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Supporting 'Made In The US' Goes Far Beyond The Label

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Supporting ‘Made In The US’ Goes Far Beyond The Label

By Nancy K. Crevier

A T-shirt made in Peru. Yoga pants from Russia. A sweater from Honduras and jeans from Guatemala. India, China, Vietnam, Taiwan, Thailand, and Hong Kong contribute to the rest of the wardrobe, with a few “Made in USA” thrown in for good measure.

It is a delicate global balancing act for the majority of world citizens who rely greatly on others to produce the items that are taken for granted. An e-mail that regularly circulates the Internet urges recipients to keep Americans working, by buying American-made products and shunning those crafted overseas. The idea behind the e-mail is that if more people buy products made in America, by Americans, that stateside businesses will flourish. As more product is demanded, more employees will be needed to meet that demand. It seems a simple action. Buy American, and grow the country.

According to the website americansworking.com, for every one manufacturing job, five more are created, including truck drivers, accountants, research and development people, and clerical. Conversely, for every manufacturing job that goes overseas, one can then suppose that those other five US jobs fail to materialize.

A special series hosted by ABC World News anchor Diane Sawyer this past spring, “Made In America” looked at American consumption of goods made out of country, and at the ease and cost of buying American, noting that it may take a bit more effort, but can be cost-effective and beautiful.

How pure should consumers be, and how can one be sure that the product labeled “Made in the USA” is truly handcrafted by an American citizen, earning a competitive wage?

A couch might be designed and assembled in the USA, but its components may be of Italian, Mexican, or South American origin. Upholstery may start out as a cotton plant in the deep south of the United States, and be woven into fabric here, but the final product cut and put together somewhere overseas. Or vice versa; the fabric originates overseas and ends up in a product put together this side of the Atlantic.

The Federal Trade Commission (FTC) requires “For a product to be called Made in USA, or claimed to be of domestic origin without qualifications or limits on the claim,” the product must be “all or virtually all” made in the United States. The term “United States,” as referred to in the Enforcement Policy Statement, includes the 50 states, the District of Columbia, and the US territories and possessions… “All or virtually all” means that all significant parts and processing that go into the product must be of US origin. That is, the product should contain no — or negligible — foreign content… The product’s final assembly or processing must take place in the US. The commission then considers other factors, including how much of the product’s total manufacturing costs can be assigned to US parts and processing, and how far removed any foreign content is from the finished product.”

It is up to manufacturers and marketers to determine if information from suppliers is given in good faith.

Items can also carry a qualified label, designating what percentage of the product was produced or crafted in America.

A conundrum for those who support 100 percent American produced goods is that items can be completely assembled this side of the ocean, by American workers, but be made entirely of imported materials. Those products would not carry the “Made in the USA” label.

Googling “made in America products” leads to hours of sorting out exactly what products are coming up and why, and how accurately it meets the criteria of what promoters of buying American desire. Electronics, which play a huge part in American households, are particularly problematic.

Googling “televisions made in the USA” brings up companies like Sharp, which does have a subsidiary of its Japanese mother company here in the United States, and LG, of Korean lineage. But the articles are not made stateside. According to the Sawyer series that aired in spring, the makeover of an American family’s living room is attractive and competitively priced to items made overseas — but lacking a television, as no Made in America television could be found.

The GE kitchen appliances in that household were replaced by beautiful stainless steel Viking and SubZero products, approximately four times more expensive than what is commonly found in a household.

Are the supporters of outfitting homes with exclusively American made items willing to forego electronics and pay quadruple the price for appliances, in order to support fellow countrymen? Is there an increase in quality equal to that increase in cost? Americans like their “stuff.” Will source and quality take precedence over quantity?

Is There An Economic Benefit?

“Economically, there really is nothing to support the idea that buying only USA-made products benefits our economy,” said Dr Mark J. Perry, professor of finance and business economics at the School of Management, University of Michigan-Flint, and a visiting scholar that the Washington, D.C., American Enterprise Institute.

What people fail to see is that money spent on foreign made items is not gone forever. “That money has to come back to the US, to either buy our products or as foreign investment,” said Dr Perry, speaking to The Bee November 7.

For example, he said, $500 spent on a Mexican-made television set means that somewhere in Mexico, a business or individual is holding $500 in American currency. “He can’t spend it in his own country, so he has to sell that currency to someone else interested in purchasing a US-made product with US dollars, or who wants to invest US dollars in the United States; or he has to spend that US money on US-made items. Either way, the money has to make its way back to the United States,” he explained. People also tend to focus on jobs created overseas, he said, and not see the jobs that are created in the US by foreign purchasers.

When the United State economy is struggling, the jobless rate is high, and recovery is slow, it is easier for an emotional patriotism to take hold.

“[Buying American] can make people feel that there are more jobs stateside, more jobs that are visible. People feel they can see that their dollars are staying in the US when they can actually see those jobs here,” he said. What they do not see, is how the dollars come back when purchasing foreign-made products.

Buying strictly USA made is not logical economics, either, said Dr Perry. “The borders between countries are imaginary lines. So if you won’t cross an imaginary line to buy or sell, why not only buy at a state level? People in Connecticut should buy only Connecticut-made items, or only if it is made in a person’s county, or city, or neighborhood, or for that matter, in a household. If self-sufficiency was beneficial at the national level, then it should also apply at household levels and we know that doesn’t make sense,” he pointed out.

Nor is the commonly held notion true that everything is made outside of the US, said Dr Perry. “In terms of the postwar record of manufacturing output in the US, there has never been any factual basis to the claims that ‘nothing is made in America anymore’ or that the industrial sector of America is ‘in decline.’ The inflation-adjusted, absolute amount of output produced in the US manufacturing sector has expanded consistently for more than a century, and has never declined, except in the short-run during recessions,” he said.

A Social Conscience

Buying American also targets the social consciousness of US citizens. Where and how clothing is manufactured has been a sore spot for years, with boycotts urged frequently against popular makers that choose to use “sweatshops” in developing countries, as much for ethical as patriotic reasons. But buying Made in America fashions may not resolve the issues of supporting factories that abuse labor laws and hire immigrants willing to work for less money in poor conditions.

Until 2009, dozens of substandard workshops on the island of Saipan employed tens of thousands of workers from countries like the Philippines, China, and other parts of Asia to make garments for high-end American-based companies. Those items, because they were produced on a US territory, could carry the label “Made in the USA.”

Garment manufacturers have outsourced production to other countries since, opening and closing shops as pricing demands, providing work and then taking it away from workers when shops close to move to a more profitable area.

Liberal Swedish author (In Defense of Global Capitalism) Johan Norberg (senior fellow at Washington, D.C., Cato Institute, a libertarian public policy think tank) argues that workers in countries like Vietnam do not compare work conditions there with US standards, but rather by comparing to their lives prior to working in a factory. And some of those workers are far happier with work provided by companies like Nike, than working as subsistence farmers, as is expressed by a Vietnamese woman he interviewed in his 2003 Spectator magazine article “The Noble Feat of Nike.”

So while compensation of workers in developing countries may be three or four times less than that of an American doing comparable work, it may be two or three times what a domestic worker earns in one of those countries. Increasing productivity in developing countries can lead to an increase in education and health care.

The purchase of products made overseas has given rise to millions of people out of poverty, said Dr Perry. “Opportunities are available to [those people overseas] that were not there before. And the wealthier they are, and the more into the middle class they rise, the more marketability there is in foreign countries for US products,” he said.

Supporting Inefficiency?

Equal or superior products can be produced in American factories by American workers than overseas, but they must be marketed competitively. Buying a higher priced product simply because it is USA made supports inefficient marketing practices.

Dr Mark LeClair, professor of economics at Fairfield University, noted that “deliberately buying from inefficient US firms in industries where goods can clearly be produced more cheaply elsewhere — e.g. textiles — reduces consumer welfare by unnecessarily consuming a person’s income.” Domestic firms support “Buy American,” he said, because it eliminates competition, raises prices, and permits inefficient firms to operate.

However, “In the long run,” said Dr LeClair in an e-mail to The Bee, “abandoning US production cedes control of that market to foreign producers. Once in control of the market, there is no guarantee prices will remain low.”

That said, he added, there are trade barriers to US exports, and the issue may really be about creating a level playing field. “If China restricts our imports, why do they have open access to our markets?” he asked. “You can only ship so many industries overseas before questions about whether you can revive them in the future, when other nations finally open up their markets, emerge,” Dr LeClair said, but added, “As Chinese wages have risen, some firms are returning manufacturing to the US, with its greater innovative capacity and lower transportation costs.”

There has been a renaissance in American manufacturing in the past two years, agreed Dr Perry, and the pressure on foreign wages is one reason. “There are a number of favorable factors,” Dr Perry said, that have made stateside manufacturing more attractive recently. Unions in the United States are also now renegotiating labor costs, meaning that new employees can be hired at somewhat lower labor costs than previously demanded by union workers. “We can now be competitive with rates overseas,” he said. Cutting down on delivery time when products are produced here, as well as transportation costs, is also attractive to American manufacturers. Compared to many foreign markets, the United States is also a more stable economic environment, said Dr Perry, and that is where “Buy USA”’ begins to make sense.

“As we move forward, I think we’ll see more and more manufacturing in the USA. The future,” guessed Dr Perry, “looks very bright for American manufacturing.

Buying American may mean looking beyond a label. Buying wisely may be the answer to the economic crisis here, and abroad.

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