Imported food testing a growing business

Looking for investment ideas? How about the imported food inspection business? There is always a silver lining, and some suffer, others benefit. In evidence: Product safety recalls linked to Chinese supplier companies have spurred many Michigan businesses to have their own products tested professionally and to do more of their own internal inventory checks. This is very good news for NSF International, a nonprofit product safety and certification facility in Ann Arbor, Michigan. Phones are ringing steadily for NSF’s services, said Lori Bestervelt, senior vice president and chief technical officer at the testing lab. Bestervelt estimates NSF is averaging five contacts per week from companies seeking to become clients — compared with one or two such contacts per week three months ago, before the Chinese recalls became national news. NSF has clients and facilities in nine countries. Its prices range from as little as $35 for a lead test on a single-sample product to $20,000 or so for a full audit of a client’s production and supply chain in sectors like dietary supplement products. Crain’s Detroit Business reports that NSF recently completed a $23 million expansion to double its laboratory space in Ann Arbor, and Bestervelt said the additional capacity is coming in handy with the surge in demand. Even though NSF also has a facility in Shanghai that tests products Chinese manufacturers plan to export to the U.S., Bestervelt said it is Ann Arbor that is shouldering most of the new demand. “The increase in testing requests has been coming in from U.S. companies, and the request is largely for tests to be done here in the U.S.,” she said. “We’re finding the clients feel more comfortable with results of a U.S. test on overseas (made) products.” Bestervelt said demand is up for tests for toxins at the Ann Arbor facility, which can handle pharmacological products, food and water products, and manufactured goods. NSF not only tests finished products but conducts audits of components and raw materials along the supply chain. Test and audit results can take days or weeks to complete.

Testing is not cheap but is an effective way to safeguard against even more expensive recalls or legal exposure, said Hal Stratton, an attorney at the Washington office of Detroit-based Dykema Gossett P.L.L.C. and chairman of the U.S. Consumer Product Safety Commission from 2002 to 2006. “Any business involved in some way with unsafe products — the retailer, the manufacturer, the distributor, the supplier, the importer — they are treated as equally responsible under the law,” he said. In cases of offshoring or imported products, American companies often end up shouldering a greater share of the total liability because their overseas partners are beyond the reach of U.S. agencies and courts. Since late May, thirteen companies have recalled more than 3.25 million toys and other products for children on their own or in cooperation with the U.S. Consumer Products Safety Commission, all due to excessive levels of lead in paint or in components manufactured in China. Hardest hit have been RC2 Corp. in Illinois and California-based Mattel with over one million units apiece. Other product recalls tied to China have included tires, toothpaste and oral-hygiene products, and pet food.