Just in time for Black Friday, the International Brotherhood of Teamsters union and an environmental justice group have released a report they commissioned attacking the nation’s biggest toy seller, Toys R Us and Babies R Us, for allegedly selling “toxic toys.”
The group says the toys purportedly contain polyvinyl chloride [PVC], citing studies that suggest PVC has been linked to cancer, brain damage, birth defects, disruption of the endocrine system, and immune system suppression, among other ailments.
“With holiday shopping in full swing,” the Teamsters and the group warn, “the company’s refusal to protect the health and safety of their customers puts at risk sales during the all-important holiday season.”
The group has also launched a website, toxictoysrus.com, calling on Congress to act, and a video on YouTube spelling out how Toys R Us is allegedly selling toys that are allegedly poisoning the nation’s children.
Toys R Us, Toy Industry Say Attack is Unfounded
In its defense, Toys R Us, with $13.6 billion in annual sales, says that the toys mentioned in the report meet all federal safety requirements and are carried broadly by retailers across the country.
Toys R Us also notes it is a retailer and not a manufacturer, that it has been a leader in children’s safety issues, and that it has already removed products from its shelves and restricted sales of products that have been cause for concern.
The Toy Industry Association, the country’s biggest toy retail group, also says that “over a 50-year period of safe use, scientists and independent research bodies have conducted numerous studies to assess the use of PVC in toys and have found no demonstrated health risk.”
It adds: “There is simply no credible scientific evidence that any child has ever been harmed by the presence of PVC in children’s toys.”
And it says PVC use in toys and children products has passed both federal as well as state reviews.
The Toy Industry Association instead says the attack on Toys R Us is part of the “toy hunting” season now in full swing, with retailers in the cross hairs.
Limited Sample, Conclusive Proof?
The Teamsters and the group do not offer conclusive proof in their report that the plastic chemicals in question are in the toys, only noting there is a “likely presence” that they are there.
Also, the group’s report notes it looked at “a limited sample from two Toys R Us outlets,” 60 toys.
Last week, the U.S. Consumer Product Safety Commission said that the number of toy recalls dropped to 44 in the fiscal year that ended in September from 50 a year earlier.
That’s down dramatically from the reported 172 toy recalls in 2008.
The agency also said in a statement that tougher regulations and enforcement, including more testing for toxic chemicals "have reduced the need to replace or fix toys already on the market.”
Also, the Teamsters and the group are not going after Walmart, Sears, Target or other toy retailers.
Why Attack Only Toys R Us?
So why only Toys R Us? The Teamsters have another stake in this battle.
A Toys R Us source says it could be because of prior activities between the union and the retailer's co-owner, Kohlberg Kravis & Roberts, a private equity concern with $54.4 billion in assets under management.
KKR is moving to take the Toys R Us public in an $800 million IPO next year.
The Teamsters union has long battled KKR for various labor practices at companies KKR owns stakes in, and for business practices the union feels will hurt its investments in its $100 billion pension and benefits fund.
The Teamsters didn’t return calls for comment. KKR didn’t returns calls for comment.
For example, KKR has been fighting the Teamsters’ attacks over its business practices at Dollar General stores, one of its biggest investments, as well as the union’s efforts to organize the U.S. Foodservice center in Tampa, reports indicate.
KKR co-owns U.S. Foodservice with Clayton, Dubilier & Rice, another private equity concern.
KKR has also been attempting to modify a Teamster labor agreement at a U.S. Foodservice location in Streator, Ill., reports note.
For more on KKR’s fight with the Teamsters, see below.
Teamsters Moving to Spoil KKR’s IPO for Toys R Us
A press release from the Teamsters and the group notes: “The potential consumer backlash also complicates efforts by Toys R US owner KKR and its business partners who hope to raise a reported $800 million on the New York Stock Exchange by selling a stake into the company in a much anticipated IPO.”
The Toxic Toys R Us website also says that by “offloading Toys R Us” without stopping “toxic” toys, KKR and Toys R Us “threaten to destroy shareholder value.”
And the Web site notes: “KKR and its business partners took Toys R Us private in 2005, bled the company dry of cash and piled on more than $5 billion of debt. Now, KKR needs new capital and they're coming for you.”
The Website also suggests “important questions potential investors should ask KKR,” namely:
*“Will Toys R Us' failure to phase out PVC products and label toxic chemicals in toys lead to a consumer backlash during the critical Christmas season which accounts for roughly 40% of the company's annual revenues?”
*“With consumers fearing a potential double dip in the global recession, will Toys R Us be positioned to meet sales expectations?”
*“With Toys R Us' seemingly endless need for fresh capital, will KKR continue to capture significant portions of secondary offerings at [sic] the detriment of the company and its public shareholders?”
The Web site also asks: “Would you buy a Tickle Me Elmo from Henry Kravis?”
In its battle against Toys R Us and KKR, the Teamsters has been joined by Lois Gibbs, the grandmother who took on the toxic waste dump that was sickening her neighborhood, Love Canal, in Niagara Falls, New York in 1978. Gibbs is the founder and executive director of the Center for Health, Environment and Justice. Scientists and doctors have also joined the group in its fight.
Teamsters Attack Toy Story 3
The Teamsters and other groups have already picketed Toys R Us and KKR at a rally in front of the retailer’s Time Square store in New York City earlier this year.
And the group has picketed Walt Disney’s (NYSE:DIS) "Toy Story 3" movie showings in more than 25 cities across the country last summer, alleging in a statement at the time that “harmful poison plastic contained in ‘Toy Story 3’ toys [are] being sold at Kohlberg Kravis Roberts and Co’s Toys R Us.” The group at the time alleged that the plastic is in Buzz Lightyear, Bucket O Soldiers, Woody and other toys.
What the Group Says it Found
The group’s report says it looked at a “limited sample” of 60 toys, including “balls, dolls, figurines, baby functional items” that were manufactured or marketed by companies such as “Disney, Nickelodeon, Marvel, Hasbro, [and] Mattel.”
Among the findings, it says that its report found that “72.5% of all toys/children’s products tested contained high levels of chlorine, indicating they were likely made of PVC.”
Besides the “Toy Story 3” toys, the report also alleges that toys “that tested positive for PVC include “Barbie..Disney Princess Royal Giggles doll, Zhu Zhu Pets Hamster Hangout, Nickelodeon’s Dora the Explorer and Diego figures, Sesame Street Elmo Faucet Cover, Club Penguin figurines, Imaginext toddler action figures,” and other products, “from dolls and balls, to baby bath time toys and products, and even My Name Sippy Cups.”
Teamsters Fight With KKR
The Teamsters union has long been in a pitched battle with KKR, notably over its co-ownership in the U.S. Foodservice company and Dollar General (KKR values its stake in Dollar General at $3.5 billion as of September 2010, according to its regulatory filings.)
The Teamsters pension fund has stakes in Dollar General, which KKR brought to the market in an initial public offering last year that raised an estimated $716 million.
China Labor Watch and the Teamsters Union both protested KKR at the Dow Jones private equity conference in New York City last January, handing out leaflets to attendees alleging “squalid conditions of Chinese workers at KKR's Dollar General sourcing factories in China,” as well as “serious labor law violations at KKR's U.S. Foodservice in Arizona.”
China Labor Watch issued a report noting that “workers at Dollar General sourcing factories in China suffer from excessive working hours, wretched smells, discriminatory hiring, and squalid company housing where up to 12 workers sleep in each room.”
And a press release from the Teamsters issued last January says that “the National Labor Relations Board in Phoenix, Arizona, charged KKR and CD&R's (Clayton, Dubilier & Rice) U.S. Foodservice with nearly 200 federal labor law violations.”
The Teamsters said in a statement that “U.S. Foodservice agreed to a settlement that reinstated 14 workers who were illegally fired and paid more than $163,000 to 22 workers who were discriminated against and denied work in May 2009.”
But the Teamsters has continued its battle against the company and its owners, saying in a statement that “despite this settlement, the company has continued its unlawful behavior and faces charges by the Teamsters Union for continued threats from management, disparate treatment and termination of worker activists.”
Teamsters also allege that KKR has leveraged up Dollar General’s balance sheet to risky levels.
Toys R Us Says it Already Acted to Protect Children
Toys R Us says it has already moved to stop the sale of products that it says contained dangerous chemicals.
For example, it says in a statement that juvenile products shipped to it “must be produced without the addition of phthalates which have raised concerns about infant safety.”
And it says in a statement that “all of the bottles, feeding and nursing accessories available in our stores meet the standards set forth by the U.S. Food and Drug Administration (FDA),” noting that as of January 1, 2009, “all baby bottles and baby feeding products sold” in its stores and through its “websites are BPA-free.”
BPA is short for bisphenol A, a chemical in plastic widely believed to be estrogenic and harmful. Canada has declared BPA a toxic substance.
Toys R Us also says that since 2007, it “has taken steps to eliminate or reduce PVC in juvenile products manufactured exclusively for the company.”
Vinyl bibs “have been removed entirely from store inventories and replaced with PVC-free merchandise lines,” it says, adding that “PVC reductions have been made in certain infant bath, feeding and teething lines produced solely for the company.”
Teamsters Head and Gibbs Speak
The group is supporting a commission to look into toxic toys that is chaired by Professor Peter Orris, Director of the Occupational Health and Safety Institute (OHSI) at the School of Public Health at the University of Illinois, Chicago and Director of the Global Toxics Program. Doctors from Mount Sinai School of Medicine and George Washington University also assisted in the report.
The group says it has also worked with the Ecology Center in Ann Arbor, Mich. to test toys sold at Toys R Us, such as Toy Story 3 merchandise.
Gibbs, the environmental activist who runs the Center for Health, Environment & Justice, says in a statement: “As a grandmother, I have to watch out for PVC toys on my grandbabies’ Christmas lists. Santa should never have to say no because a toy is made out of a poison plastic. There should only be toys under the Christmas tree; not toxic additives like organotins."
Teamsters General President James P. Hoffa says in a statement: "How can investors back a company that poisons our kids and communities?”
He adds in his statement: "This is just the beginning. As long as KKR's Toys R Us fails to ignore the welfare of American consumers and their children, we will keep taking action to inform the public and demand legislative action."