Made in the U.S.A. Gets a Big ‘So What’
By George Anderson
Check carefully. Those red, white and blue flags you were waving at the Memorial Day parade probably weren’t even made in the U.S.A., and if you’re like many consumers here, you don’t really care.
According to the American Demographics Perception Study, many U.S. consumers, especially those who are younger adults, well educated and affluent, give products made here in this country high marks but they’re still buying foreign produced goods in categories such as automobiles, electronics, etc.
Consumers with lower levels of income and education are most likely to look for the “Made in the USA” patch when shopping, reports the study.
Moderator’s Comment: Does made in America mean anything to American consumers anymore? Is there a “Made in the USA” niche ready for a retailer to fill?
If you’re doing business down south, it might be of interest to know consumers from that region of the country were, according to a report on the Ad
Age Web site, “slightly more likely than residents of other regions to scope out U.S. consumer goods.” –
George Anderson – Moderator
Personal preference aside, the business question asked here is “can a niche be exploited by marketing around Made in the USA.” Answer: not so far, and not very successfully.
The reality is that country of origin is very far down the “needs” profile of most consumer groups. Certainly there are small and mostly regional pockets of consumers who place vast importance on country of origin. It may even influence their purchasing, if all else is equal.
The studies I have seen show a huge discrepancy between what lower income groups say they like, and how they actually spend their money. Price is king, and if the lowest price at a minimum quality level is made overseas, the research indicates that it gets bought.
No, I would not advise most businesses to focus a marketing and merchandising campaign around Made in America. On a selected basis, where the product will still be competitive in price, and the customer demographics are aligned, then yes, it makes sense.
But remember: like so many other ideas, this one is really NOT defensible. Any retailer can access similar sources of supply, and if it’s economically viable for one maker, it is probably so for others (significant barriers to entry not withstanding). So even if you do have a customer who not only cares but is willing to follow through in purchase, you can’t defend the position when your competition notices your success and copies you.
Successful positioning involves defensibility – some advantage (other than first to market) that will maintain market share or help it continue to increase. Made in America, exceptions not withstanding, simply is not a defensible strategy.
I worked for a major apparel company many years ago that proclaimed “made in America” long after everyone else had moved production to Mexico…then they grudgingly went 807 long after everyone else had moved production to China…they stubbornly held to this “distinction” against all reason as consumers said “so what?” and retailers chimed in “what’s wrong with you?” Two bankruptcies and complete dissolution followed for this company that once was an undisputed leader.
I agree with Warren. With the exception of a few novelty concepts (American Apparel), the MADE in America ship has sailed, never to return. Not only that, I would add that Tom Friedman has it right in his latest book … DESIGNED in (China, India, etc.) is around the corner!
What comes to mind almost immediately when ‘Made in the U.S.A.’ is mentioned is cars. Taking a close look at these products, the component percentage that qualifies as such is slipping dramatically. What they have become is ‘American Brands’ rather than ‘Made in the U.S.A.’ There has of late been a further erosion in this market due to the Korean manufacturers.
I do believe that the automobile industry, being once the largest manufacturing sector in the country, set the tone for the decline in American manufacturing. There was a saying some time ago that ‘So goes GM, so goes the country.’ This has become true — so true that in some markets in the country GM’s market share has slipped below 15%.
Whether it was arrogance or incompetence, the American automobile companies continued, even when the message was clear, to fail to meet the consumers’ needs. What is interesting in this decline, while price was a factor, it was, in my mind, not the determining factor. However, as a result, the impact to the consuming public became price for all other types of products due to the decline in jobs and increased costs in all other areas of living.
Sentiment is fine, but consumer spending, both trends and performance, should always be measured by what is extracted from their wallets rather than their words. Left without an acceptable value alternative, the consumer will always slip to the lowest denominator of price. Whether that has been caused by arrogance, incompetence, or simply a long term sense of betrayal, the consumer has spoken by their purchases. They continue to speak in high numbers and in the same trends.
I truly believe that the American consuming public’s actual preference may be to the contrary. However, we have likely reached a point of no return. I don’t see it likely that any level of confidence can be restored either in the products, relationships, or services. First, you have to believe you’ve lost. We have, but an admission is neither forthcoming or likely at any time in the foreseeable future.
I’m sure that Bill O’Reilly and his ‘Made in America’ stance might disagree. However, I’ve seen no significant step by any retailer to take advantage of the opportunity. In order for there to be a niche, there have to be products to sell. They are few: expensive, and of not significant greater quality. The value equation can’t be met.
I will however, be flying my ‘Made in the U.S.A.’ flag on my porch this weekend. That was one purchase where I made sure of its origin. And yes, it was substantially more expensive, but worth it.
Made in America used to be a source of pride. I’d like to see that happen again. Unfortunately, it’s not going to happen until we get our political leaders to stop selling off pieces of this country with ill-conceived free trade agreements for the sake of political expediency.
The FTC set guidelines years ago to regulate the proper use of the “Made in the USA” label. [Click here to read them.] They seem reasonable, but there’s a loophole inherent in this line: “The term ‘United States,’ as referred to in the Enforcement Policy Statement, includes the 50 states, the District of Columbia, and the U.S. territories and possessions.” It so happens that the U.S. has ‘possessions’ overseas (specifically, the Northern Mariana Islands, between Hawaii and the Philippines) and some manufacturers are reportedly producing products in sweat shop conditions there, then claiming “Made in USA” status. Legislation has been introduced to correct this (the subject, as it happens, of Tom DeLay’s most recent scandal). As consumers become aware of these practices, the label may lose its luster.
I have always preferred “Made in America” merchandise, and I have a Master’s degree to boot. Case in point, Coach, my favorite handbag manufacturer stopped manufacturing in the USA ages ago. I used to avoid the “Made in China” handbags, but now there isn’t even a choice. At this point, I care more about quality than country of manufacture — a sad statement about the demise of US manufacturing.
It means very little to shoppers, who vote with their dollars. Time and again over the years, I’ve seen waning manufacturing industries (shoes and apparel come quickly to mind) come out with “Crafted With Pride in the USA” or whatever on logos and in advertising, but the erosion to offshore providers didn’t slow down at all. So I think chasing that illusion and waving the flag may make you feel good, but will ultimately be a waste of money, time and resources. I don’t expect current trends will be reversed until our dollar has shrunk low enough so that it is cheaper to produce here again. Ouch.
Although “Made in the USA” is not a primary reason to purchase in most categories, I’ve often thought that CPG suppliers are missing an opportunity to tout that many of their products are made here, and link that to high quality. You’d also think that the Grocery Manufacturers of America and other similar associations might want to promote the contribution that their member companies make to the economy by producing their products here.
Very sadly, our country has been saddled with greed from Wall Street and from CEOs who want to make the numbers and cash in their stock options. As a result, products, particularly consumer electronics, computers and everyday consumer products such as clothes, are all made by somebody outside the U.S.A. now. I still remember the Zenith and Motorola TVs, all made in USA and were very reliable, yet costly. Well, the Japanese were the first to beat us in the consumer electronic games. Now our automobile industry is going through the same cycle as consumer electronics. At the end of the day, it all boils down to corporate and Wall Street greed and American products were sacrificed to feed those hungers.
At one end of the spectrum, we have educated consumers who demand price and quality and US made products can no longer deliver these attributes. At the other end of the spectrum, poorly educated Americans still want to buy made in “USA” because they are talking about products derived from the jobs, thus meaning their job security. However, those days are all over unless we are able to deliver quality products with highly competitive prices (no where in sight currently).
We still make world-class aircrafts and sophisticated electronics, military hardware and high end consumer products. However, we have to be constantly vigilant and there should be no complacency or else we will see somebody taking over business in those sectors also. My life-long motto–never underestimate anybody! The Second World War era mindset and attitude that “we are the best,” underestimating everybody else in the world, should not exist anymore or else we will be on a constant sliding scale, intellectually or economically.
I don’t know if I can add anything original to what’s already been so well said. But I believe a tipping point is coming–more consumers on the high end are quite conscious of just how much worse our collective national debt (personal and federal) is made by transferring so much wealth out of our borders (read the cover story in the July/August Atlantic Monthly, a look back from 2016). Free trade is wonderful, but only if all sides benefit (and I fail to see how Americans benefit when they carry $10,000 in credit card debt, for purchases of items that mostly came from out of our borders). This idea will eventually become widespread enough that maybe, just maybe, we will change our ways. I don’t think politicians are smart enough to figure it out, but individual consumers are.
This is a bigger problem than just consumer goods, obviously–but we all have to do our part.
Made in the USA – I love it! I want every item I buy to be made in the USA. Does it help me make up my mind what to buy? SURE. I will buy Made in USA Honda’s, Toyotas, Mercedes made in Mexico, Dodges and Plymouths or made in Canada Impala’s. There was a time when made in the USA was a sign of quality. Sadly, quality improvements in Europe and the far east have eclipsed the “standards” that were deemed acceptable in America. Unfortunately, “Made in the USA” would seem to refer only to the wages of illegal workers. Lousy management, Wall Street greed and corrupt government seem to have resulted in a cynical population that doesn’t have the motivation to vote. We seem to be getting what we want, because we don’t seem to be willing to do anything to correct our condition.
Participation in a global economy, which we’ve determined is a benefit to our country, requires the free flow of goods and services across national borders. Certainly many U.S. trade restrictions exist for various good or poor reasons, but to pry open foreign borders for our exports, we must in turn open our own.
As the world’s largest consuming nation by far, we’ve created a domestic market that we can’t supply by ourselves. We must import. The long view is that by allowing foreign goods into our country we are creating emerging foreign markets for our own goods and services. Currently, my partners and I are putting together a program to export upscale and midscale California wines to China. The appetite for these wines is voracious there, and the finer California wines cannot be counterfeited by the Chinese – the labels can be counterfeited, but not the wine. There was a time that the Chinese government put several hurdles in front of initiatives like ours, but those are going away and the market is opening up.
We must remember that other countries are growing into consuming economies, but that they are in the early stages much like we were following WWII. They’ll catch up rapidly, require more and more of our goods, and the balance of trade will begin to shift in our favor (excluding oil) with “Made In America” a symbol of quality worldwide, not just here.
As with most things, consumers need a reason to alter a decision. As silly as it sounds, I only buy “Made in the U.S.A.” rawhides for my dogs because I have the impression that they contain less pesticides and other chemicals unhealthy to them. If we have a belief that “Made in the U.S.A.” has a meaning that will cause us to alter a decision, it will continue to have value. If we believe that there is no value in the statement, we will ignore it. What is “Made in the U.S.A” supposed to imply: quality, value, patriotism, loyalty? If we market the attributes of the statement, the statement will continue to have value.
Walking through a mass merchant store today, I came across a shirt with a car graphic with Made in America in script underneath it. When I looked at the label on the inside of the shirt. It said it Made in China. Enough said.
Niche markets (very very small and niche) can and do exist in all countries for a range of different products. As each country’s best quality output is identified, it gains merit and a following. That isn’t to say that products are bought – or are likely to be bought – on the basis of patriotism alone but, more importantly I think, on the basis of recognition of who is best at what. This is one of the ways in which globalisation can be good for all. As each country produces a smaller range of products they can specialise and fine tune more, phasing out the ones that they are not so good at. The end result is that consumers get the best of all worlds and each country’s manufacturers can focus on what they do best.
This reinforces the outsourcing of manufacturing to
cheaper labor countries, and further spells trouble for
the USA and its economy. USA needs to become a superior
service driven industry country.
Interestingly, it wouldn’t hurt our retail shop businesses! Hmmmmmmmm