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Companies use recalls to replace or fix faulty products for customers’ safety.

Recalls are costly, but they also allow companies to take responsibility for their products.

Mar 04,2008
A security guard at Hallmark Meat Packing shuts the front gate at the California slaughterhouse after the company was ordered by the U.S. Department of Agriculture to recall a massive amount of beef late last month. [JoongAng Ilbo]
In the news recently were reports that the United States government ordered a recall of 143 million pounds, or 64,000 tons, of frozen beef that originated from a California slaughterhouse.
The recall volume, the largest in history for beef, is the equivalent of 600 million hamburgers, or two for every person in the United States.
The largest beef recall in the past had been 35 million pounds.
A recall happens when a product has a defect or presents a safety hazard.
The manufacturer sends out a notice to anyone who bought the product.
Then the customers have to send their product back to either get it repaired or replaced.
Even when a company tries very hard to thoroughly inspect products’ safety, they cannot guarantee perfection.
That is why a recall system exists. After recalled products are returned or repaired, in some cases customers are given money as compensation.
Korea introduced a recall system in February 1991. A certain type of automobile turned out to have gas emissions that did not meet standards under the atmospheric environment law.

Hazardous toys including wooden Thomas & Friends trains and Barbie dolls from Mattel were recalled last year for containing lead.
In response, the government ordered the automaker to recall the cars, repair them and return them to customers.
Later a variety of recall systems were adopted for different fields.
There are two types of recall systems. One is government-ordered and the other is voluntary. When the government considers a recall, companies are given a chance to explain the product’s flaws.
If the company can explain the product’s flaws in a satisfactory manner, the government does not order the recall.
But when the government thinks the product flaws are unacceptable, the government orders a recall.
When a company refuses to take government-recommended action, the government can impose fines or prison terms on the company and its executives.
If a company conducts a recall, it is required to submit detailed plans to the government.
The company either publishes a recall notification detailing the goods, reasons and recall procedures in major newspapers, or delivers information to all customers who bought the product.
Then the company follows the recall plan and reports the results to the government.
The government assesses the results and if the results are unsatisfactory, it can impose a correctional order.
Simply put, recalls mean losses for a company. Ford Motor Company, for example, had to recall 13 million tires in 2001.
The Ford Explorer sport utility vehicle, fitted with Firestone tires made by a U.S. subsidiary of Japan’s Bridgestone, caused hundreds of car accidents for several years.
In the United States, 174 people died from such accidents, and more than 700 were injured.
The recall cost $3 billion, dealing a huge blow to Ford.
But despite the cost, recalls aren’t necessarily bad for companies.
They are essentially similar to repairing broken goods.
Instead of waiting to recall a product that will definitely break and pose a safety risk like the Ford Explorer, companies can proactively recall products that could possibly break in the interest of protecting consumers.
Some leading companies abroad intentionally recall goods as part of marketing schemes to win consumer confidence.

When companies try to hide product defects, that can lead to bigger problems.
Consumers may distrust a company, which can hurt the corporate image in the long term.
Ford, which had initially been reluctant to recall the tires, later said companies may temporarily be able to hide mistakes but consumers will know the truth in the long run.
For a recall system to take root appropriately, corporate efforts are not enough. Consumers’ attitudes matter, too.
We tend to equate recalls with poor quality.
Once we hear that a company has recalled a certain product, the company’s sales retreat.
But a company recall can also be seen as a company taking responsibility for their own products.
There is a product liability law designed to protect consumer rights.
Under the law, when a consumer proves that a product has a defect, the manufacturer must provide the consumer with payment called damage compensation.
If companies are reluctant to pay for damage, they should prove they made no error in manufacturing the product.
The compensation covers not only the single consumer who filed the complaint but also anyone who argues they suffered from the product defect.


By Ko Ran JoongAng Ilbo [spring@joongang.co.kr]


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