190 product recalls in UK last year, up from 179 the previous year, finds new research
The number of product recalls in the UK has hit a new high of 190 in the last year (up from 179 in the previous year) as problems with products sourced from China mounted, reveals a new study.
City law firm, Reynolds Porter Chamberlain LLP (RPC), said the number of recalls of dangerous or faulty consumer goods rose 22% to 89 whilst the number of food & drink recalls also increased from 71 to 74.
In its latest research, RPC said that it has been the year in which poorly controlled Chinese supply chains have proved they have a nasty sting in their tail. Mattel’s Fisher Price brand clocked up blanket media coverage when it was forced to make a series of recalls covering millions of potentially dangerous Chinese manufactured toys.
Mark Kendall, Partner, of RPC said: “We have been warning for years of the risks in uncontrolled out-sourcing to China and other developing countries. Many companies need the cost savings from outsourcing to China to drive their earnings but the statistics show that putting in place proper quality control procedures to protect their customers is easier said than done.”
“While lessons will have been learned from the Mattel recall, the problem will not be solved over night. We expect to see more of the same.”
RPC added that companies are now more willing to move early to launch product recall programmes in order to protect their reputations but these expensive programmes are often undertaken without any product recall insurance coverage to offset the costs.
Explained Mark Kendall: “When you add up the costs of the transportation, publicising the recall, refunds and other factors it can be very costly. Standard product liability insurance will not cover for a recall.”
“But, insurance or no insurance, the costs of trying to avoid a necessary recall in terms of reputational damage, regulatory intervention and potential lawsuits can be huge.”
“Consumer groups are more litigious than ever and regulators in the UK such as the Food Standards Agency and Medicines and Healthcare Products Regulatory Agency promise a tough stance against dangerous products.”
Merck which has been accused of delaying the recall of its Vioxx painkiller drug has faced legal fees of $500m a year to defend against lawsuits. This month the company offered to pay US$4.85 billion to settle 26,000 lawsuits. Vioxx was found to increase the chances of a heart attack. The total cost of the Vioxx problem is currently estimated at US$8 billion.
Despite some exceptions, such as insects found in batches of cereal, there was a smaller rise in UK food recalls and a decrease in pharmaceutical recalls. RPC says this is due to the fact that food and drugs sold in the UK are either produced in the UK or in other Western countries where the existing systems for quality control are more robust than in China.