For the last year, I have urging everyone I know to consider buying more products manufactured by members of our extended American family. I have featured a lot of these products on this blog. But what does it mean for a product to be made in America or American made? Well, as you might have guessed, the devil is in the details. The Federal Trade Commission (FTC) is charged with preventing deception and unfairness in the marketplace. The FTC requires that a product must be “all or virtually all” made in the U.S. before it can be advertised as being “Made in USA”. That seems simple enough. But is it?
The FTC has provided guidance as to what it means to be “all or virtually all” made in the U.S. A product that meets this standard is entitled to what the FTC calls an unqualified “Made in the USA” claim. There are two factors in this standard; the manufacturing factor and the parts factor. The FTC standard for “All or virtually all” means that final assembly or processing of the product must take place in the U.S. and the product should contain no or only a negligible number of foreign parts. The FTC provides two examples to help make it crystal clear.
Example: A company produces propane barbecue grills at a plant in Nevada. The product’s major components include the gas valve, burner and aluminum housing, each of which is made in the U.S. The grill’s knobs and tubing are imported from Mexico. An unqualified “Made in USA” claim is not likely to be deceptive because the knobs and tubing make up a negligible portion of the product’s total manufacturing costs and are insignificant parts of the final product.
Example: A table lamp is assembled in the U.S. from American-made brass, an American-made Tiffany-style lampshade, and an imported base. The base accounts for a small percent of the total cost of making the lamp. An unqualified “Made in USA” claim is deceptive for two reasons: The base is not far enough removed in the manufacturing process from the finished product to be of little consequence and it is a significant part of the final product.
I may be a bit thick, but I didn’t get the answer to either of those examples right. But it gets worse. The FTC warns manufacturers that before they may use an unqualified “Made in USA” claim they should “look back far enough in the manufacturing process to be reasonably sure that any significant foreign content has been included in their assessment of foreign costs. Foreign content incorporated early in the manufacturing process often will be less significant to consumers than content that is a direct part of the finished product or the parts or components produced by the immediate supplier.” Returning to the FTC’s grill example, does the answer change if the starter switch has 75% US content, but 25% content from Canada? What if the tubing used for the burners are made manufactured in the US, but 30% of the iron ore used to make the burners came from Peru? I don’t know about you, but that kind of analysis makes my brain hurt. But I guess if you want to make an unqualified “Made in the USA” claim, you should have to prove that you are making a product in the U.S. with U.S. parts. But sheesh, it sure seems like a lot of work.
Manufacturers who are unable to make an unqualified “Made in USA” claim can often make a qualified “Made in USA” claim. A qualified “Made in USA” claim describes the extent, amount or type of a product’s domestic content or processing; it indicates that the product isn’t entirely of domestic origin.
Finally, a manufacturer that can’t meet the standard necessary to get a qualified “Made in USA” claim can opt for an “Assembled in USA” claim. But there are standards for this claim as well. According to the FTC, as long as “substantial” assembly occurs in this country, a product may be labeled “Assembled in USA” regardless of the source of its parts.
This American made labeling issue can be contentious. U.S. shoe manufacturer New Balance has been the subject of a lot of attention on the labeling issue. New Balance states on its website, “Twenty-five percent of New Balance shoes sold in North America are produced by our US workforce using US and imported materials. When possible, we obtain materials from domestic suppliers. At times, due to availability, economic or quality reasons, there is a need to import components from foreign sources. Where the domestic value is at least 70%, we have labeled the shoe “Made in the USA.” Where it falls below 70%, we have qualified the label referencing domestic and imported materials. This determination is based in part on the Federal Trade Commission’s survey of consumers.” New Balance employs 1,200 U.S. manufacturing workers in this country making its shoes.
The labeling issue also came to the fore recently with the opening of the “Made in America” store in Elma, New York. Mark Andol is the founder of the store and the store has been featured on Fox News, the ABC “Made in America” series, and NPR. Mr. Andol’s goal is the same goal I have: to create manufacturing jobs for Americans by having you and I buy American made products. Mr. Andol’s store appears to sell only products that meet the FTC’s unqualified “Made in USA” claim standard. I guess I am less of a purist than Mr. Andol. If the choice that a U.S. consumer is considering is between a “Made in USA” product and an “Assembled in USA” product, I would urge them to buy the former. But if the choice is between a product manufactured overseas versus an “Assembled in USA” product, I would urge them to buy the latter. I would like your take on that question.
If you have time, please leave a comment on the issue of whether you agree or disagree with me on my “Assembled in USA” position. Do you think American consumers should take an all or nothing approach to the made in America issue? Do you only consider an unqualified “Made in USA” product to be a made in America product? Please chime in.