“Your Honda isn’t welcome here. Go park it in Japan.”
In the US auto industry’s muscle-car heyday, it wasn’t unusual to see such xenophobic signs sprouting from factory pavement throughout the rust belt. Today, figuring out how American your car is requires sophisticated sleuthing and online mapping software.
Turns out, Honda’s are pretty darn American. In 2012, the company built 1.2 million vehicles right here in the good old US of A. In fact, every major Japanese auto manufacturer except Mazda has US production capacity. A US-built engine powers the Toyota Sienna, which is assembled in a Princeton, Indiana plant, not far from a gaggle of Denny’s and Cracker Barrel restaurants. More than 75% of the vehicle’s components are sourced from US suppliers. Compared to the Chevrolet Spark, which is built in Korea from mostly Korean parts, these Japanese nameplates are as American as mom and apple pie.
Made in America was once dependably rock-solid easy to understand. But last week, The Wall Street Journal reported on a new confusion—the very definition of made. A new business model called factory-less goods producers (yes, you read that correctly) has become a growing trend. According to the newspaper, these producers “handle every part of making their products except the actual fabrication. As industries have gone global, this model has proliferated from furniture making to electronics. Think of Apple Inc. and its iPhones. Now there is a move afoot among US government agencies to count these companies as manufacturers, which is a surprisingly fraught issue.” (Feds Try Redefining Manufacturing, March 15, 2014). An iPhone shipped from China with a proud Made in America emblem? Don’t laugh. Soon, it might be perfectly legal.
Even America, once synonymous with US, doesn’t reliably mean US, at least for advertising and promotion purposes. Technically, the term encompasses our neighbors to the north and south, Canada and Mexico. NAFTA, the North American Free Trade Agreement, accounts for 17% of all global trade. And bilateral US-Mexican trade alone now equals $1.4 billion per day, according to former Mexican ambassador to the US, Arturo Sarukhan, who spoke to our technology council last year.
The fuzzification of American-made presents difficult challenges for US consumers. “Given a choice between a product made in the US and an identical one made abroad, 78% of Americans would rather buy the American product,” according to a nationally representative survey by the Consumer Reports National Research Center.
The survey further revealed that “more than 80% of those people cited retaining manufacturing jobs and keeping American manufacturing strong in the global economy as very important reasons for buying American. About 60% cited concern about the use of child workers or other cheap labor overseas, or stated that American-made goods were of higher quality.” A 2012 study by another company, Perception Research Services International, corroborated these findings. Their research found that 80% of shoppers notice a Made in the USA label on packaging, and 76% said they would be more likely to buy a product because of the label.
But when money comes up, rabid patriotism takes a back seat. “Just 21% said they would definitely pay slightly higher prices to buy American-made products. 60% said that they would pay slightly higher prices to buy American made products only in some cases. And 19% said they wouldn’t pay more to buy American made products,” according to the Consumer Reports survey.
Does Buy American help or hinder US producers? Does it help US global competitiveness if patriotic fervor is the primary motivator for a purchase decision? In a global economy, aren’t US producers best served when they win on merits of superior quality, better features, and wide availability? These are not easy questions to answer. After all, a revenue dollar is still a dollar—regardless the reason a customer decided to buy.
But beyond patriotism, there are compelling reasons that a Made in USA label drives demand:
Safety. In a widely publicized case beginning in 2007, pet food imported from China was implicated in sickening many dogs and cats in the US, prompting the FDA to issue a warning, updated in 2011. “The Food and Drug Administration (FDA) continues to caution consumers about a potential association between the development of illness in dogs and the consumption of chicken jerky products. The products—also called chicken tenders, strips, or treats—are imported from China. FDA continues to receive complaints of sick dogs that their owners or veterinarians associate with eating chicken jerky products.”
Corporate Social Responsibility. Many Americans are troubled by the labor and environmental standards in the developing world, and want to make buying choices that are ethical. The factory collapse that killed 1,100 workers in Bangladesh in April, 2013, exposed the hazardous conditions that many workers outside the US encounter every day. Still, finding clothing with a Made in USA label isn’t easy. The American Apparel and Footwear Association reported that in 2011, just 2.3% of all apparel sold in the US was made in the US.
Profit. The competitive price advantage for offshore goods has started to fade. “’With rising labor and energy costs overseas, a few manufacturers have even told Walmart privately that they have defined the ‘tipping points’ at which manufacturing abroad will no longer make sense for them,’ William S. Simon, the Walmart U.S. chief executive, said in making the announcement at the National Retail Federation conference in New York,” according to a January, 2013 article in The New York Times, Walmart Plans to Buy American More Often. Last year, Walmart announced plans to increase sourcing of American-made products by $50 billion by 2023.
Despite claims that customers have more information power than ever, supply chains remain highly opaque. In February, 2014 The Wall Street Journal reported that “the top three canned-tuna brands in the US are foreign-owned, but that doesn’t stop them from bickering about which is the most American . . . StarKist cleans and cans tuna in the US territory of American Samoa. Last year it drove home that point by introducing a label depicting Charlie the Tuna backed by an American flag. Chicken of the Sea (owned by Thai Union Frozen Products PCL of Thailand) and Bumble Bee rely on plants in Thailand and elsewhere for labor-intensive cleaning, then ship their tuna to the US for canning.”
If you think the migration of wild tuna is difficult to chart, try tracking the product once it’s canned. Happily, David Roszmann, COO of Chicken of the Sea, set things straight when he said, “We’re as American as any other major seafood company.” Good to know.
But the ultimate obfuscation comes from the American Glove Company of Dalles, Oregon. The Consumer Reports article I mentioned earlier shows a pair of the company’s gloves with a label decorated with a flapping American flag aligned at a bold diagonal, offset against a white oval background. One important detail appears right above the flag: made in Vietnam. Well, heck. You can’t have everything.
