobby their legislators.

Here we’ve created a form where people can email all of their legislators at once.

Note from Mark: I have emailed legislators in the past. I find it completely ineffective because it is so easy to ignore. In some cases, it takes more than six months to hear back and even then the response is often vague – in at least one case, I had no idea what issue the response related to. They know how easy it is to slam them with 100,000 emails. What would you do if you got 100,000 emails about an issue? Probably the same thing they’ll do: Note the volume and read only a few of them. If you are serious about dealing with your legislators on this issue, I strongly suggest that you fax them or best of all, pick up the phone and call their offices.

Here people can detail the anticipated costs of CPSIA compliance.

A petition is here.

Lastly, there are several additional sites at the forefront of this:
Fashion-Incubator.com CPSIA discussion area.

For artisan toymakers, I’d recommend hooking up with CPSIA Central at Ning.com. There is a great difficulty with HTA in that their proposal for CPSIA modifications are illegal under standing of international law due to treaties the U.S. has signed. This has created a distancing from HTA in the CPSIA activist community. I am aware you may not have known this but that’s why I’m writing in addition to thanking you for making this known to the public.