“Made in the USA” is a hot marketing trend that can help manufacturers differentiate products in the marketplace. If manufacturers can obtain goods domestically faster and at lower costs than foreign suppliers can offer, it seems like a win. But, when “homegrown” products are more expensive than foreign-sourced products, purchasers may balk at the higher price tag.
For manufacturers that have used overseas suppliers, deciding when and whether to return to U.S. factories and suppliers can be a tough decision. Here is what you should know before jumping on the Made-in-America bandwagon.
Learn the rules
To claim a product is “Made in the USA,” you must comply with strict regulations enacted by the Federal Trade Commission (FTC). Under these rules, final assembly must take place on U.S. soil and the majority of total manufacturing costs must be spent on U.S. parts and processing. Complex labeling standards may also apply if an American flag or map is used on packaging to imply the country of origin.
A company can make a qualified claim when a product is made in several countries, however. For example, it may specify the percentage of a product’s domestic content or label a product as “Assembled in the USA” instead.
Compliance with these rules is essential. False claims are likely to attract an FTC investigation, which could lead to enforcement actions and negative publicity. Violators also may need to modify packaging to comply with the FTC regulations, which can be another costly expenditure.
Promote the benefits
The decision to make your product “Made in the USA” will undoubtedly benefit domestic manufacturing. You can prepare by investing staff, inventory and equipment to meet increasing demand for domestic-made products.
Remind your customers about the benefits of using domestic manufacturers. This includes less expensive and reliable shipping. For example, the United States offers lower labor, natural gas and electricity costs than some other developed countries in Europe and Asia, including Germany, Austria and Japan. Tariffs and high shipping costs can also make overseas production cost prohibitive. And, volatile foreign political environments may prevent products from shipping on time, leading to production delays.
People feel patriotic when they support the U.S. economy and create jobs for American workers. They also want to know that factory workers are not subjected to unsafe conditions, low wages or other forms of exploitation against which the U.S. Department of Labor and domestic labor unions protect. “Made in the USA” can be a powerful expression.
Avoid business risks
Intellectual property theft and devaluation of the U.S. dollar are just some of the risks companies face when they outsource production to other countries. Additionally, important instructions — such as product specifications or shipping terms — may be lost in translation when communicating with foreign suppliers.
News stories about contaminated plastic and pet food products from China have led to recalls, illnesses and even deaths. Products made under the scrutiny of the U.S. Food and Drug Administration and Departments of Commerce and Agriculture are typically held to higher quality standards than many foreign-made products. Safer materials and products give manufacturers peace of mind that they are not exposing end-users to unsafe products — and themselves to liability claims.
The U.S. Environmental Protection Agency also requires manufacturers to adhere to strict environmental standards that limit emissions and pollutants. Other countries, including China and India, are making huge carbon footprints today that will harm the environment for many years.
Whether you sell to businesses or consumers, consider implementing a marketing campaign that positions your products as American-made. This may include new advertising programs and repackaging with the “Made in the USA” label.
Preparing for a comeback
As 2020 looms, manufacturers and distributors should consider how to best incorporate “Made in the USA” and its ability to attract business. Customer demand for U.S.-manufactured products has been holding steady even in the face of tariff uncertainty. Make sure your business is positioned accordingly.
For more information, contact Seamus Donoghue at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Manufacturing and Distribution Group.