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AAFA Executive Summit - Friday, March 12, 2010, Washington, D.C.

September 17, 2012

Thank you so much Kevin for your gracious introduction and for the opportunity to address your Annual Executive Summit this morning. I appreciate your leadership and the significant efforts made by your association to keep your members engaged in relevant safety issues.

In preparing my remarks, I was told that there would be CEOs and senior managers in the audience who are curious about what it was like taking over a government agency in a time when “Change” was promised to the American people. Well, let’s take a quick look at where CPSC was:

First of all, in recent years the agency’s staffing and budget were half of what they were 30 years ago. At one time the agency had 900 employees and that number had dropped to 385.

Businesses shifted manufacturing overseas, the majority of recalls ended up coming from China, and the way CPSC conducts its business was forever changed.

Maintenance of our 1950’s-era testing lab was becoming a bigger and bigger concern.

Technology increased our capacity to accept complaints, but our ability to deal with and analyze trends in those complaints became a major challenge.

As many of you know, a whole new set of laws was passed by Congress making sweeping changes just six months before I took over the office.

Well, those were the top issues facing the agency -- staffing, budget, off-shore manufacturing, outdated facilities, technology advances, changes in management and new laws.

Sound familiar?

I have a feeling that every business represented in this room has faced these issues and more over the years.

Last year I came into this job ready to address all of these problems and one more thing as a top priority in my office. After all the recalls announced by CPSC in 2007, we had to restore consumer confidence in buying products that would not harm them or their children.

To do that, we got an increased budget and are hiring more staff, but even as our agency grows, we understand that we cannot do this job alone. We must engage effective partners. For that reason, I took several steps, including a major public outreach to businesses in a spirit of creating effective partnerships.

With your association:

We want to work with you to resolve issues you have with the Consumer Product Safety Improvement Act - like we did work with you on the stay of lead content certification.

We want to work with you to help harmonize and standardize labeling requirements globally- like we did work with you on determinations on textiles.

We want to work with you to get harmful products out of the market like children’s hooded garments with drawstrings, and children’s clothing with decorations containing high lead levels - like we did work with you on component testing.

And, we want to work with you as nanomaterials find their way into apparel and footwear. From shirts to sneakers, nanomaterials are showing amazing promise, but I want your promise that every safety precaution is being taken with these materials.

We want you to work with us to identify how and where nanomaterials are being used in your products. We want to know that you are doing responsible development and testing of these products – and I want you to understand why we need to do this.

Let me remind you of two recent incidents at our agency.

In January, I pre-recorded and sent a message to Asian regulators and manufacturers to not use hazardous heavy metals in children’s products. In other words, don’t substitute out lead with heavy metals. Two days later, the Associated Press broke a national story about large amounts of cadmium found in children’s jewelry imported from China. The story was big in print, broadcast and social media channels. The recall that followed unfortunately involved a big name - Walmart. For them, the warning came too late.

Back in December, on a Friday, Zhu- Zhu pets were accused of exposing children to a harmful chemical - antimony. Four days later the company was in our offices sharing their significant testing results with our scientists. In this case, a quick response based on solid test results quickly ended a significant threat to their business.

When it comes to nanomaterials, we have the authority to react to identified problems. We will quickly do a recall when a real and substantial hazard is demonstrated. But, I am here today to push the door open wider for communications with your companies to share more information and work with us studying the safety of nanomaterials.

Don’t surprise your customers and have them come to find out that they have been unknowingly used to test the effects of nanomaterials in your products. You don’t want a surprise and neither do we.

Cooperation on matters such as these is what I am working for here. I would like to give well-deserved praise to your Product Safety Council for its announced intention to “help AAFA members understand product safety regulations.” And further “to discuss how to best adapt the industry to current and new regulations for the benefit of both customers/consumers as well as the industry.”

THAT is the kind of cooperation that I am looking for.

From my point of view, the products that all of you make and sell are important not just for your precious customers, but also for providing jobs for your U.S. employees.

In the past you may have heard leadership at CPSC tell you that recalls are a sign of CPSC doing its job to police the marketplace. I do not share that philosophy and parents surely do not share that perspective when it comes to their children.

Of course our Compliance staff will seek a recall when they see a problem. But our common goal should be to make sure that these problems do not develop in the first place. It’s not good for you. It’s not good for us.

My philosophy is that multiple recalls with a similar defect in a product class is a failure in the marketplace. A piecemeal approach to addressing such problems is not the answer; it must be addressed with a preventative, systematic solution.

Being proactive and reaching the highest levels of safety is an imperative that I believe CPSC and industry need to achieve. There are three key ways in which all of you can be proactive when designing and manufacturing your products:

First, by making products that go well beyond the performance requirements in ASTM or other voluntary standards. Don’t just meet standards. Go above it if you can.

Second, consider potential safety problems in the design phase, well before certification or entry into the marketplace. CPSC is concerned that safety problems may not be detected during existing tests and that’s how recalled products end up in the hands of consumers.

I believe as manufacturers it would be best for you to do design reviews on every new product before it gets made. Also, have a robust quality control process in place for your factories and your manufacturing line. The agency has been advocating for these same best practices to be used by Chinese manufacturers.

And lastly, new thinking is needed for hybrid children’s products, such as those that use unique components. Products like these do not fit nicely into one particular testing or certification program or require separate testing.

It’s not that CPSC wants to stifle ingenuity in your industry; we just want you to build safety into your designs and have robust conformance and testing processes. This will help ensure that the final product that makes it to retail is one that will never be reported to CPSC.

Let me take a few moments now to talk about where things now stand at the Commission. Since I became Chairman 9 months ago, I have seen great strides made and have come to believe that we are headed in the right direction in building a safer marketplace and safer communities.

After a tumultuous 2007 and 2008 – we made 2009 a year of change at CPSC:

change that brought new staff and new thinking as we grow from 385 employees in 2008 to 530 by the end of this year,

change that brought new partners and a return to openness, and

change that has brought renewed confidence to consumers.

And I’m pleased to report that we ended 2009 on a high note,

with a 75 percent decline in toy recalls versus 2008,

an 80 percent decline in toy recalls due to lead violations,

a 2010 budget that is double what it was 4 years ago and

the opening of our first foreign office in Beijing.

The Beijing office is probably our most visible demonstration of how we are engaging not just businesses, but also countries.

So, when you look at where we have been and where we are headed, you can see why we are an agency on the rise. You can see it in the determination of CPSC staff

working in the marketplace to catch clueless makers and sellers of children’s clothing with drawstrings that I referred to earlier,

working late into the night to complete new rules on tracking labels and product registration cards, and

working on weekends to stop online auctions of recalled products.

So that we never again have the year of the recall, let’s continue to work together to put the interests of consumers above all else.

Now, some folks say that all of this talk of change at CPSC and better days for product safety is just happy talk and rhetoric.

Well, that’s not true.

I have seen it.

I have seen competitors become partners in the pursuit of product safety. I have seen industry and advocates come to CPSC with outside-the-box thinking of ways to keep consumers informed about hazards in their homes.

That is what this new direction is all about - it is what we all need to be about at this time.

As many of you have heard me say before, I am a believer in open government. It is integral to the Administration’s efforts to change the culture in Washington, and I believe it is integral in changing perceptions of the CPSC.

Over these past months, I have made the Commission as accessible to the public as any time in its history. Our public meetings are online – you can watch our Commission meetings every Wednesday morning, -- we have hosted public workshops to collect input from the public on major issues and our staff members are presenting useful information to groups like this around the country. At the same time, I have made myself accessible to associations like AAFA and to consumer groups.

I will continue to have an open door in the years ahead. But I am looking to work with people who come to the table with solutions and creative approaches to safety, not those who want to delay progress or fail to respond quickly to the problems.

For we are an agency moving at a rapid pace. During the past nine months we have:

begun federal rulemaking on recreational off-highway vehicles, after it was brought to my attention there were no standards despite a dramatic rate of rollovers resulting in deaths and injuries;

jump-started the agency’s dormant rulemaking on all-terrain vehicles, on which staff made great progress before the passage of the CPSIA and was supported by Congress in their call to complete our work;

visited China multiple times to push for best practices in manufacturing, building safety into the products they export, and complying with CPSIA requirements. And while I am talking about international cooperation, I want to let those of you who do business internationally know that other countries are now talking with us to find ways to build and strengthen their consumer protection agencies.

We’ve conducted an industry-wide recall of 50 million Roman shades and roll-up blinds with free repair kits for everyone;

We’ve moved swiftly to get ahead of the emerging issue of cadmium in children’s jewelry as I mentioned earlier;

We’ve created CPSC 2.0, our social media initiative, which is reaching out to tens of thousands of consumers and has the potential to put lifesaving information before millions of online users;

We’ve joined forces with other federal partners to address health and safety concerns associated with Chinese drywall in thousands of homes in the south – this has been the most expensive and expansive investigation in the CPSC’s history;

We’ve joined forces with state Attorneys General from across the country to coordinate on major recall announcements and protect children from hazardous products;

We’ve held companies such as RC2, Fisher-Price, Mattel, and Target accountable for lead in paint violations tied to the major recalls of 2007 and 2008. Our achievements in recent months represent a turning of the page from the past. We are now turning to a fresh page and scripting our own future. I believe this is rich with opportunities to retain the public’s trust in CPSC.

To keep our focus on what consumers expect of CPSC and what is in their best interest, I have established an ambitious agenda. The top priorities for CPSC in 2010 are these:

carrying out the SAFE SLEEP initiative that includes the development of a new mandatory crib standard this year just like we promised Congress;

modernizing the agency, including our work on the product incident database and open a new testing facility which is sorely needed;

continuing our work to finish the pending CPSIA rulemakings, including defining what is a children’s product and what is a reasonable testing program;

implementing an expansive information and education campaign tied to the Pool and Spa Safety Act of 2008;

carrying out a minority outreach campaign; and

conducting an operational review and a new five-year strategic plan in partnership with Booz Allen Hamilton.

I truly believe that there are opportunities for us to work together and for you to have a say in the direction of our agency. I hope that you will engage with us as those opportunities present themselves.

I would like to close my remarks today by giving you a better sense of who we are at CPSC. CPSC stands for safety and that is best represented in our staff at the agency.

We are parents and grandparents, survivors and fighters.

We are an agency represented by people working in honor of children taken too soon and people whose own lives were almost taken too soon.

We have heart and we have talent at CPSC.

And we have the best compliance and enforcement team in government. Many of you have sat at the negotiating table or been on the phone discussing very serious matters with us, so you know what I’m talking about.

The team of compliance officers is tireless in their pursuit of protecting children. Their case loads are enormous, the gravity of their work speaks for itself, and success for them is best measured in lives saved and injuries prevented.

If you have heard that I am encouraging the compliance team to move faster and be bolder, it is true. But it is equally true that I am appreciative to have them working for me and they have my full support.

We also have a new, expanded Commission – there are five of us now. Not always unanimous in our votes, but all committed to keeping children safe.

Commissioner Nord recently visited India to speak to important stakeholders of AAFA. I am pleased that she will be representing the agency once again and traveling soon to China to continue our dialogue on how to meet the requirements of the CPSIA.

We want your business to stay open and this education domestically and globally will help AAFA members stay competitive and in compliance with the law.

This is important because as many of you know we are a Commission that has new powers. If you do not meet your obligations to safety and you resist our efforts to conduct a recall, be forewarned, this Commission stands ready to be creative in the use of our enforcement authorities.

Consumers expect CPSC to be proactive, put their interests first, use their tax dollars wisely, and be nonpartisan in our pursuit of protecting children.

Under my leadership this is what we will strive to do at the CPSC. And with your support, I will continue the transformation of CPSC from what some have described as a “teething tiger” into the world’s leading lion of consumer protection.

Once again, thank you to Kevin, AAFA, and all of you for your commitment to keeping consumers safe – I really appreciate it

It was a pleasure to be here this morning and I wish you all an enjoyable remainder to your conference.

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