Made in USA

For other uses, see Made in USA (disambiguation).
1926 Ford Model T hubcap made in USA

The Made in USA mark is a country of origin label indicating the product is "all or virtually all" made in the United States. The label is regulated by the Federal Trade Commission (FTC).

In general, goods imported into the United States must have a country of origin label unless excepted, but goods manufactured in the United States can be sold without any sort of "Made in the USA" label unless explicitly required. Requirements to label domestic content include automobiles and textile, wool, and fur products. Any voluntary claims made about the amount of U.S. content in other products must comply with the FTC’s Made in USA policy.

A Made in USA claim can be expressed (for example, "American-made") or implied. In identifying implied claims, the Commission focuses on the overall impression of the advertising, label, or promotional material. Depending on the context, U.S. symbols or geographic references (for example, U.S. flags, outlines of U.S. maps, or references to U.S. locations of headquarters or factories) may convey a claim of U.S. origin either by themselves, or in conjunction with other phrases or images.

In 1996 the FTC[1] proposed that the requirement be stated as:

It will not be considered a deceptive practice for a marketer to make an unqualified U.S. origin claim if, at the time it makes the claim, the marketer possesses and relies upon competent and reliable evidence that: (1) U.S. manufacturing costs constitute 75% of the manufacturing costs for the product; and (2) the product was last substantially transformed in the United States.[2]

However, this was just a proposal and never became part of the final guidelines which were published in the Federal Register[3] in 1997.

On July 4, 2013 House Representative Steve Israel announced legislation that would require all U.S. national parks to sell merchandise that is Made in the USA.[4]

Matchbox

Assembled in USA

A product that includes foreign components may be called "Assembled in USA" without qualification when its principal assembly takes place in the U.S. and the assembly is substantial. For the "assembly" claim to be valid, the product's "last substantial transformation" also should have occurred in the U.S.A. A "screwdriver" assembly in the U.S. of foreign components into a final product at the end of the manufacturing process does not usually qualify for the "Assembled in USA" claim.

Regulation

Main article: Country of origin

Country of origin labels are required on textiles, wools, furs, automobiles, most foods, and many other imports.

Customs fraud

Examples of fraudulent practices involving imports include removing a required foreign origin label before the product is even delivered to the ultimate purchaser (with or without the improper substitution of a Made in USA label) and failing to label a product with the required country of origin.

Urban legend

There have been claims that products made in a town named "Usa" located in Ōita Prefecture, Japan and exported to the US in the 1960s carried the label "MADE IN USA, JAPAN", in order for it to have an appearance that the product is "Made in USA". It is, however, a myth that Japan renamed the town "Usa" following World War II so that goods exported from Japan could be labeled as such.[5] The town had this name long before the war, at least from the 8th century, and is not a major manufacturing center; furthermore, the United States Customs Service would likely have recognized such labeling, had it occurred, as fraudulent and thus would have prohibited goods so labeled from being imported into the United States.[5]

Significance

"Made-in-the-USA has enormous appeal to the rising Chinese middle class."
—Gary Locke[6]

Many manufacturers use the Made in the U.S.A. label as a selling point with varying degrees of success. This tag is associated with marketing and operational benefits. Companies that use domestic factories see positive externalities that relate directly to cost as well as those that are non-cost. When a consumer sees a product is made in the USA they may perceive this as higher quality, compared to a Chinese made counterpart.[7] The decision of where to produce is based on many factors, not simply the direct product costs. Marketing and operations are both affected greatly by producing domestically.

Marketing significance

Companies make it clear when a product is made in the USA. The branding and campaigns associated always highlight this aspect. One benefit to US production is the marketing potential associated with it. These are often non-cost, but relate to the success of products. Country of origin is a typical heuristic used when purchasing.[8] This plays a significant role in the consumer’s perspective and evaluation process. Consumers believe domestic products offer the highest value and show the least risk.[7] When comparing similar products, the consumer is more drawn to that which is made domestically. This may be effected by price as well.

Automotive

For years we have seen American car brands use this as a differentiating point. Supporting companies such as Ford was thought of as patriotic. Twenty eight percent of Americans have said they would only buy American vehicles.[9] There was a large push from domestic automakers after foreign competition entered the market in the 80's. Ford placed ads to all Americans highlighting that they made quality cars.[10] Chrysler also needed to reclaim market share from foreign competitors. They created commercials about American cars that were made by Americans with American parts. [11] Times have recently changed as Cars.com released American-Made Index which shows that many Hondas and Toyotas are among the top "American made" automotives.[12]

Apparel

Karlie Kloss showcases an Anna Sui dress at New York Fashion Week, Sui's collections have been designed and manufactured in New York's Garment Center since 1981.

Some may be concerned with the exploitation of non-American workers in sweatshops. Therefore, a product bearing a Made in the USA label can appeal to an American who seeks high quality products produced domestically under American labor and environmental laws. American Apparel, which has been producing in Los Angeles since 1989, is the largest clothing manufacturer in North America.[13] They are committed to social responsibility, and offer their factory workers careers with benefits and pay significantly higher than that of their overseas counterparts. Companies such as Rhode Island-based Kiel James Patrick are determined to resurrect American manufacturing.[14] They have seen huge social media success by highlighting the American aspects of their brand.

Food

After worker protests and bribery investigations, Walmart, the largest grocery store in the world, has pledged to source $50 billion in products from the US over the next ten years.[15] Companies such as Tropicana sold their orange juice as being 100% native to Florida. They later started to mix oranges from Brazil, and Florida’s Natural saw this as an opportunity to place "Made in the USA" on their cartons. Now that Tropicana has returned to only sourcing Florida oranges, Florida’s Natural has updated their ads saying "All Florida. Never imported. Who can say that?"[16]

Operational significance

Companies that make products in the USA also see benefits in their supply chain. Not all benefits are directly seen in cash flows immediately. Aspects like communication are simply improved, which may have effects that are not seen in the short run. The trend towards overseas factories has resulted in complications for companies of all sizes, ranging from quality to timeline issues.

Financial

Some direct costs are decreased as a result of using domestic factories. Shipping is simpler and faster when there is no need to deal with customs. US factories offer more flexible production runs, which can be appealing to new companies or new products.[17] These offer prices and quantities closer to what companies require. Research shows that reduced tariff rates are reflected immediately in lower clothing prices.[18] This suggests that the price of an imported good directly includes the tariff paid to import it. By producing in the USA, this price increase is avoided.

Non-financial

Companies also benefit in non-direct cost ways from making in the USA. The USA has the most productive workforce.[19] Costs are higher for these factories but the workers are more effective than their abroad counterparts. China historically was a cheap place to manufacture. This led to the thriving apparel factories. As currency appreciates, and wages rise people are moving to low cost areas in south east Asia, and also coming back to the USA. China’s prices are rising and time to market is becoming increasingly important.[20] Communication is difficult as well for companies that produce in areas where another language is spoken. General manager of a Haier plant in Camden, South Carolina Bernie Tymkiw has been quoted saying, “We just don't have the brainstorming ability because of language.”[21] The cultural disconnect can prove to be a significant barrier with global companies.

Supply chains are more agile using local suppliers. There is a greater control over orders. High end designers like being very close to their factories, as they have full control of the product quality that is leaving the assembly line. This is necessary to keep their high standards.[17] One can visit their factory as often as necessary. This plays an important role in auditing the production process. An online article about the luxury apparel maker company Everlane led to over 2,000 shirts sales in a single day.[22] A shirt restock from China may have taken three months, whereas they were able to do it in under one month.[22] Being closer to the factory can aid in shipping costs and time.

Examples

The FTC has a page[23] summarizing this issue, but, as of late 2011, there appears to be no "bright line" determining what "all or substantially all" means. Examples are given on the FTC site; a barbecue grill made of components made in USA with the exception of the knobs may be called "Made in USA" while a garden tool with an imported motor may not.

Controversial use of label

Goods produced in American Samoa (a United States territory) are entitled to attach a "Made in USA" label, as this is an insular area of the United States. This area has until recently had few of the labor and safety protections afforded United States workers, and there have been a number of cases of sweatshop operators exploiting labor forces imported from south and east Asia. The Northern Mariana Islands is another U.S. possession in the Pacific that was exempted from U.S. wage and labor laws until recently, where the use of the "Made in USA" label was likewise controversial. The label is controversial also since all U.S. insular areas, except Puerto Rico, operate under a customs territory separate from the U.S., making their products technically imports when sold in the United States proper.

See also

References

  1. ↑ "Examples Of Applications". Ftc.gov. 2011-06-24. Retrieved 2012-10-23.
  2. ↑ http://info.usa-c.com/faqs/
  3. ↑ "Document" (PDF). Retrieved 2012-10-23.
  4. ↑ "Rep. Israel Announces Legislation to Require National Parks to Sell Merchandise 'Made in the USA'". Retrieved 2013-07-04.
  5. 1 2 "Made in USA". snopes.com. Retrieved 2012-10-23.
  6. ↑ "Special Advertising Section". BusinessWeek: S3. May 30, 2011.
  7. 1 2 Ha‐Brookshire, J., & Yoon, S. (2012). Country of origin factors influencing US consumers’ perceived price for multinational products. Journal of Consumer Marketing, 29(6), 445–454. doi:10.1108/07363761211259250
  8. ↑ Cattin, P., Jolibert, A., & Lohnes, C. (1982). A Cross-Cultural Study of "Made in" Concepts.Journal of International Business Studies, 13(3), 131-141. JSTOR 154470
  9. ↑ Miller, Daniel (2016-10-28). "Detroit Automakers: The Truth About American-Made Vehicles -- The Motley Fool". The Motley Fool. Retrieved 2016-10-28.
  10. ↑ "History: 1980s". Adage. September 15, 2003. Retrieved November 28, 2016.
  11. ↑ Sottek, T. C. (2014-09-19). "Car commercials from the 1980s were completely insane". The Verge. Retrieved 2016-11-28.
  12. ↑ Tuttle, Brad. "Guess How Many Top 'American-Made' Cars Are Japanese Brands". MONEY.com. Retrieved 2016-11-28.
  13. ↑ "About Us". store.americanapparel.net. Retrieved 2016-10-26.
  14. ↑ Kurutz, Steven (2014-07-02). "The Designer Kiel James Patrick Evokes the Perfect New England Summer". The New York Times. ISSN 0362-4331. Retrieved 2016-12-02.
  15. ↑ "Made in USA makes comeback as a marketing tool". USA TODAY. Retrieved 2016-10-26.
  16. ↑ Elliott, Stuart (2012-02-15). "Made-in-America Resonates With Marketers". The New York Times. ISSN 0362-4331. Retrieved 2016-10-26.
  17. 1 2 Rowan L. Made in America, maybe: The potential renaissance of domestic apparel manufacturing in the united states. Georgetown University; 2015.
  18. ↑ Zigmantavičienė, A., & Snieška, V. (2006). Methods of measurement of non-tariff barriers in the international textile trade. Engineering Economics, 46(1), 13-19.
  19. ↑ Made in U.S.A. Is American competitiveness slipping? (1981). Great Decisions, 63-72. JSTOR 43680988
  20. ↑ Flannery, R. (2014). Cambodia factory shootings underscore shifts, openings in the global apparel business. forbes.com, 3.
  21. ↑ Biers, D. (2001). A taste of china in camden. Far Eastern Economic Review, 164(12), 54. Retrieved from http://search.proquest.com/docview/208230365
  22. 1 2 Wang J. American beauty there's a rebound in domestic production. Entrepreneur. 2012:70-71. http://web.a.ebscohost.com/
  23. ↑ "Made in the USA Workshop". Ftc.gov. 2007-06-25. Retrieved 2012-10-23.
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