Mattel, Inc: The Lead Paint Recall
Ron Montalto tossed the newspaper onto a growing pile. The Sept 22, 2007 Wall Street Journal headline read “Mattel Seeks to Placate China With Apology.” The headlines in the stack of papers told the story:
Mattel Announces Third Toy Recall – CNN Money (Sept 5, 2007)
Mattel Does Damage Control After New Recall - Wall Street Journal (Aug 15, 2007)
Owner of Chinese Toy Factory Commits Suicide – New York Times (Aug 14, 2007)
Lead Paint Prompts Mattel to Recall 967,000 Toys– New York Times (Aug 2, 2007)
The worldwide news coverage had been intense. Robert Eckert, Mattel’s CEO, had led the news on both morning and evening TV broadcasts, staring directly into the camera and apologizing for Mattel’s failure, while promising to take immediate steps to improve quality. Mattel had also launched a recall website that received millions of visitors and was later referred to as a model of excellence (see Exhibit 1). Corporate communication experts had given Mattel and Eckert high marks for the handling of the crisis. Yet Montalto, a long-term Mattel China veteran, still couldn’t grasp how it had all come to this. Ironically, the bottom paper in the stack headlined “Toymaking in China, Mattel’s Way” heralded Mattel’s decades of success operating in China and was published just days before the initial recall (New York Times July 26, 2007 – see Exhibit 2 for full press list and links). Montalto reflected on key sourcing decisions made nearly a decade ago. In 1997, Montalto had been embroiled in a debate over the sourcing strategy for the Mattel. The acquisition earlier that year of Tyco, maker of Matchbox cars, had driven the need for more capacity for die-cast cars. That summer, the company had decided to build a wholly owned manufacturing facility in the Guangzhou region of southern China, starting production in 1999. The