Every year, during the Executive Forum and Fly-In, a delegation of member executives from Plumbing Manufacturers Intl. (PMI) travels to Washington...
Legend has it, a high percentage of the price of a new ladder is because of product liability for the ladder manufacturers. People fall from ladders all the time and can end up with some serious injuries. Some of these injuries have led to lawsuits against the ladder manufacturers. You can get a feel for this by looking at a new ladder in the store and counting the number of warning stickers. Some of these warnings are ludicrous, you think, but they must have originated from somewhere. What percentage of the price of a residential drinking water treatment system is due to product liability? It’s probably not as high a percentage as with the ladder, but the potential for liability is definitely there. What if the product is not made of safe materials and someone is harmed by contaminants leaching into the water? What if the filter housing cracks and leaks water all over someone’s imported hardwood floor, causing extensive damage? What if the manufacturer claims the product will reduce health effects from contaminants, and consumer testing reveals that it does not meet the claims?
Any or all of these scenarios can result in product liability for the manufacturer. The manufacturing community has long recognized this issue and has worked in conjunction with regulators, filtration systems users, and product certifiers to identify and reduce this liability through development of standards and certification programs.
The first step toward limiting the liability of manufacturers for the products they sell is agreeing on the standard of performance. Without agreed-upon standards of performance, it is much more difficult for a manufacturer to effectively perform due diligence to make a claim that their water treatment product reduces microbiological cysts, for example. There would always be questions, including the conditions of pressure and flow, the required reduction percentage, and so on. After all, an old sock might catch a cyst or two passing through it, but its impact on reducing the effects of cyst contamination of the water supply would be negligible.
There are different ways to develop standards. They can be promulgated by federal or state governments, developed by trade associations or internationally through the ISO process. In the case of the NSF/ANSI Drinking Water Treatment Unit (DWTU) Standards, they are developed by a Joint Committee of experts in the area of water treatment, representing the three different groups of interested stakeholders: manufacturers, regulators and users of water treatment products .
The NSF/ANSI DWTU Joint Committee includes 34 members, composed of a chair, 11 members representing manufacturers, 11 from the regulatory community and 11 members representing users of residential water treatment products. This balanced representation is to prevent any one group from dominating the standards.
This committee uses a consensus process, accredited by the American National Standards Institute (ANSI), to develop the NSF/ANSI DWTU Standards. Consensus means substantial agreement has been reached by directly and materially affected interest categories. This signifies the concurrence of more than a simple majority, but not necessarily unanimity. Consensus requires that all views and objections be considered, and that an effort be made toward their resolution. Any negative ballots must be resolved before a draft can move to the next level. Any substantive changes or any unresolved negative ballots must be presented to the Joint Committee so they have an opportunity to change their vote based on the new information.
Final resolution of a ballot requires that at least 50% of the committee votes, and of those who vote, at least two-thirds must vote in the affirmative.
By involving all of these interested parties through the consensus process, very strong standards of performance are developed. Because of this involvement and the consensus process, manufacturers can be confident in their due diligence efforts with respect to product liability when setting these standards as the bar for performance.
Once the bar has been set, manufacturers seeking to limit product liability must somehow measure their products against the bar. When it comes to the NSF/ANSI DWTU Standards, for the most part this involves testing. There are other requirements in the standards that do not require testing, such as including various disclaimers and information in the associated product literature. However, establishing material safety, structural integrity and contaminant reduction performance is all dependent on testing.
There are many approaches to conducting product testing. Manufacturers can elect to conduct this testing themselves. They can obtain copies of the standards, develop the test stands and expertise necessary to conduct the testing, and procure the analytical equipment to do all of their own due diligence testing. This is an expensive proposition, although several of the larger manufacturers have elected to do this as a part of their due diligence. Typically, they do not rely on in-house testing as their sole due diligence. Although this testing can be very good and can establish that the product measures up against the bar, it is not as strong as it could be because of the lack of independent testing. In-house testing results can be viewed with skepticism by outsiders intent on raising doubts about the validity of these results.
In order to overcome the skepticism generated by sole reliance on in-house testing, manufacturers can use independent laboratories for testing their products. The advantage to this approach for manufacturers is the independence of these laboratories. There can be disadvantages to this approach as well. The manufacturers do not have control over the timing of testing, which can lead to product launch delays, or the quality of testing, which can be an even bigger issue with respect to due diligence.
Because of the nature of the NSF/ANSI DWTU Standards, poor quality testing typically results in passing test results being assigned to products that would have failed the tests if the quality of testing were better. In other words, the best quality DWTU testing will result in the most failures. This only makes sense, as the whole purpose is due diligence and trying to find a weakness in the product. If the testing is not thorough or conducted according to all the details in the standards, these weaknesses may not be found. Manufacturers should be very careful to extend their due diligence toward assuring themselves that the quality of independent laboratory testing meets the objectives of truly performing due diligence.
Additionally, testing is conducted at one point in time, with no consideration to developments that occur subsequently. Any changes to the product design, materials of construction, or manufacturing processes will leave doubts as to whether previous testing results would be reflective of current production.
A step beyond independent testing is to conduct product certification through a third-party certifier. Certification through a third party assures independence in product evaluation above and beyond independent testing, and it addresses the issue of product changes over time. Because certification is ongoing, product changes and their impacts on conformance to the standards are evaluated by the certifier as changes are implemented. Continued conformance to the standards is ensured by periodic retesting per the certifier’s policy requirements and through production facility audits focused on the manufacturing of the product.
There are differences in certifiers. Accreditation of the certifier by ANSI helps ensure that the program is being operated in accordance with its policies. Manufacturers should extend their due diligence in product liability to evaluate their certifier in terms of competence, quality, thoroughness and independence, in order to maximize the value of the impact of certification on their potential product liability.
Whether manufacturing ladders, shotguns, automobiles or residential water treatment equipment, product liability is a fact of life in the U.S. today. Although water treatment products typically do not have the risk of immediate serious injury associated with their use the way the other products can, there is certainly liability associated with their manufacturing and sale. Manufacturers recognize this and take steps to address and limit liability. Whether doing their own testing, using independent laboratories or going to the full extent of third-party certification, they have all consciously or subconsciously made decisions based on their assessment of potential product liability. For those of you who are manufacturers, what is your assessment? For those of you who are dealers, how comfortable are you selling the products you sell based on the manufacturer’s approach to product liability? These are difficult assessments to make, but they are critical. After all, it’s certainly better to climb down the ladder on your own terms, as opposed to falling off. wqp