Basics - Leg/Reg
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Environmentally & Consumer Safe but Is It Manufacturer Friendly?

While each of us wants to be good stewards in ensuring the longevity of our environment, conserve resources, provide products which are safe to the consumer etc.; are these new regulatory laws friends or foe to the manufacturing processes? Heightened product liability laws, surging restricted substance lists (RSL), and the onset of global programs, i.e. REACH, and are quickly changing the dynamics of the global supply chain for apparel and legwear.

Recently the American Apparel and Footwear Association (AAFA) along with The Hosiery Association (THA) sponsored a day long seminar at FIT in New York that provided an overview on each of these topics. Over 120 apparel, legwear and footwear manufacturers, suppliers and retailers took part in this comprehensive program.

Sean Cady of Levi Straus and Company (pictured below) discussed in depth how his company has addressed the issue of RSLs. According to Cady, Levis has had a program in place for about 7 year. They consider the RSL as a set of chemical substances that are either 1) prohibited from use or 2) limited in the final product. Levis ® believes that RSLs are important in that they ensure legal compliance, protect the consumer, and eliminate hazardous substances from manufacturing. “It’s a great way to say to suppliers that we don’t want certain chemicals and want the RSL to be a dynamic management systems approach, not just a piece of paper,” offered Cady. This process, too, should also raise knowledge in the overall supply chain and serve as a more effective process in meeting customer requirements.

AAFA recently formed a task force (which Cady participated on) to develop an all encompassing RSL. It is intended to provide apparel and footwear companies with information related to regulations and laws that restrict or ban certain chemicals and substances in finished consumer home textile, apparel and footwear products around the world. It will be updated on a regular basis and will be supplemented with additional resources to help officials in these companies undertake responsible chemical management practices.

According to Tommy Thompson of Hanesbrands Inc., (left) there is a difference between testing versus chemical management. Whereas testing requires an absolute method to confirm compliance, process management involves the use of an RSL to eliminate unwanted chemicals from production. Thompson emphasized to companies that it is important for them to develop a policy and implement it, determine what restricted substances will be managed or select an RSL to be referenced. Companies’ marketing teams need to understand the impact of restricted substances on their products, in other words, don’t create a concept for the functionality of a product without fully understanding what is involved in manufacturing it. For companies that source, it is important that each of the sourcing operations is cognizant of its RSL requirements, provide an RSL, recommend training, include RSL in the contract or purchase order, and audit as warranted. From the manufacturers’ perspective, it is important that they obtain accurate chemical information on raw materials, i.e. MSDS sheets or more detailed information, develop a chemical management system which prohibits the restricted substances in the process and cross reference existing raw materials to RSL’s and take necessary corrective actions. Thompson discussed the regulatory rationale which includes the company and employee liability, i.e. criminal, civil, fines, penalties, as well as the product liability which includes medical costs and attorneys fees. From a company standpoint, a successful program implementation offers consumer protection, employee safety, brand equity, fewer product recalls, limits negative media, positive consumer perception and increases stockholder value.

Andy Chen of Nike ® (pictured below) knows first hand how detrimental non compliance can be. Unfortunately, things can go wrong…and they do. Chen emphasized the fact that every company in our industry has or will have a failure. These failures can disrupt business, damage the brand image and are expensive. He cited 3 specific examples of a Nike ® soccer ball, a jersey and a baby shoe that collectively cost the company over $6 million dollars. The suppliers, too, in each of the cases financially shared in the penalty.

Indeed product liability is expensive and these cases have been around for at least half a century. According to Jim Bruen (pictured below with colleague Ruth Ann Castro) of Farella Braun and Martel, every manufacturer, distributor and retailer, along with every one of their lawyers, should see defect claims and suits coming, and yet compensatory and punitive damage awards are escalating. Why. Bruen believes that courts and juries see carefully maintained evidence that tracks the development of complaints and defects. This tracking is done to protect defendant manufacturers, distributors and retailers in the event of a law suit. This same evidence, however, offers little good faith efforts to protect the consumer.

Proposition 65, known as the Safe Drinking Water and Toxic Enforcement Act, was enacted in California in 1986. It requires that anyone in the course of doing business who exposes an individual to a chemical “known to the State” to cause cancer or reproductive toxicity must first give a “clear and reasonable” warning. Currently, over 740 chemicals are listed by the State of California as known carcinogens or reproductive toxins, and lead is one such toxin. Violators can face fines up to $2,500 per violation, per day, and each piece sold in California would be considered a separate violation. The Act affects all products sold or distributed in California, including textile goods.

AAFA and THA are working with Farella Braun and Martel to offer their members informational updates and guidance on this particular law and other areas of product liability. Be sure to visit their respective websites and contact them for further assistance.

Facts about REACH

What is REACH?

• It is the European Union’s Registration, Evaluation and Authorization of Chemicals. It provides a major overhaul of European chemical policies.

When did REACH go into effect?

• June 1, 2007

Why REACH?

• Lack of information on chemicals in commerce
• Unequal treatment of new/existing chemicals
• Slow, inefficient chemical by chemical risk assessment/management process
• Lack of incentives to stimulate development safer substitutes
• Lack of integrated, modernized, proactive and forward-looking approach to chemicals management

What is the scope of REACH?

• Covers some 30,000 substances manufactured or imported into any of the European Union countries in quantities of 1 ton or more per year.
• Exemptions:
   o Medicinal products, food additives
   o Polymers
   o Pesticides and biocides
   o Ores, fuels, cements
   o Chemical in research labs

What are the impacts of REACH?

• REACH will impact chemical use and supply in the EU and beyond
• Withdrawal of substances from the market is inevitable; how will this impact your supply chain?
• Greater information generated by REACH will affect your liability
• Imports into the EU, importers and customers will require help (scientific, technical, etc)
• Any legislation of the size and scope of REACH will provide opportunities as well as threats.
• There will be benefits as well as costs.
• Opportunities: information, public confidence, safer products, reduced liability