Manufacturers Buck Obstacles to Claim ‘Made in America’

“Made in the USA” is a hot pursuit for manufacturing CEOs these days, as more American companies decide on domestic production and many also look for opportunities to “onshore” output that previously was done abroad. By 2015, the Boston Consulting Group predicts that cost advantages over parts of Asia and Europe will drive more companies back to the U.S. generating as many as 5 million manufacturing jobs by the end of the decade.

“Continued uncertainty over FTC regs, as well as a passel of consumer lawsuits, make a pathway to the claim difficult to see.”

But federal labeling regulations make it difficult for some manufacturers to leverage domestic production into crucial marketing claims. Putting a crimp in “Made in America” marketing is Federal Trade Commission guidelines that say an unqualified “Made in USA” label can go on goods that are “all or virtually all” made domestically. Yet according to The Wall Street Journal, the agency doesn’t define what “virtually” means. And in California, if even one fastener in a product is foreign, state law says it’s false advertising to call it U.S.-made.

This has created a venue for consumer lawsuits against manufacturers in which people complain that “Made-in-America” labeling is deceptive. It’s also really difficult for manufacturers, even those who are very dedicated to manufacturing everything here, not to rely on some foreign bolt or rivet or flange somewhere, given how interconnected the global economy has become and the fact that there are just some things that aren’t made in America anymore.

For CEOs, this can be a difficult quandary, because continued uncertainty over the FTC regs, as well as a passel of consumer lawsuits against companies making a “made in USA claim,” still make a pathway through the thicket difficult to see. The one reliable strategy may be that pursued by New Balance, the iconic U.S. sneaker maker that claims “made in the USA” on its labels even though only about 70% of its shoes reflects domestic content and labor. New Balance’s solution: thoroughly explaining the percentage on its tags.

Manufacturing chiefs are increasingly eager, however, to expand U.S. production for a variety of reasons, ranging from the relative improvement in domestic labor costs compared with places like China, to the fact that only highly skilled American workers can handle some manufacturing tasks now; to the relatively weak dollar; to the reward that many brands still get from American consumers when goods are stamped “Made in the USA.”

“Being able to brand something ‘Made in the USA’ is an important consideration for both consumers and CEOs.”

“Being able to brand something ‘Made in the USA’ is an important thing that consumers really do pay attention to, and it’s a big part of the consideration set of a lot of CEOs for moving back to America or making it here in the first place,” Dick Sheehy, director of advanced planning and site selection for CH2M Hill, told CEO Manufacturing Briefing. “Even middle-class consumers in China now are preferring ‘made-in-the-USA’ and are willing to pay the higher costs.”

An impact also is being made by local companies that have succeeded, such as WeatherTech, a Chicago-area maker of digitally measured, premium-priced automotive floor mats. Founder and owner David MacNeil ponied up $4 million for the $400-million-plus company to tout its domestic-manufacturing message in a Super Bowl TV ad last February.

Another big enabler of the made-in-America “movement” is Shinola, a Detroit-based company that makes watches and other fashion accessories. Last year, the company came up with a “Makers Monday” campaign for consumers to buy American on the first day after Thanksgiving. It also encourages consumers to share their spending pledge—and, later, their American-made purchase—on their social networks.

" Dale Buss : Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other business publications. He lives in Michigan.."