Mattel Toy Recalls Cost Company's Stock Market Value

Last year, Mattel was riding high, having reported profits of a whopping $592 million -- a 42% jump in profits that it owed in no small way to Chinese toy factories that churned out cheap -- and in tens of millions of cases -- toxic toys.

Now, as the company reaps what is has sown. Traders have shaved 7% off the toy making giant's stock price since the first of its 21 million-toy recall spree was announced in early August, and on Friday, the Standard and Poor's credit rating service downgraded the company's rate, according to the Los Angeles Times.

The larger toll -- on the intelligence of a generation of American children -- is yet to be calculated, and may never be. The lead paint that Chinese factories used to make some of Mattel's toys -- including Barbie, SpongeBob and other iconic kid characters -- may be cheap, but it can be costly. Lead causes permanent brain damage, lowering IQ scores and otherwise impairing children's ability to live up to their full potential.

That's why lead paint and leaded gasoline was banned in this country 30 years ago. The larger concern is that the Mattel story will prove to be a drop in the bucket. Chinese industrialization and American corporate greed form a perfect storm: Shareholders demand greater profits, so companies turn to the cheapest alternatives available and those alternatives are cookie-cutter factories that can spring up in a matter of days in China, where there is little government oversight and -- unfortunately -- a seeming lack of integrity or awareness about the toxicity of many substances.

The Senate will hold hearings next week on the subject, and Mattel's CEO is among those who will testify. The focus will no doubt be on corporate responsibility and government accountability, as a single employee at the Consumer Product Safety Commission is responsible for testing all suspect toys.

COMMENTS ()