“Consumers increasingly want to see “Made in the USA” on the products they purchase.”
What does “Made in the USA” mean to you? America dominated manufacturing from the 1940’s to 1960’s. Since then the face of manufacturing in America has undergone a number of changes. Production in America began to lose its position as the world leader in the late 70’s as Europe began making better quality products and Asia was making them less expensive. In the 80’s, Japan
improved on production methods to produce better robotic assembly lines, better product and at a low cost. In the 90’s, the United States began relying on the outside for production in order to be more competitive and sell products at a lower cost without losing acceptance by the American consumer.
Recently, I have seen an increase with companies bringing production back to America. The term “Made in the USA” is meaning more to business leaders and consumers. Whether out of a sense of patriotism, a desire to help the American economy, faster time to market or the belief that products made in the United States are of higher quality. Consumers increasingly want to see a “Made in the USA” label on the products they purchase.
In a survey by Consumer Reports National Research Center, 78% of Americans would rather buy an American product when given a choice between that product and an identical one made abroad. Also, more than 60% said they would buy American made clothes and appliances even if the cost is 10% more than imported versions. While for the past four decades America has been moving manufacturing overseas, there are a few reasons I believe it is important to bring it back to the U.S:
• Reduction in finances tied up in goods from advanced production and overseas shipments
• Elimination of shipping time, customs inspection delays, import duties and costs
• Ability to monitor quality of goods during production and resolve issues faster
• Rising cost of labor, materials and manufacturing regulations with emissions in foreign countries
• Improving on just-in-time manufacturing and delivery and flexiblity to adapt to last minute requests
I recently spoke with representatives at two companies who manufacture their products in America, to inquire about these changes and what is causing this trend. Among these companies is Home Products International (HPI), who designs, manufactures and markets a broad range of consumer houseware products, and Pregis Corporation, a leading global provider of innovative protective packaging materials and systems. Both provided insight into the notion of U.S. manufacturing and what it means to both businesses and consumers.
THE “MADE IN THE USA” PLATFORM
As more manufacturing returns to the U.S., early signs show that a “Made in America” label is a serious competitive advantage for businesses. Brands reviving the slogan to attract buyers are relying less on patriotism and more on data that shows consumers are willing to pay a premium for better quality, quicker availability and product safety.
Home Products International has a long history of manufacturing in America, with more than 60 years of commitment to their factories in Seymour, IN and Chicago, IL. Additionally, they have distribution on both coasts and re-invest in equipment and processes that keep their business competitive.
“We’ve heard from many consumers that they actively seek out Made in America suppliers. There is a sense of pride in their purchase knowing they are supporting homeland businesses,” said Kathy Evens, Sr. VP of Marketing at HPI.
The company has worn their heritage proudly and is finding ways to partner with retailers to develop programs that improve awareness to the benefits of supporting American produced goods and supplies.
“The advantages of U.S. production are numerous. Besides providing stable employment for hundreds of employees, American manufacturing provides a more efficient supply chain for the retailer, more consistent product quality, eliminates concerns over ethical and social manufacturing issues, and many times results in lower total cost than comparable import products,” says George Hamilton, CEO of HPI.
Pregis is a manufacturer of packaging systems that is used in virtually every business that manufactures and ships products. Their business model relies heavily on the supply chain and their ability to work with manufacturers throughout the United States to design, build and install custom solutions.
“We are more nimble and can manage the process better when making products in the U.S.,” said Tom Wetsch, Chief Innovation Officer at Pregis. “We have found the further away you are from your customer, the more difficult it is to keep up with innovation. Also, the further away from your manufacturing, the more problems you will encounter.”
Since 2005, Pregis has focused on keeping their production in America because it frees up working capital for their customers through lower inventories, reduced lead time, and a reduction in the overall carbon footprint compared to international sourcing.
“We still source components and parts from various markets that provide the best pricing, however, all components have been designed or specified, qualified and are assembled within the states. This ensures quality and enables Pregis to be more flexible and innovate fast,” says Tom Wetsch.
According to the Federal Trade Commission, “the product’s final assembly or processing must take place in the U.S.” to carry the “Made in the USA” distinction, although the agency allows for the inclusion of some imported parts.
HPI and Pregis continue to manufacture their products in America for three primary reasons: people, quality and customer value. Both companies are among a number of businesses who are bringing manufacturing back and proudly promoting “Made in America.”
After speaking with companies, consumers and our team at Beyond Design, we came up with the following six reasons we see manufacturing is coming back to America (in no particular order):
1. Economic Stability: U.S. manufacturing creates jobs for Americans. While overseas manufacturing may ultimately result in a lower priced end product, who will purchase that product if no one has a job?
2. Increased Control: “We are more flexible and can make changes faster if manufacturing in the U.S.,” Kathy Evens says, “Domestic production allows us to be more nimble and have more control over processes and results – thus making it easier to satisfy our customers’ needs.”
3. Speed to Market: “Not only are there shorter delivery times, which allows for quicker turnaround time, but there is less of a communication barrier which speeds up the process,” says Kathy. Tom Wetsch adds, “U.S. manufacturing gives smaller companies an opportunity to compete because they can now produce smaller volumes to get to market faster.”
4. Continuous Innovation: “The further you get away from a customer, the more difficult it is to keep up with innovation. When a middleman has to manage the development overseas, it adds time and complexity to the process. Not to mention that some things may be lost in translation as to what you get in the end,” says Tom Wetsch.
5. Higher Quality: In many foreign countries, goods made in the U.S. are held in high esteem and, in general, are perceived to be of better quality than foreign goods. By keeping manufacturing in the U.S., you have more control at following the manufacturing process, talking to vendors and/or meeting face-to-face to make sure that quality control is there.
6. Safety: Safety is perhaps one of the most important benefits of manufacturing in the U.S. While it may seem a distant concern to some, the well being of workers can often be placed at risk. American regulations keep standards in place to ensure the safety of all personnel. In addition, items made in China have had massive safety recalls. Products made in America are more thoroughly tested and inspected for safety standards set by the Consumer Product Safety Commission.
WHAT DOES THE FUTURE OF MANUFACTURING HOLD?
As product development experts, we realize the advantages of making products and services in our local markets and we want more products to be developed in the U.S. Through programs like dig-8, we teach product development to 8th grade students at Chicago Public Schools that includes research, strategy, design, engineering, marketing and sales.
The Elephant Hooks is an outcome of this work, and has since gone on to Kickstarter where it exceeded the revenue goal and generated a positive return on investment with funds going back to the school.
The best part of the dig-8 program was the introduction of the students to a local manufacturer, D&J Metalcraft, to learn first-hand what they do and inspire the next generation to play an active role. Today, companies are looking at manufacturing in a completely new way. U.S. manufacturers are looking at additive manufacturing technologies to provide low volume, custom parts. New production technologies and processes could have its most significant commercial impact on America. Additive manufacturing, or the industrial version of 3D printing, is already being used to produce some niche items such as medical implants, automotive parts and jewelry.
Innovative companies like D&J Metalcraft are realizing there is a better way to use new technologies that allows them to be more responsive to their customers. Where companies used to turn away, now custom designs can be achieved faster and less expensive.
Manufacturing will remain one of the most important factors of our economic future – as the benefits of manufacturing in the U.S. and marketing under a “Made in America” label are very apparent. We need to be ready for this next wave of industrial evolution and how this will further improve our economy and competitive advantage.
Special thanks to Kathy Evens and George Hamilton from HPI and Tom Wetsch from Pregis, for taking the time to share their insights on American manufacturing. Please feel free to submit your comments to firstname.lastname@example.org