What Is 'Made in America' Worth?
Probably more than you think. As more manufacturing returns to
U.S. shores, early signs show that a "Made in America" label is a serious
competitive advantage.
VisionsofAmerica/Joe Sohm/Getty
Think of the label "Made in America." What brand images come to mind? Odds
are, you've conjured up a picture of one of two scenes.
First, there's that rugged, sturdy (if underappreciated), no-frills, American
quality. It's the stuff of Chrysler Automotive's much-praised "
Imported from Detroit" ad, and Bruce Springsteen's "Born in
the USA." If you buy this two-fisted version of "Made in the USA," you also
likely buy American because you're patriotic. You don't care if elites would
rather buy a BMW.
The other Made-in-America vision embraces an artisanal, moral, locavore
sensibility. Think of Whole Foods, or, in apparel,
Brooklyn
Industries. In this vision, you buy boutique American goods because they're
holier-than-corporate and show off your elevated taste (not to mention your
ability to
afford such taste).
If one of these images is all that comes to mind, though, recent research and
certain branding experts suggest that you're selling "Made in America" short.
The label still has far more international cachet than Americans are likely to
give it credit for. Even in the United States, buyers have proven that they'll
pay considerably more for some kinds of American-made goods--simply because they
expect them to be a better value.
International perceptions of "Made in America," are rooted in global
perceptions of the country itself--and that news is surprisingly favorable for
domestic manufacturers. Simon Anholt is a British branding consultant and
creator of the Anholt-GfK Roper
Nation Brands Index, which measures a nation's
international reputation. In the market-research company's most recent survey,
released in late October, the U.S. ranked first--for the fourth year in a
row.
"The strengths of America's international standing continue to be innovation,
opportunities and vibrancy," Anholt said in a press release. Germany placed
second and the U.K. third. China didn't crack the top 10.
None of this would come as a surprise to Drew Greenblatt, president and owner
of Baltimore-based
Marlin Steel Wire Products, an
Inc. 5000 honoree that manufactures
only in the United States.
"American manufacturers have a reputation for getting it right the first
time," Greenblatt says. "And a lot of clients are comfortable that, if they
don't get it right, American companies will bend over backwards to make good on
it quickly." Since companies that manufacture in America often can't compete on
price, they have to compete on quality, service, or speed--and they have a
reputation for doing all they can to defend that brand edge.
Part of the advantage Greenblatt enjoys is technological. Forced to compete
with companies that benefit from lower labor costs overseas, American
manufacturers have invested heavily in advanced plants. That tends to provides
an edge in manufacturing precision and flexibility.
"I can manufacture to tolerances of 10 microns," he says. "My Chinese
competitors can't match that."
And domestic customers? While U.S. buyers tend to be less impressed by
American quality and innovation, they are willing to cut the "Made in USA" label
considerable slack. In a study of consumer perceptions of clothing made in the
United States vs. that made in China, Jung Ha-Brookshire, an assistant professor
at the University of Missouri, found that when offered a choice between a shirt
made in the U.S. with U.S. cotton and one made in China with local materials,
American consumers strongly preferred the "Made in USA" label. They also valued
the American-made garment nearly twice that of the Chinese one.
American
Giant, a San Francisco-based maker of cotton shirts and sweats, trades on
that preference. But it's also cautious not to presume too much about consumers'
patriotic tendencies.
"We try to bring business savvy and innovation to bear so that we can compete
on price and quality with foreign-made apparel," says CEO and founder Bayard
Winthrop. "By shouting that you're American-made, you're asking people to make
an exception for you and accept lousy quality or higher prices for a 'Made in
USA' label. You can't build a scalable business that way.”
Contrary to the thrust of much election-season advertising, America's
reputation seems to be improving, not receding. In the Nation Brands Index, the
United States was the only nation among the top 10 to improve its standing. A
lot of this has to do with the American economy. While the United States has
emerged sluggishly from the 2008 financial crisis, its recovery is firmly
established, and is now more than three years old. The U.S. faces nothing like
the 25% unemployment of Spain or the shrinking GDPs of most European nations.
"Success is a major dimension of the American brand," as Allen Adamson, managing
director of global-branding outfit Landor Associates, told
Businessweek.
At the same time, the labor-cost penalty that American manufacturers have to
compensate for continues to shrink. Greenblatt says that his Chinese competitors
used to pay workers 28 cents an hour but now pay $2.38, not including the 50%
tax for the Chinese version of social security.
The U.S. is still not a cheap place to manufacture, admits Greenblatt, but he
is content to compete internationally on U.S. companies' reputations for agility
and quality.
"We're not selling to ignorant people," he says. "Our clients have plenty of
choice, but they choose us because they are confident we'll deliver what we
promised. Regardless of what anyone says, the rest of the world has a lot of
faith in American ingenuity."
Eric Schurenberg is
the editor-in-chief of Inc. Before joining Inc,
