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Recalls part of a global pattern of more, and ever-larger, product failures

A customer uses his Samsung Electronics' Galaxy Note 7 as he waits for an exchange at company's headquarters in Seoul, South Korea, October 13, 2016.

KIM HONG-JI/REUTERS

As far as product failures go, it's hard to imagine a more nightmarish scenario.

Brian Green of Indiana had just boarded a Southwest Airlines flight in Louisville, Ky., earlier this month when grey-green smoke began wafting from his pocket. Terrified, he grabbed his smouldering Samsung Galaxy Note 7 smartphone and flung it onto the ground, where it burned through the carpet and scorched the subfloor, forcing the evacuation of the aircraft, according to an account in The Verge, a technology website.

It wasn't just any phone. Mr. Green's device was a replacement, with a new battery, deemed safe by Samsung after reports that an initial model was prone to spontaneous combustion.

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This week, Samsung took the extraordinary step of abandoning production of the Note 7, while ordering the recall of 2.5 million of the devices worldwide, including nearly 22,000 in Canada and a million in the United States.

It's the second time this year that an iconic global brand has faced a humiliating public flogging. Before Samsung, there was Volkswagen, which has acknowledged fitting 11 million of its diesel vehicles with software designed to dupe emissions tests. And in 2014 and 2015, there was Japan's Takata Corp., whose faulty airbags forced the recall of 19 million vehicles sold by most of the world's leading auto makers.

These recalls are part of a global pattern of more, and ever-larger, product failures.

Auto makers recalled a record 51.3 million vehicles in the United States last year, topping the previous high of 50.9 million reached in 2014. Recalls monitored by food and consumer product regulators are also rising.

It would be comforting if the trend was due to better vigilance by regulators, and more demanding consumers. Even if true, that's only part of the story.

What's particularly distressing is that large multinationals, with vast testing and engineering departments, are still unable to stop badly flawed and even dangerous products from reaching consumers.

And it suggests that the rush to grab market share may be getting ahead of companies' ability to deliver fully formed products.

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Smartphones and cars are intensely competitive markets, where global companies battle for every bit of market space. It's a relentless quest for lighter, faster and cheaper.

The struggle is so intense that some companies are apparently willing to bet everything to get there first.

Samsung is the world's largest smartphone maker, but it trails Apple's iPhone in the prized U.S. market. The Note 7 was one of the most sophisticated Android phones on the market, an answer to the iPhone 7.

Another possibility is that the surge in recalls is because companies are relying increasingly on vast global supply chains they do not fully control. This structure has obvious cost-saving benefits, with niche players in the chain specializing in what they do best and sharing the efficiencies.

Auto makers and smartphone makers are classic examples of global assemblers. Their products are filled with intellectual property that is not theirs. For example, Apple designs and develops software for the iPhone, but most other key components, from chips to glass and batteries, are made by a vast network of suppliers in more than 30 countries, which often jealously guard their trade secrets, even from Apple.

Samsung, which is generally more vertically integrated than Apple, has been vague about what might be causing some of its devices to catch fire. In early September, the company said it would stop using batteries from its original supplier and divert orders to a unit of Japan's TDK Corp.

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But that was before reports of replacement phones flaming out.

Samsung's recall won't be easy or painless. The company could lose billions of dollars in sales.

There is also a logistical problem. The phones are potentially so incendiary that the company is supplying fireproof packaging and gloves to handle returns. Some postal services, including Britain's Royal Mail, are balking at carrying them, citing safety reasons. The U.S. Postal Service is only shipping returned Note 7s through its ground transportation network and won't allow them on its planes.

Advertising for Samsung's Galaxy line of phones shows them splashed with water to demonstrate their waterproof qualities – "Because water happens," the copy reads.

Samsung might well add a postscript, "Because fire happens."

As for Mr. Green, he now owns an iPhone 7.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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