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Made In The USA – The Slow Comeback

09/03/2013

madeinusalabel-300x232Over the weekend Parade Magazine, the print micro-mag stuffed inside newspapers (you remember newspapers, right?), featured the article, “ Putting America Back to Work: 5 Ways ‘Made In The USA’ Is Making A Comeback“.

The piece starts off, “Good news: Americans are making things again, from cars to watches to socks. What’s behind the manufacturing upswing—and what it means for American labor.”

It continues, “In the 1990s, American manufacturing took a hit. When China opened itself to the world 20 years ago, its labor costs were so low (less than 50 cents an hour) that U.S. companies couldn’t resist moving production there.”

The article then goes on to highlight a few companies making product in the USA…socks, bicycles, pencils, etc. While we’re all for Made in the USA, we have a slightly different perspective on what got us to this point and the prospects of a Made in the USA comeback.

What Took Manufacturing Away From The US? – Certainly China played a major role. Labor was cheap, resources to build new factories and a new-found respect for capitalism abounded. But that’s part of the equation.

NAFTA, The North American Free Trade Agreement (NAFTA) is a trade agreement between the United States, Canada, and Mexico. It was entered into force on January 1, 1994 after being negotiated and agreed upon based on the economic benefits promised by supporters to the three nations involved. For starters, there was supposed to be increases in trade, foreign investment and exports. Incomes and standards of living were supposed to improve. NAFTA was also implemented with the goal of reducing migration, creating better jobs, and reducing prices for goods.

Nearly two decades after NAFTA was implemented, the goals and promises of the agreement remain unrealized. In fact, quite the opposite has resulted. NAFTA has been devastating to the U.S. trade deficit and has resulted in massive job losses—particularly in the manufacturing sector. Between 1994 and 2010, U.S. trade deficits with Mexico totaled $97.2 billion and displaced an estimated 682,900 U.S. jobs. Nearly all of the losses were in manufacturing.

Schools Don’t Train American Kids for Manufacturing – American steelmakers used to say they would take anyone who could lift 50 pounds and fog a mirror. Not any more.

Today U.S. manufacturing is the most productive in the world because of a high level of automation. That automation requires a high level of skills. It’s not just lugging heavy things around anymore. Workers have to be able to think, and to have a command of a high level of details.

Modern-day factory jobs often involve the use of computers, CNC (computer numerical control) machines and robotic devices that stack inventory on warehouse shelves. Working with such equipment often requires more than a high school degree, whether a certificate program or a two-year associate degree. This is several notches above proficiency on Facebook.

Consumers Talk Out of Both Sides of Their Mouths – According to a recent nationally representative survey by the Consumer Reports National Research Center, 78% of Americans that were given a choice between an identical product made in the U.S. and one made abroad, would rather buy the American product.

Unfortunately consumers vote with their wallet…not with their heart. The pressure on brands to deliver the lowest cost products precludes much of American manufacturing.

We believe there’s a trend that is building for Made in the USA. But we are also realists. This is no overnight shift. Any real change will take years to fully develop. And until mass consumed product such as apparel are made at significant (not boutique) levels the movement will remain a curiosity rather than a full-on trend.

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