| UK businesses warned to act as product recalls soar
There was a record number of product recalls in 2006 according to figures published recently by the European Commission – with a further surge expected in 2007. 2006 saw 92 reported recalls or safety notices from the UK (not including the 78 food related recalls/withdrawals), more than double the number in 2005, which itself saw an increase of 44 percent compared to 2004. Last year the UK had the fourth highest number of notifications in the EU after Germany, Hungary and Greece. High profile and expensive examples of recent recalls include Dell’s recall of over four million notebook computers worldwide costing an estimated $300 million and Cadbury’s recall of salmonella infected chocolate in the UK estimated at £20 million. Product recall communications expert, Porter Novelli, has been monitoring the rising trend and its implications for UK businesses and advising organisations on how to prevent such problems arising. The figures from the European Commission confirm the company’s assessment that businesses need to act now to avoid being caught unprepared. “Consumer safety is the priority here and no one would argue with that,” says product recall expert Jonathan Hemus, global crisis practice leader at Porter Novelli. ”But corporate reputations are also at stake. Businesses are not prepared, and it is not sufficient simply to take out further insurance. The cost of getting a recall wrong in terms of time, money and reputation, can be devastating to a business, yet the reputational benefits of doing a good job can outweigh the financial cost of the recall.” Recalls are becoming increasingly international in scope, and with 48 percent of European recalls involving products made in China, UK businesses relying on Chinese manufacturers are particularly vulnerable. Toys were the most recalled category in 2006, according to the European Commission, making up 24 percent of total recalls, with electrical appliances and cars coming in second and third respectively. Food products are not recorded in these statistics but new European labelling regulations covering allergens has also seen the number of food related recalls soar. New European Product Safety Legislation which came into force in November 2005 is partly accountable for the scale of the increase with manufacturers becoming responsible for informing the authorities and consumers of any potential risk to consumers from their products. “UK businesses must not bury their heads in the sand,” continues Hemus. “It is not safe to assume ‘it will never happen to us’. The rising trend looks set to continue and all organisations need to plan how they would manage a major recall. For example by identifying where they are most vulnerable via a risk assessment, developing procedures, creating communication processes and testing them. “The message is clear. UK business must act now to get prepared for a recall or risk heavy financial losses and damage to their brands”.
•Date: 24th April 2007 • Region: UK •Type: Article •Topic: Retail BC
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