United Tools
Memorandum

To:         Art Vandelay, Supervisor
From:     Bo Bayles, Customer Service Department
Date:         7 June, 2005
Subject:     Addressing Safety Issues With 9” Pipe Wrench

This week I received a letter from a hardware store that carries our products. This letter brought to my attention an issue I think warrants discussion outside the Customer Service Department.

Background

A representative from Handee Hardware, Inc. in Alabama, a hardware store that carries our hand tools, sent me a letter about our 9” pipe wrench. He said that in the past several months, he has had two complaints from customers about the handles of wrenches snapping off. One of his customers was injured, and required stitches. He still has our wrenches in stock, but is hesitant to sell them.

This prompted me to investigate the issue. I learned that two months ago, our engineers found a structure problem with the 9” pipe wrenches that might cause their handles to snap off, and made a revised design to correct the problem. All the wrenches we are now shipping should not exhibit this flaw. However, in the past six months, we sold more than 300 wrenches that might be dangerous. We received four claim letters from customers about 9” pipe wrench handles.

United Tools Response

To preserve our reputation and shield ourselves from possible lawsuits, I think United Tools should consider conducting a recall of the wrenches that are still in stock at our various retailers, and replace them with the new wrench designs. This may be an expensive move, as there are up to 300 wrenches to replace, but it may very well be less costly than not conducting a recall in the long run. If someone is seriously injured, we could face a liability suit that could cost us lots of money in legal fees, damages, or both. Also, if we don't conduct a recall, retailers might be hesitant to sell our products in the future. This has the potential to cost more in lost sales than a total recall. I feel that even though both revisions of our product exceed ANSI standards for hand tools, we are ethically obligated to prevent potential injuries to our customers. Please let me know what action United Tools will take in addressing this matter.

I drafted an adjustment letter to the retailers and customers who sent sent us claim letters. In this adjustment letter, I offer to replace any wrenches the customers and retailers still have, and reimburse them for shipping their old wrenches to us. Please let me know if this response is appropriate (cost-wise) and if it sufficiently protects United Tools from liability. The letter is attached.

Attachment: Adjustment letter to retailers and customers

United Tools
20 Central Ave.
Dover, TX 76104
241 555-2010
7 June, 2005

To our valued customers:

We at United Tools are sorry that you have had a problem with our 9” pipe wrenches. We are committed to providing high-quality, useful tools to our customers and clients, and when our products fail, it reflects poorly on our company.

Our company engineers have redesigned our 9” pipe wrench product. Like the previous model, this new model exceeds ANSI standards for that type of tool. This new model, however, should have a much more durable handle. Because we wish to restore your confidence in United Tools' ability to provide a high quality, safe product, enclosed is a new 9” pipe wrench.

We appreciate your bringing product failures to our attention – it helps us better assure product quality, so we can maintain our reputation of good service. If you have any other older model 9” pipe wrenches from United Tools, please send them to us, and we will replace them with the newer design, and reimburse you for shipping costs.

If you have any questions, please contact our Customer Service Department at the address above.

Sincerely,

Bo Bayles, Customer Service Representative