press release

Writing Assignment #3 – Fall 2018

From: Peacock, Elizabeth <[email protected]>

To: Analyst, Student <[email protected]>

Subject: Mattel account

Dear Analyst,

Congratulations on giving a fantastic presentation to the Board of Mattel. The chair was

so impressed with your performance that she recommended the company work

exclusively with you while navigating this situation. Mattel has asked us to do damage

control on two fronts and I would like you to please handle both assignments:

1. Draft a press release for Mattel based on the same information it sent over for your

presentation to its Board. I’ve attached it again to this email. It should not be more

than 500 words. Mattel needs this press release issued by Sunday, November 11 at

11:59 p.m. (Upload this to Blackboard.)

2. Compose an email to shareholders based on this same information. Consider your

audience and remember that what the Board needed to hear is not necessarily what

should make its way into a press release to consumers. The same is true of what

should be included in your email to shareholders who need to be persuaded to keep

their shares of Mattel. (Send this email to your professor by Sunday, November 11

at 11:59 p.m.).

Sincerely,

Elizabeth

Mattel Toy Recall

RESEARCH

Mattel, “the world’s premiere toy company,” began in Southern California in a

garage workshop that manufactured picture frames. When the company started selling

dollhouse furniture made from picture frame scraps, they realized the market potential

and decided to switch to toy manufacturing. In 1959, Mattel created its most popular toy,

the Barbie doll. Inspired by paper dolls, Barbie was a three-dimensional doll with which

“little girls could play out their dreams.” Throughout the decades Mattel has continued to

create and market popular toys, (Hot Wheels and He-man) merge with successful

manufacturers, (Fisher Price and Tyco) partner with children’s program companies,

(Disney, Sesame Street, and Nickelodeon) obtain licenses and rights to manufacture

popular lines (Cabbage Patch Dolls and Harry Potter merchandise), and acquire other

companies (Pleasant Company).

Since its conception, the Mattel Company has done a lot to make sure it is

considered a trustworthy company for children and the community. The corporation

established a children’s charity, called the Mattel Children’s Foundation. In 1997 the

company created the Global Manufacturing Principles, making it the first company to

create a framework to ensure manufacturing would be conducted through consistent

standards on a global level. In 1998, it started a $25 million multi-year donation to the

UCLA Children’s Hospital, which is now called the Mattel Children’s Hospital at UCLA.

However, Mattel has not always been able to maintain its image of child-like

innocence. The corporation has had numerous complaints that it has stolen ideas for its

toy lines from children who have entered its competitions. In the mid 1970’s, it was

uncovered that company officials had lied in press releases and financial information to

make it look like the company was continuing to grow corporately. The company has also

had its share of recalls. Depending on who you ask, the number ranges from 17 to 28. And

from August to September of 2007, Mattel faced the biggest recall in the company’s

history.

Reasons for Recall

There are two separate reasons why Mattel recalled 19 million toys from August to

September of 2007. The fact that both recalls occurred at the same time makes this the

biggest recall in the company’s history. The first reason toys were recalled was because of

faulty magnets. The design of these toys included parts with high-energy magnets,

magnets normally used for industrial purposes that can easily come loose. These magnets

pose a threat to young children and infants who could easily ingest the parts and have

them bond together along their digestive tracts. If several magnets were swallowed, they

would pull together in the stomach and rip through stomach tissue. The strength of the

magnets combined with Mattel’s poor design of the toys made these products a serious

hazard for young children. On its website, Mattel listed 71 models and makes of toys that

were recalled because of faulty magnets. Toys affected by this problem included Polly

Pockets, Batman action figures, and Barbie and her dog Tanner. Some Polly Pocket sets

had been recalled as early as November of 2006.

The other reason Mattel toys were recalled was because high levels of lead-based

paint were found on the surface of many toys. Mattel had previously given manufacturers

in China a list of eight paint suppliers that they could use, but in order to cut costs,

subcontractors used unapproved suppliers. In some cases the lead content was over 180

times the legal limit. Lead-based paint is dangerous for children because elevated levels

have been shown to create learning and behavioral problems, slow muscle and bone

growth, hearing loss, anemia, brain damage, seizures, coma, and in extreme cases, death.

There are 91 models and makes of toys that Mattel placed on recall because of harmful

levels of paint. Many of the toys coated with lead-based paint were from Mattel’s Fisher-

Price line.

Recently, China has had numerous problems with the quality and standards of the

products manufactured within the country. Pet food, toothpaste, seafood, tires, and toys

are some of the products that had to be recalled from homes in the United States because

of serious and possibly deadly manufacturing errors.

The business relationship between Mattel and China seemed to be a textbook

partnership that started over 25 years ago. Mattel currently does 65 percent of its

manufacturing in China, and before this recall was a company others wanted to model in

terms of its global manufacturing. Mattel has been criticized for placing too much

confidence in its relationship with China and slacking on quality checks at the

manufacturing sites. At this point, it seems that Mattel will continue to work with the

same manufacturers in China because its options are limited.

Recall Timeline

In November of 2006, Mattel recalled several Polly Pocket sets sold with magnets

that could pose a threat to children. In early July of 2007, a retailer in Europe discovered

a high lead content on some Mattel toys. Upon notification, Mattel began an investigation

and halted operations at the factory that produced the toys. During this investigation it

was discovered that there were millions of products that didn’t conform to safety

standards, many that had been available since 2003. Fisher-Price started the recall with

1.5 million toys on August 1, 2007 due to high levels of lead-based paint. The products

containing lead paint were mostly from this division of Mattel and were all manufactured

in China.

On August 9, 2007, China cancelled the export license of two of the factories linked

to the recalls, Hansheng Wooden Products Factory and Lida Toy Company. Four days

later, the body of Zhang Shuhong, the boss of the Lida Toy Company, was found in the

factory workshop. Reports said that he committed suicide by hanging himself in the

factory. After further investigation, Mattel recalled 18 million more products on August

14, 2007 because of the possible hazards they could pose to children swallowing faulty

magnets. And on September 4, 2007, Mattel recalled 848,000 more toys globally because

of high levels of lead-based paint. The U.S. Senate Committee began scrutinizing

American safety standards for children’s toys and clothing on August 28. The committee

said it would consider the possibility of creating new legislation to keep hazardous toys

from children.

Despite the fact that a larger number of toys were recalled because of faulty

magnets rather than lead-based paint, recall blame was heavily placed on China by global

media. During this time, Chinese media claimed that Mattel should be accountable for the

mistakes it made rather than use China as a scapegoat. Mattel eventually listened. On

September 21, Mattel issued a prepared apology to China about the recall, taking full

blame for the incident. It took ownership of the magnetic design flaw, claiming that it was

a Mattel design flaw and not a Chinese manufacturing flaw. Nothing was said about the

paint.

OBJECTIVES

Objective 1: Get all information about the recall to the public accurately, quickly, and efficiently.

Objective 2: Reassure consumers, especially parents, that Mattel is committed to making

safe toys, fixing the problem, and being open and honest.

Objective 3: Take responsibility for the recall. Solve the problem while maintaining a

stable relationship with China.

Crisis Plan

When Mattel realized its company was facing a very serious problem, it first

contacted the federal agency that oversees toy problems and product safety. It then

opened a 100-page crisis plan. The fact that the company had a product defect and

difficulty with its supplier made this recall a problem within its control. When federal

officials announced the first Mattel recall, 16 public relations personnel immediately

called reporters at the top 40 media outlets. They told reporters about a teleconference

with executives and allowed the media to schedule TV appearances or phone

conversations with top personnel at Mattel.

The day of the recall, Robert Eckert, the CEO of Mattel did 14 interviews on

television and took 20 calls from reporters. Mattel answered over 300 media requests in

the United States by the end of the week. The company took out full-page ads in the New

York Times and the Wall Street Journal as well. Mattel also launched a massive online

crusade to inform people about the recall. A link to a crisis response website was set up

on its webpage right away and updates were posted regularly. Webcasts and search engine

marketing, also known as pay per click marketing, were used as well.

There are a few reports (and a lawsuit) that claim Mattel knew about the defects of

its products long before its announcement to the public, but since announcing it, Mattel

has constantly been open with the media and its customers. It claims that although it has

very high standards and thorough quality and safety testing procedures, “no system can

be perfect.” Mattel also made it clear that it is doing all that it can to assess the situation

on the manufacturing level.

Apology to China

Mattel’s toy recalls spurred a wave of China-bashing in the media across the world.

This greatly damaged China’s manufacturing reputation around the globe. But much of

the criticism may have been unwarranted. Many manufacturers in China claimed they

were being blamed for design flaws created by Mattel. On September 20, 2007, with

lawyers present, Mattel issued a carefully-worded apology to China in a meeting with Li

Changjiang, the Chinese product safety chief. The apology was given by Mattel’s executive

vice president for worldwide operations, Thomas A. Debrowski.

In part of the apology, Debrowski said “Mattel takes full responsibility for these

recalls and apologizes personally to you, the Chinese people, and all of our customers who

received the toys.” The apology also took responsibility for Mattel’s design flaws, a

problem that encompassed a majority of the recalled products and admitted that toys

affected by the lead-based paint were a very small percentage of the toys recalled. China

accepted the apology, but Li said that Mattel “should value our cooperation. I really hope

that Mattel can learn lessons and gain experience from these incidents, [and they should]

improve their control measures.”

The apology may have been later than China would have liked, but the country hopes that

it will restore consumer confidence in products “made in China.”

What Mattel is Currently Doing

Those at Mattel have done their best to appear up-front and completely open about

the recall. On the first page of its webpage, Mattel dedicated a bold red link to the toy

recall. This link contains information for the recall for all countries affected in the world.

It tells customers what toys are being recalled, where to bring recalled toys, and about

Mattel’s three-point check system. Mattel’s three-point check system covers the steps that

it is currently taking to insure that all its toys are safe for children. These steps include:

1. Mattel will make sure that manufactures only use paint from certified suppliers and will

test every single batch of paint from all vendors. If the paint isn’t up to Mattel’s standards,

it won’t be used.

2. Mattel is increasing control on every level of the production process and conducting

random inspections at all vendor facilities.

3. Mattel pledges to test all finished toys vigorously before they reach the consumer. The toys must meet a series of strict safety standards before they are put on the market.

4. Mattel assures customers that all vendors are aware of these new procedures and Mattel’s strict enforcement of them.