Can You Scale “Made in America”?

In January 2005, a typical family made an unusual New Years resolution: a pledge to spend an entire calendar year without buying anything from China.

The family successfully accomplished their goal, but the experience was powerful enough to compel public interest in both a book and documentary chronicling their incredibly challenging journey.

Although this family spent a year without products made in China, they were able to substitute many typical Chinese-made purchases such as clothing and toys for other foreign imports from countries like Germany, Italy, or Vietnam. Imagine if they tried to spend an entire year only purchasing American-made products!

After the signing of NAFTA in 1994, that concept is all but laughable; millions of manufacturing jobs disappeared and nearly 25 years later, the U.S. trade deficit is north of $180 billion.

Many of our iconic American brands are made overseas. American Girl & Barbie dolls are both manufactured in China; Levi Strauss & Co. moved production to China, Vietnam, Turkey, and other countries that are not America; Rawlings Baseballs – symbols of the great American past time – are made in Costa Rica; Monopoly, a game epitomizing capitalism embedded into America, manufacturers game pieces in Ireland.

These, of course, are just a handful of examples. Since the mid-90s, however, manufacturing and production have been systemically outsourced to foreign countries, primarily in Asia in order to keep costs down and remain competitive.

There’s a growing grassroots movement to purchase only products that are American-made. They itemize benefits of this lifestyle ranging from reducing the carbon footprint to improving the state of human rights globally. Another added benefit is more American jobs to boost the American economy.

Despite this growing sentiment, overall consumer buying habits have changed very little.

  • In survey after survey, Americans claim that they care whether their shoes, toasters or cellphones are American made. Their actual spending habits, however, tell a different story.
  • – Heather Long, Washington Post contributor, in the Chicago Tribune

A Reuters-Ipsos poll found that a good price is 2x as important as purchasing a product made in America. Likewise, an Associated Press-GFK poll found that approximately 75% of Americans prefer to purchase American-made goods, but only 30 percent were willing to pay more for them.

The cost of American-made goods compared to their overseas counterparts ranges dramatically based on the industry. A single pair of pliers would sell for 30% more than a comparable import. A hypothetical analysis of Apple’s production costs, if moved to the U.S., would double the retail cost of iPhone to nearly $2,000. Clothing, however, would likely see the biggest increase with estimations exceeding 60% premium for a pair of jeans.

Within the discussion about the benefits of buying American-made and the potential premium attached to those products, is another conversation about identifying which products are truly made in the USA. That “Made in America” tag has tremendous selling power, something most brands want to cash in on, but the FTC guidelines about who can apply the claim and when isn’t widely known, leading many consumers to second-guess the application.

“Made in America” labels take many forms, especially since the FTC allows brands to design their own packaging and tags, meaning “made in the USA” splashed across the plastic of the American Flag might be pure marketing farce for those Chinese-made stars and stripes.

With so many U.S. manufacturers relying on the global supply chain, it is becoming increasingly difficult to identify products that are 100% American-made, as products can be partially developed in one country and completed in yet another. 

Dov Charney proved that controlling the supply chain and staying in the USA is not only possible, but it’s profitable with American Apparel. The company began humbly by selling basic garments at wholesale prices, but launched into fashionable fame in 2003 when it moved into the retail space.

This unorthodox startup developed a reputation for provocative advertising followed by claims of the founder’s impropriety trailed by sexual assault lawsuits filed against Charney. Yet, these tumultuous happenings were largely overshadowed by the company’s commitment to quality materials, fair pay for employees, and selling 100% American-made products.

By vertically integrating their business model, American Apparel was seeing 70% profit margins at a time when staple brands in the apparel industry were averaging 30% returns. The fervor of their loyal brand may have helped them disrupt a static industry, but their profitable production process is nothing short of a perfect recipe for success.

If you’re wondering what the future of American Apparel might have looked like without the resulting downfall from numerous lawsuits, you can find out with Los Angeles Apparel, Charney’s continuation of his original brand. Spoiler: it’s exactly the same, and getting its sea legs in wholesale.
Is it possible for other brands to follow American Apparel’s lead, but without the veil of controversy? 

Filson Shinola built their name on the slogan “Built in America” as the sum of two iconic American brands. The creator of high-quality watches and leather goods, Shinola’s products are all manufactured in Detroit, MI. Likewise, Filson has maintained their headquarters and manufacturing process in the USA since 1897.

Mizzen & Main, known for creating men’s dress shirts from performance fabric, is another emerging brand with strong American roots. The company makes all of its products in the hometown of its founder, right out of Texas.

The early success of American Apparel has a great deal of its origin in quality. In the era leading up to Occupy Wall Street, the rise of spaces like craft fairs and local farmer’s markets indicate that people want unique, handmade products. Enter: Etsy.

  • “We’re living in the sea of sameness. People are buying more and more of the same mass-produced goods from the same few logistics companies, and the world wants an antidote to that.”
  • – Josh Silverman, Etsy CEO

Etsy was born in 2005 for a small, but mighty audience of crafters and artisans. While it was no surprise that painters, candlemakers, bag designers, woodcutters and craftsman would flock to the site to sell their art, the unexpected demand from hungry consumers skyrocketed this marketplace.

Targeting members of the early 2000s feminist, anti-consumerist movement provided early traction, and allowed Etsy to become a mainstream player in the gift market, the go-to resource for artisan crafts, and a force in the e-commerce world. 

But even Etsy struggled to scale, alienating their core demographic, and angering investors, which required a new CEO to come in and take the wheel of operations. 

But is it realistic that all retailers can provide quality products made in America to a zealot brand following and turn a profit? Even with changes to trade agreements, manufacturing plants returning the American soil, and consumer desire for American products growing – the questions stands. Can you truly scale manufacturing in America?

By | 2019-03-20T18:53:06+00:00 March 20th, 2019|Adam's Blog|Comments Off on Can You Scale “Made in America”?