International Center for Corporate Accountability Announces Independent Audit Results for Additional Mattel Suppliers in China

NEW YORK, June 2 /PRNewswire/ -- The International Center for Corporate Accountability (ICCA) today released initial audit results of additional manufacturing facilities of major Mattel, Inc. suppliers in China. The ICCA reports were commissioned by Mattel as part of Mattel's commitment to upholding its Global Manufacturing Principles (GMP) code of conduct. Audits are intended to provide an unbiased, third-party analysis of working conditions in both Mattel's owned and operated and contracted manufacturing facilities.

Voluntary audit reports of Mattel-owned manufacturing facilities have been published since 1999, and this marks the second round of reports about Mattel's major supplier facilities. The current audit covers seven manufacturing facilities that are among the major suppliers of Mattel in China. Of these, one has previously been audited by ICCA (results issued in January 2004). Audits of three facilities were conducted in July 2005, with follow-up visits in December 2005. The remaining four facilities were audited in December 2005.

"With the conclusion of this audit, ICCA has determined that Mattel's GMP continues to play an important role in leading contractor manufacturing facilities to achieve or even surpass compliance standards in safety, maintenance, employee communications, payroll and working conditions, which in turn benefits the entire industry," said Dr. S. Prakash Sethi, chairman of ICCA and University Distinguished Professor, Zicklin School of Business, Baruch College. "We were especially pleased to see significant progress between July and December at the three facilities where we have already conducted follow-up visits."

Sethi noted, "Mattel is the first and still the only global consumer products company to apply a required standards system to both its own manufacturing facilities and those of its major suppliers, and to independently monitor and publicly disclose the results. We encourage other companies to adopt such standards for their manufacturing facilities worldwide."

Following is a summary of the findings of the ICCA report released today: Achievements: * Manufacturing facilities visited by ICCA show compliance in a number of areas, and the audits indicate that Mattel has committed considerable resources to advise and assist its suppliers in order to improve their level of compliance with Mattel's GMP. * The minimum employee age of 16 is strictly enforced; investigators did not find any employees under the age of 16. In most facilities, the average age was over 20. * All facilities demonstrated a lack of discrimination or promotion based on sex, race or ethnic origin. * With one or two exceptions, all plants were found to be in compliance for accurate personnel record-keeping and payment of legally mandated minimum wages for regular and normal overtime working hours. * Employee access to and communication with management was generally good, with various opportunities for communication, including line supervisors, HR staff, suggestion boxes and meetings with management. * Almost all of the facilities provided voluntary use of safe and clean dormitories and most had good food service available to employees. Improvement Challenges: * Some plants showed inadequacies pertaining to environmental issues, including disposal of wastewater and poor ventilation. Improvements are also needed with regard to facility maintenance, employee safety training and proper use of personal protective equipment. * Improvements needed around application with regard to benefits such as maternity leave and paid annual leave, elimination of fees for ID badges, uniforms and required pre-hire medical examinations. * Several plants did not have adequate medical facilities on-site. * Some plants also required permits for restroom and water breaks and issued only a limited number of permits during any given shift. * Most facilities exceeded the maximum overtime hours limits for peak production periods (called consolidated work hours), authorized by the local labor bureaus and Mattel's revised GMP and some facilities didn't have the required consolidated work hour permits.

"I'm very proud of Mattel's role in leading this effort, which has helped us to identify important areas of performance that require improvement," said Tom Debrowski, executive vice president of worldwide operations for Mattel. "This is precisely why we've continued to commission these audits, so we can work with our vendors to ensure they make the appropriate changes to achieve compliance with our GMP standards."

Plant 18 presented an unusual situation for Mattel in that this is the first time that an audit has not been completed due to insufficient cooperation on the part of plant management. Mattel has scheduled a full audit of Plant 18 slated for this summer and expects its management to cooperate fully with ICCA to address issues and help the facility comply with Mattel's GMP. If Plant 18 management does not comply with the audit procedures, Mattel says it will consider termination of this supplier contract.

"Mattel's goal first and foremost is to lead suppliers into compliance with our standards, because that benefits employees, the community and our business," Debrowski said. "If we are unable to drive the necessary change to meet Mattel's standards, then under our Zero Tolerance rule we will terminate contracts."

Despite the challenges and disappointment in this round of the auditing process, both ICCA and Mattel are pleased with the improved level compliance achieved by suppliers, and recognize the challenges that lie ahead in leading suppliers into compliance with GMP. To achieve this goal, Mattel will work closely with suppliers, and in consultation with ICCA, to design and implement an action plan to correct those deficiencies that may not have already been rectified since the audits were conducted.

The full text of the ICCA report can be viewed on ICCA's Web site at http://www.icca-corporateaccountability.org/ and on the Mattel corporate Web site located at http://www.mattel.com/about_us/Corp_Responsibility/default.asp. For more information about how Mattel is addressing the challenges outlined in this round of audits, please see Mattel's response located at the company's corporate website.

Mattel's Global Manufacturing Principles (GMP), launched in November 1997, form the cornerstone of the company's ongoing commitment to responsible manufacturing practices around the world. Adherence to GMP seeks to ensure that wages, working and living conditions and employee access to management are just and fair, as well as to assure protection of the environment. As part of Mattel's GMP, the company's primary suppliers are also subject to compliance with the standards set in the GMP. Mattel contracted with ICCA to perform regular audits of its owned manufacturing facilities and those of its major suppliers. ICCA's responsibility is to evaluate and publish findings on these manufacturing facilities' compliance with GMP.

ICCA's audit protocols are designed to verify supplier compliance with Mattel's GMP standards in a manner that is comprehensive, objectively measured, interpreted in a meaningful manner and independent of any other consideration except the compliance standards specified in the GMP.

About Mattel

Mattel, Inc., (http://www.mattel.com/) is the worldwide leader in the design, manufacture and marketing of toys and family products, including Barbie(R), the most popular fashion doll ever introduced. The Mattel family is comprised of such best-selling brands as Hot Wheels(R), Matchbox(R), American Girl(R) and Tyco(R) R/C, as well as Fisher-Price(R) brands (http://www.fisher-price.com/), including Little People(R), Rescue Heroes(R), Power Wheels(R) and a wide array of entertainment-inspired toy lines. With worldwide headquarters in El Segundo, Calif., Mattel employs more than 25,000 people in 42 countries and sells products in more than 150 nations throughout the world. The Mattel vision is to be the world's premier toy brands -- today and tomorrow.

About ICCA

Directed by Dr. S. Prakash Sethi, the International Center for Corporate Accountability (ICCA) is a not-for-profit, independently incorporated organization comprised of a council of experts in labor issues worldwide. ICCA encourages and assists multinational corporations in creating, implementing and arranging independent monitoring of codes of conduct. As an academically-affiliated organization, associated with the Zicklin School of Business of Baruch College - The City University of New York, ICCA also undertakes independent field research on aspects of corporate governance and accountability that normally fall outside the purview of corporate boards of directors, and engages in dialogue with a wide range of stakeholders.