July 19, 2009

Manufacturers Cope With Aftermath of Highly Public And Costly Product Recalls

(repreinted with permission from page 1 of July 15, 2009 edition of Bicycle Retailer and Industry News)


HAVERHILL, MA—Product recalls are time-consuming, costly and can eat away at a bike brand’s reputation in the marketplace unless they’re resolved thoroughly and quickly. And even when a manufacturer goes through the whole process, that’s not to say that they’re completely out of the water.

Case in point: Mavic’s recall of about 12,000 of its R-Sys front wheels earlier this year. Though Mavic took action and replaced the flawed product, a firsthand crash report by VeloNews editor-in-chief Ben Delaney while racing on Mavic’s second-generation, post-recall carbon-spoke R-Sys wheels has drawn quite a few eyeballs and cast a new web of doubt the company is working to clear up.

We are in the process of doing as complete of an investigation as possible,” said Mark Leydecker, managing director for Mavic. “Shortly after the crash we had people over here from France to investigate every aspect of this event. They have inspected the wheel and published a preliminary re sponse on VeloNews. We have requested to have some of the other non-Mavic products involved in this event be sent to a third party testing facility. To say we are taking this very seriously would be a gross understatement, however, we aren’t going to jump to conclusions, nor will we react hastily,” Leydecker added.

Besides following up on the crash incident, Mavic now also faces some skepticism from retailers who feel they put their reputation—and future sales—in jeopardy if consumers purchase defective wheels from them.

Dan Casebeer, owner of Grand Performance in St. Paul, Minnesota, said he’s not inclined to buy more of these Mavic wheels until he knows what the problem is. “I need to keep my customers happy,” Casebeer said. “I don’t want my customers hurt.”

Fortunately for Mavic, it has had a near-perfect track record when it comes to recalls. The wheel company’s last one happened more than 10 years ago. But the financial consequences of product recalls are very real for suppliers. Aside from loss of potential sales from bad press, attorney fees, replacement parts and printing and mailings can add up quickly. Much of the total cost depends on what a supplier’s replacing and how many parts are involved, according to Steve Boyd, director of operations for Dahon California. It could be real easy to get to $100,000,” Boyd said. He would know. Dahon is still dealing with its May recall of about 11,500 folding bikes from the 2008 model year.

Having enough replacement parts in stock is another issue. Dahon faced this problem in late June. Up until then, the company’s recall was going smoothly with 50 to 60 percent of consumers notified within 90 days. Then Dahon ran out of replacement parts.

The recall process itself can be quite lengthy. Some bike companies will file the paperwork with the Consumer Product Safety Commission themselves, while others will have their attorneys, who are familiar with the process and jargon, handle it.

The process in the United States takes time,” said Boyd. “There are 10 things we have to file with the CPSC and they have to approve it.” Internationally, recalls seem to be easier for suppliers. While there might be more regulating entities to satisfy worldwide, the process is much more loose and fast,” Boyd said. “You push that down to your distributors.”

Like Mavic, Dahon’s main headquarters are overseas, which can be yet another challenge in satisfying American dealers with expedience and efficiency. Still, alerting the owners of recalled products is the greatest hurdle bike suppliers face.

"Getting in touch with consumers that’s the biggest challenge in a recall," said attorney Steven W. Hansen, who has dealt with somewhere between 30 and 40 product recalls. “There’s just not a good way of tracking customers when they make a purchase” with the IBD, he said.

Components and to a lesser degree bikes aren’t tracked with nearly the same efficiency as automobiles. If a consumer hasn’t registered their bike, there’s a good chance—unless their local bike shop linked them to the purchase of a recalled bike—they’ll never know they’re riding a potentially dangerous product.

I think retailers are getting better at tracking,” said Boyd. “I’d say at least half of my customers could send me a list with consumers’ contact info.” Ten years ago that number would have been 5 percent. The increase in retail tracking is due in large part to the growing number of retailers who are using point-of-sale software.

Contact numbers tend to fluctuate depending on how many units are involved in the recall and the product’s price point among other variables, said attorney Sheldon Warren, who’s been handling bike recalls for about 20 years, and handled Dahon’s recent recall.

When the product is high-end, dealers may have better records,” Warren said. The first 90 days of any recall, Warren said, is when the majority of contacts are made.

I’ve heard from others in the industry that if you’ve been able to reach 50 percent of consumers it’s been successful,” said Brian Wilson, director of product development for Felt Racing, which issued a recall last month of about 1,450 F1X cyclocross bikes due to faulty fork steerer tubes.

Unfortunately for bike companies, recalls don’t go away in a matter of weeks or months. It’s not uncommon for a recall to drag on for years since it may take some consumers that long to take note and notify the manufacturer. I was just talking with someone at Giant Bicycle, and they had someone call on a 10-year-old recall,” Boyd said. You always honor it.”

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