Introduction
The Federal Trade Commission (FTC) is charged with preventing deception and unfairness in the marketplace. The FTC Act gives the Commission the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin. Traditionally, the Commission has required that a product advertised as Made in USA be “all or virtually all” made in the U.S. After a comprehensive review of Made in USA and other U.S. origin claims in product advertising and labeling, the Commission announced in December 1997 that it would retain the “all or virtually all” standard. The Commission also issued an Enforcement Policy Statement on U.S. Origin Claims to provide guidance to marketers who want to make an unqualified Made in USA claim under the “all or virtually all” standard and those who want to make a qualified Made in USA claim.
This publication provides additional guidance about how to comply with the “all or virtually all” standard. It also offers some general information about the U.S. Customs Service’s requirement that all products of foreign origin imported into the U.S. be marked with the name of the country of origin.
This publication is the Federal Trade Commission staff’s view of the law’s requirements. It is not binding on the Commission. The Enforcement Policy Statement issued by the FTC is at the end of the publication.
Basic Information About Made In USA Claims
Must U.S. content be disclosed on products sold in the U.S.?
U.S. content must be disclosed on automobiles and textile, wool, and fur products. There’s no law that requires most other products sold in the U.S. to be marked or labeled Made in USA or have any other disclosure about their amount of U.S. content. However, manufacturers and marketers who choose to make claims about the amount of U.S. content in their products must comply with the FTC’s Made in USA policy.
What products does the FTC’s Made in USA policy apply to?
The policy applies to all products advertised or sold in the U.S., except for those specifically subject to country-of-origin labeling by other laws. Other countries may have their own country-of-origin marking requirements. As a result, exporters should determine whether the country to which they are exporting imposes such requirements.
What kinds of claims does the Enforcement Policy Statement apply to?
The Enforcement Policy Statement applies to U.S. origin claims that appear on products and labeling, advertising, and other promotional materials. It also applies to all other forms of marketing, including marketing through digital or electronic mechanisms, such as Internet or e-mail.
A Made in USA claim can be express or implied.
Examples of express claims: Made in USA. “Our products are American-made.” “USA.”
In identifying implied claims, the Commission focuses on the overall impression of the advertising, label, or promotional material. Depending on the context, U.S. symbols or geographic references (for example, U.S. flags, outlines of U.S. maps, or references to U.S. locations of headquarters or factories) may convey a claim of U.S. origin either by themselves, or in conjunction with other phrases or images.
Example: A company promotes its product in an ad that features a manager describing the “true American quality” of the work produced at the company’s American factory. Although there is no express representation that the company’s product is made in the U.S., the overall — or net — impression the ad is likely to convey to consumers is that the product is of U.S. origin.
Brand names and trademarks
Ordinarily, the Commission will not consider a manufacturer or marketer’s use of an American brand name or trademark by itself as a U.S. origin claim. Similarly, the Commission is not likely to interpret the mere listing of a company’s U.S. address on a package label in a non-prominent way as a claim of U.S. origin.
Example: A product is manufactured abroad by a well-known U.S. company. The fact that the company is headquartered in the U.S. also is widely known. Company pamphlets for its foreign-made product prominently feature its brand name. Assuming that the brand name does not specifically denote U.S. origin (that is, the brand name is not “Made in America, Inc.”), using the brand name by itself does not constitute a claim of U.S. origin.
Representations about entire product lines
Manufacturers and marketers should not indicate, either expressly or implicitly, that a whole product line is of U.S. origin (“Our products are made in USA”) when only some products in the product line are made in the U.S. according to the “all or virtually all” standard.
Does the FTC pre-approve Made in USA claims?
The Commission does not pre-approve advertising or labeling claims. A company doesn’t need approval from the Commission before making a Made in USA claim. As with most other advertising claims, a manufacturer or marketer may make any claim as long as it is truthful and substantiated.
The Standard For Unqualified Made In USA Claims
What is the standard for a product to be called Made in USA without qualification?
For a product to be called Made in USA, or claimed to be of domestic origin without qualifications or limits on the claim, the product must be “all or virtually all” made in the U.S. 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.
What does “all or virtually all” mean?
“All or virtually all” means that all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no — or negligible — foreign content.
What substantiation is required for a Made in USA claim?
When a manufacturer or marketer makes an unqualified claim that a product is Made in USA, it should have — and rely on — a “reasonable basis” to support the claim at the time it is made. This means a manufacturer or marketer needs competent and reliable evidence to back up the claim that its product is “all or virtually all” made in the U.S.
What factors does the Commission consider to determine whether a product is “all or virtually all” made in the U.S.?
The product’s final assembly or processing must take place in the U.S. The Commission then considers other factors, including how much of the product’s total manufacturing costs can be assigned to U
.S.
parts and processing, and how far removed any foreign content is from the finished product. In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a significant amount of the product’s overall processing. The same could be true for some foreign parts. In these cases, the foreign content (processing or parts) is more than negligible, and, as a result, unqualified claims are inappropriate.
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.
What items should manufacturers and marketers include in analyzing the percentage of domestic content in a particular product?
Manufacturers and marketers should use the cost of goods sold or inventory costs of finished goods in their analysis. Such costs generally are limited to the total cost of all manufacturing materials, direct manufacturing labor, and manufacturing overhead.
Should manufacturers and marketers rely on information from American suppliers about the amount of domestic content in the parts, components, and other elements they buy and use for their final products?
If given in good faith, manufacturers and marketers can rely on information from suppliers about the domestic content in the parts, components, and other elements they produce. Rather than assume that the input is 100 percent U.S.-made, however, manufacturers and marketers would be wise to ask the supplier for specific information about the percentage of U.S. content before they make a U.S. origin claim.
Example: A company manufactures food processors in its U.S. plant, making most of the parts, including the housing and blade, from U.S. materials. The motor, which constitutes 50 percent of the food processor’s total manufacturing costs, is bought from a U.S. supplier. The food processor manufacturer knows that the motor is assembled in a U.S. factory. Even though most of the parts of the food processor are of U.S. origin, the final assembly is in the U.S., and the motor is assembled in the U.S., the food processor is not considered “all or virtually all” American-made if the motor itself is made of imported parts that constitute a significant percentage of the appliance’s total manufacturing cost. Before claiming the product is Made in USA, this manufacturer should look to its motor supplier for more specific information about the motor’s origin.
Example: On its purchase order, a company states: “Our company requires that suppliers certify the percentage of U.S. content in products supplied to us. If you are unable or unwilling to make such certification, we will not purchase from you.” Appearing under this statement is the sentence, “We certify that our ___ have at least ___% U.S. content,” with space for the supplier to fill in the name of the product and its percentage of U.S. content. The company generally could rely on a certification like this to determine the appropriate country-of-origin designation for its product.
How far back in the manufacturing process should manufacturers and marketers look?
To determine the percentage of U.S. content, manufacturers and marketers 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.
Example: The steel used to make a single component of a complex product (for example, the steel used in the case of a computer’s floppy drive) is an early input into the computer’s manufacture, and is likely to constitute a very small portion of the final product’s total cost. On the other hand, the steel in a product like a pipe or a wrench is a direct and significant input. Whether the steel in a pipe or wrench is imported would be a significant factor in evaluating whether the finished product is “all or virtually all” made in the U.S.
Are raw materials included in the evaluation of whether a product is “all or virtually all” made in the U.S.?
It depends on how much of the product’s cost the raw materials make up and how far removed from the finished product they are.
Example: If the gold in a gold ring is imported, an unqualified Made in USA claim for the ring is deceptive. That’s because of the significant value the gold is likely to represent relative to the finished product, and because the gold — an integral component — is only one step back from the finished article. By contrast, consider the plastic in the plastic case of a clock radio otherwise made in the U.S. of U.S.-made components. If the plastic case was made from imported petroleum, a Made in USA claim is likely to be appropriate because the petroleum is far enough removed from the finished product, and is an insignificant part of it as well.
Qualified Claims
What is 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.
Example: “60% U.S. content.” “Made in USA of U.S. and imported parts.” “Couch assembled in USA from Italian Leather and Mexican Frame.”
When is a qualified Made in USA claim appropriate?
A qualified Made in USA claim is appropriate for products that include U.S. content or processing but don’t meet the criteria for making an unqualified Made in USA claim. Because even qualified claims may imply more domestic content than exists, manufacturers or marketers must exercise care when making these claims. That is, avoid qualified claims unless the product has a significant amount of U.S. content or U.S. processing. A qualified Made in USA claim, like an unqualified claim, must be truthful and substantiated.
Example: An exercise treadmill is assembled in the U.S. The assembly represents significant work and constitutes a “substantial transformation” (a term used by the U.S. Customs Service). All of the treadmill’s major parts, including the motor, frame, and electronic display, are imported. A few of its incidental parts, such as the handle bar covers, the plastic on/off power key, and the treadmill mat, are manufactured in the U.S.
Together, these parts account for approximately three percent of the total cost of all the parts. Because the value of the U.S.-made parts is negligible compared to the value of all the parts, a claim on the treadmill that it is “Made in USA of U.S. and Imported Parts” is deceptive. A claim like “Made in U.S. from Imported Parts” or “Assembled in U.S.A.” would not be deceptive.
U.S. origin claims for specific processes or parts
Claims that a particular manufacturing or other process was performed in the U.S. or that a particular part was manufactured in the U.S. must be truthful, substantiated, and clearly refer to the specific process or part, not to the general manufacture of the product, to avoid implying more U.S. content than exists.
Manufacturers and marketers should be cautious about using general terms, such as “produced,” “created” or “manufactured” in the U.S. Words like these are unlikely to convey a message limited to a particular process. Additional qualification probably is necessary to describe a product that is not “all or virtually all” made in the U.S.
In addition, if a product is of foreign origin (that is, it has been substantially transformed abroad), manufacturers and marketers also should make sure they satisfy Customs’ markings statute and regulations that require such products to be marked with a foreign country of origin. Further, Customs requires the foreign country of origin to be preceded by “Made in,” “Product of,” or words of similar meaning when any city or location that is not the country of origin appears on the product.
Example: A company designs a product in New York City and sends the blueprint to a factory in Finland for manufacturing. It labels the product “Designed in USA — Made in Finland.” Such a specific processing claim would not lead a reasonable consumer to believe that the whole product was made in the U.S. The Customs Service requires the product to be marked “Made in,” or “Product of” Finland since the product is of Finnish origin and the claim refers to the U.S. Examples of other specific processing claims are: “Bound in U.S. — Printed in Turkey.” “Hand carved in U.S. — Wood from Philippines.” “Software written in U.S. — Disk made in India.” “Painted and fired in USA. Blanks made in (foreign country of origin).”
Example: A company advertises its product, which was invented in Seattle and manufactured in Bangladesh, as “Created in USA.” This claim is deceptive because consumers are likely to interpret the term “Created” as Made in USA — an unqualified U.S. origin claim.
Example: A computer imported from Korea is packaged in the U.S. in an American-made corrugated paperboard box containing only domestic materials and domestically produced expanded rigid polystyrene plastic packing. Stating Made in USA on the package would deceive consumers about the origin of the product inside. But the company could legitimately make a qualified claim, such as “Computer Made in Korea — Packaging Made in USA.”
Example: The Acme Camera Company assembles its cameras in the U.S. The camera lenses are manufactured in the U.S., but most of the remaining parts are imported. A magazine ad for the camera is headlined “Beware of Imported Imitations” and states “Other high-end camera makers use imported parts made with cheap foreign labor. But at Acme Camera, we want only the highest quality parts for our cameras and we believe in employing American workers. That’s why we make all of our lenses right here in the U.S.” This ad is likely to convey that more than a specific product part (the lens) is of U.S. origin. The marketer should be prepared to substantiate the broader U.S. origin claim conveyed to consumers viewing the ad.
Comparative Claims
Comparative claims should be truthful and substantiated, and presented in a way that makes the basis for comparison clear (for example, whether the comparison is to another leading brand or to a previous version of the same product). They should truthfully describe the U.S. content of the product and be based on a meaningful difference in U.S. content between the compared products.
Example: An ad for cellular phones states “We use more U.S. content than any other cellular phone manufacturer.” The manufacturer assembles the phones in the U.S. from American and imported components and can substantiate that the difference between the U.S. content of its phones and that of the other manufacturers’ phones is significant. This comparative claim is not deceptive.
Example: A product is advertised as having “twice as much U.S. content as before.” The U.S. content in the product has been increased from 2 percent in the previous version to 4 percent in the current version. This comparative claim is deceptive because the difference between the U.S. content in the current and previous version of the product are insignificant.
Assembled in USA Claims
A product that includes foreign components may be called “Assembled in USA” without qualification when its principal assembly takes place in the U.S. and the assembly is substantial. For the “assembly” claim to be valid, the product’s last “substantial transformation” also should have occurred in the U.S. That’s why a “screwdriver” assembly in the U.S. of foreign components into a final product at the end of the manufacturing process doesn’t usually qualify for the “Assembled in USA” claim.
Example: A lawn mower, composed of all domestic parts except for the cable sheathing, flywheel, wheel rims and air filter (15 to 20 percent foreign content) is assembled in the U.S. An “Assembled in USA” claim is appropriate.
Example: All the major components of a computer, including the motherboard and hard drive, are imported. The computer’s components then are put together in a simple “screwdriver” operation in the U.S., are not substantially transformed under the Customs Standard, and must be marked with a foreign country of origin. An “Assembled in U.S.” claim without further qualification is deceptive.
The FTC and The Customs Service
What is the U.S. Customs Service’s jurisdiction over country-of-origin claims?
The Tariff Act gives Customs and the Secretary of the Treasury the power to administer the requirement that imported goods be marked with a foreign country of origin (for example, “Made in Japan”).
When an imported product incorporates materials and/or processing from more than one country, Customs considers the country of origin to be the last country in which a “substantial transformation” took place. Customs defines “substantial transformation” as a manufacturing process that results in a new and different product with a new name, character, and use that is different from that which existed before the change. Customs makes country-of-origin determinations using the “substantial transformation” test on a case-by-case basis. In some instances, Customs uses a “tariff shift” analysis, comparable to “substantial transformation,” to determine a product’s country of origin.
What is the interaction between the FTC and Customs regarding country-of-origin claims?
Even if Customs determines that an imported product does not need a foreign country-of-origin mark, it is not necessarily permissible to promote that product as Made in USA. The FTC considers additional factors to decide whether a product can be advertised or labeled as Made in USA.
Manufacturers and marketers should check with Customs to see if they need to mark their products with the foreign country of origin. If they don’t, they should look at the FTC’s standard to check if they can properly make a Made in USA claim.
The FTC has jurisdiction over foreign origin claims on products and in packaging that are beyond the disclosures required by Customs (for example, claims that supplement a required foreign origin marking to indicate where additional processing or finishing of a product occurred).
The FTC also has jurisdiction over foreign origin claims in advertising and other promotional materials. Unqualified U.S. origin claims in ads or other promotional materials for products that Customs requires a foreign country-of-origin mark may mislead or confuse consumers about the product’s origin. To avoid misleading consumers, marketers should clearly disclose the foreign manufacture of a product.
Example: A television set assembled in Korea using an American-made picture tube is shipped to the U.S. The Customs Service requires the television set to be marked “Made in Korea” because that’s where the television set was last “substantially transformed.” The company’s World Wide Web page states “Although our televisions are made abroad, they always contain U.S.-made picture tubes.” This statement is not deceptive. However, making the statement “All our picture tubes are made in the USA” — without disclosing the foreign origin of the television’s manufacture — might imply a broader claim (for example, that the television set is largely made in the U.S.) than could be substantiated. That is, if the statement and the entire ad imply that any foreign content or processing is negligible, the advertiser must substantiate that claim or net impression. The advertiser in this scenario would not be able to substantiate the implied Made in USA claim because the product was “substantially transformed” in Korea.
Other Statutes
What are the requirements of other federal statutes relating to country-of-origin determinations?
Textile Fiber Products Identification Act and Wool Products Labeling Act — Require a Made in USA label on most clothing and other textile or wool household products if the final product is manufactured in the U.S. of fabric that is manufactured in the U.S., regardless of where materials earlier in the manufacturing process (for example, the yarn and fiber) came from. Textile products that are imported must be labeled as required by the Customs Service. A textile or wool product partially manufactured in the U.S. and partially manufactured in another country must be labeled to show both foreign and domestic processing.
On a garment with a neck, the country of origin must be disclosed on the front of a label attached to the inside center of the neck — either midway between the shoulder seams or very near another label attached to the inside center of the neck. On a garment without a neck, and on other kinds of textile products, the country of origin must appear on a conspicuous and readily accessible label on the inside or outside of the product.
Catalogs and other mail order promotional materials for textile and wool products, including those disseminated on the Internet, must disclose whether a product is made in the U.S., imported or both.
The Fur Products Labeling Act requires the country of origin of imported furs to be disclosed on all labels and in all advertising. For copies of the Textile, Wool or Fur Rules and Regulations, or the new business education guide on labeling requirements, call the FTC’s Consumer Response Center (202-382-4357). Or visit the FTC online at www.ftc.gov Click on Consumer Protection.
American Automobile Labeling Act
Requires that each automobile manufactured on or after October 1, 1994, for sale in the U.S. bear a label disclosing where the car was assembled, the percentage of equipment that originated in the U.S. and Canada, and the country of origin of the engine and transmission. Any representation that a car marketer makes that is required by the AALA is exempt from the Commission’s policy. When a company makes claims in advertising or promotional materials that go beyond the AALA requirements, it will be held to the Commission’s standard. For more information, call the Consumer Programs Division of the National Highway Traffic Safety Administration (202-366-0846).
Buy American Act — Requires that a product be manufactured in the U.S. of more than 50 percent U.S. parts to be considered Made in USA for government procurement purposes. For more information, review the Buy American Act at 41 U.S.C. §§ 10a-10c, the Federal Acquisition Regulations at 48 C.F.R. Part 25, and the Trade Agreements Act at 19 U.S.C. §§ 2501-2582.
What To Do About Violations
What if I suspect noncompliance with the FTC’s Made in USA standard or other country-of-origin mislabeling?
Information about possible illegal activity helps law enforcement officials target companies whose practices warrant scrutiny. If you suspect noncompliance, contact the Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, DC 20580; (202) 326-2996 or send an e-mail to MUSA@ftc.gov. If you know about import or export fraud, call Customs’ toll-free Commercial Fraud Hotline, 1-800-ITS-FAKE. Examples of fraudulent practices involving imports include removing a required foreign origin label before the product is delivered to the ultimate purchaser (with or without the improper substitution of a Made in USA label) and failing to label a product with a required country of origin.
You also can contact your state Attorney General and your local Better Business Bureau to report a company. Or you can refer your complaint to the National Advertising Division (NAD) of the Council of Better Business Bureaus by calling (212) 754-1320. NAD handles complaints about the truth and accuracy of national advertising. You can reach the Council of Better Business Bureaus on the web at adweb.com/adassoc17.html.
Finally, the Lanham Act gives any person (such as a competitor) who is damaged by a false designation of origin the right to sue the party making the false claim. Consult a lawyer to see if this private right of action is an appropriate course of action for you.
For More Information
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and i
nvestigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Your Opportunity to Comment
The National Small Business Ombudsman and 10 Regional Fairness Boards collect comments from small businesses about federal compliance and enforcement activities. Each year, the Ombudsman evaluates the conduct of these activities and rates each agency’s responsiveness to small businesses. Small businesses can comment to the Ombudsman without fear of reprisal. To comment, call toll-free 1-888-REGFAIR (1-888-734-3247) or go to www.sba.gov/ombudsman.
December 1998 –
{Made in America Movement Note} Cleary this needs to be updated.
U.S. Mill Re-Opens To Meet China's Rising Demand For Diapers
in Uncategorized“There is a huge, huge opportunity” as families in the burgeoning middle classes of China, India and other Asian countries are seeking more personal hygiene and baby care products, said Rildo Martini, IP’s vice president and general manager for pulp.
Copy paper demand in Asia has increased, but North American mills can’t compete with Asian mills in that market, because the paper can be produced more cheaply there.
But the mill on the inky Blackwater River is able to take advantage of Asia’s growing desire for fluff because it can be made only from the long, coarse fibers of loblolly pine, a fast-growing tree that thrives in the U.S. South. Its fibers are ground, boiled, bleached and pressed into puffy white material that can absorb what a baby can excrete.
IP, with headquarters in Memphis, also makes fluff at part of its mills in Pensacola, Fla., Riegelwood, N.C., and Georgetown, S.C.
During the recession, copy paper demand in North America “stopped overnight” and IP had to shutter the Franklin mill, said John Faraci, IP’s chief executive. “We had no choice,” he said. “We didn’t have any orders.”
The Franklin mill’s large operations, southern location, and proximity to a major port made it a logical candidate to restart for fluff pulp production. “We’re willing to create jobs where there is demand,” Mr. Faraci said.
The revival came none too soon for the city, whose economy had been dominated by the mill since the 1880s. Today “closed” signs in storefront windows are common. The city has had to freeze hiring and dip into reserves due to an about $1 million loss this year in tax revenue from the mill. The percentage of City of Franklin residents living below the poverty line was 22% from 2006 to 2010, more than double the state rate. Unemployment sits at 10%. When IP sought to hire 220 workers, 3,000 people applied.
Darnell Lee, 52 years old, was one of the lucky ones. He and his wife were laid off from the mill in 2009. His wife is unemployed but at least now they have one salary, he said.
“That was the best phone call I could have ever got,” said Mr. Lee, who works in the mill’s shipping department.
The mill’s 15-story power-system tower—by far the tallest building for miles—is again illuminated at night. Trucks bearing 22-ton bundles of loblolly logs rumble through the city. Giant machines are whirring and grinding as preliminary operations have begun.And that peculiar mill smell, which one resident described as “like rotten eggs times three,” wafts through area streets. Some hate it, but many residents don’t mind.
Beulah Thorpe, 69, who lives right next to the mill, said she hushes people who complain about the plant’s odor. “That is money you smell,” she said. “It is a blessing to see people working there again.”
A Banner Year For The U.S. Wind Industry
in UncategorizedAssistant Secretary for Energy Efficiency and Renewable Energy
In the United States, domestic clean energy production and manufacturing competitiveness work hand-in-hand. The report finds total U.S. wind power capacity grew to 47,000 megawatts by the end of 2011 and has since grown to 50,000 megawatts, enough to power 12 million homes annually — as many homes as in the entire state of California. And as wind energy capacity has grown, more and more wind turbines and components like towers, blades, gears, and generators are “Made in America.” Nearly 70 percent of all of the equipment installed at U.S. wind farmslast year came from domestic manufacturers, doubling from 35 percent in 2005.
This summer, Energy Department leaders have traveled across the country and seen first hand how American workers and businesses are helping maintain U.S. leadership in the growing wind energy industry. In Iowa, Keystone Electrical Manufacturing Company has seen orders from the wind industry grow from almost nothing a decade ago to nearly 22 percent of gross sales, while, at ACCIONA Windpower’s West Branch assembly plant more than 100 workers are making wind turbines to sell here in the U.S. and around the world. Near Minneapolis, the International Brotherhood of Electrical Workers Local 343 Union facility features a 60-foot turbine tower to help train union members for new construction, installation, and maintenance jobs.
In addition to strong gains in domestic wind manufacturing and capacity, the report finds that as wind technology improves, costs are coming down. Technological innovations are helping make longer and lighter wind turbine blades, while improving turbine performance and increasing the efficiency of power generation. At the same time, wind project capital and maintenance costs have continued to decline.
Smart investments are paying dividends across the U.S. wind industry. From Des Moines to Amarillo to Denver, the American clean energy economy is hard at work – creating jobs right now and ensuring our global competitiveness in the clean energy technologies of the future. We can’t afford to break this momentum.
This is why the Obama Administration is calling for the extension of the production tax credit (PTC). Our continued support of clean energy policies like the PTC are mission critical for America’s thriving, competitive wind industry — and shows, more than ever, the promise to create the high-paying American jobs and nationwide economic growth our country needs.
Reshoring Success: AirGuide moving manufacturing from Mexico to Clarksdale
in UncategorizedAugust 14, 2012
The project represents a company investment of $720,000, according to the Mississippi Development Authority.
AirGuide, a manufacturer of aluminum grilles, registers and diffusers for the HVAC industry and energy efficient lighting products, is consolidating its Mexico and Houston operations into the Clarksdale facility.
AirGuide said in a press statement that Ron Hudson, Hugh Jack Stubbs, Hartley Kittle and Trisha Webber as well as many other peoples from the Clarksdale-area business community “have been instrumental in AirGuide making the decision to locate in Clarksdale.”
Doug Marty, president of AirGuide, said the company thinks the new location will enable AirGuide Manufacturing and Arcalux “to better serve our customers and further improve our competitiveness manufacturing our HVAC and energy efficient lighting products.”
The Mississippi Development Authority (MDA) provided assistance for improvements to the publicly-owned building AirGuide will occupy, along with support through the Momentum Mississippi Incentives program. Coahoma County is also assisting with this project.
AirGuide manufactures a variety of products, as well as a broad range of custom-designed original equipment manufacturer (OEM) products that can be modified to suit most applications. AirGuide has been in operation for nearly 50 years.
7 Reasons to Expect US Manufacturing Resurgence
in UncategorizedYaleGlobal, 7 August 2012
It’s true that the share of manufacturing in the US GDP is now only 12 to15 percent, and the country is predominantly a service economy. But the nation is still the world’s biggest manufacturer, with unrivaled productivity in terms of manufacturing value-added per employee or per hour worked (Table 1). American manufacturing wages average $34 an hour, some 21 times the average in China at $1.60 an hour. But each US worker adds $145,000 in value, far more than German, French or Japanese employees, and more than 10 times that of the Chinese worker who contributes $13,700.
The predominant explanation is US manufacturers’ investment in automated equipment. Also, American labor is better trained than the Chinese. Similar productivity rankings can be seen in dollar value-added per hour: The US worker is on top with $73 in value-added per hour worked; the Chinese worker adds only $7.19 of value per hour; Japanese, German and French workers contribute up to $63. China outperforms the US and Europe only in “value added per dollar wages paid” – but only because hourly wages are so low in China.
> Wages of the bottom half of American workers have significantly declined in real terms over the past decade, as well as in comparison with other nations, while those of US manufacturing rivals, including China and Japan, have risen.
> American workers are working longer, faster, with greater anxiety,than ever before. Because of greater automation, flexibility, domestic US outsourcing and the fear of being laid-off, surviving US manufacturing workers have seen little or no increases in wages in the past eight years, and their output has increased with productivity in output per employee at an all-time high. Americans put in 1800 hours per year, about the same as Japanese workers (Table 2). Top is South Korea, with its corporate culture that prevents employees going home until the last boss has departed. The French and Germans, by comparison, put in 19 percent less time than Americans.
> The dollar has weakened against several major currencies over the past decade, making imports more expensive and producing in or exporting from the US more competitive, by comparison. The US is not just the world’s biggest importer but also the second largest exporter of merchandise goods (Table 3). In 2001 – the year China joined the World Trade Organization – the renminbi yuan, RMB, was 8.27 per dollar. By 2012 the currency had appreciated by more than 30 percent to 6.3 RMB per dollar. For many Chinese exporters, a breakeven exchange rate, when their exports to the US are no longer competitive, is between 5.5 to 5.8 yuan per dollar. As the RMB continues to appreciate against the dollar, more Chinese firms will abandon exports and focus on their domestic market, growing at 8 percent per annum.
> Fuel prices have more than doubled. For products with significant transportation costs, the rise in energy costs can add significantly to the cost of imports. Shipping large appliances is expensive, so Haier, a leading white goods manufacturer based in China, opened a South Carolina plant where components, shipped across the Pacific Ocean, are assembled by American workers.
> Delivery and Flexibility Pressures. For products requiring flexibility in the face of fickle fashion changes or assembly operations that require components shipped within a few days to accommodate schedules, such pressures have driven component producers to co-locate near US assembly operations.
> Natural disasters and disruptions in recent years have spooked global supply chains: Volcanoes in Iceland, overflowing rivers in Thailand and tsunamis in the Pacific Ocean idled assembly plants in the US and Europe because parts from affected regions could not be shipped. Years of cost savings at Toyota, from sourcing components from faraway locations, were wiped out by a few weeks of losses from assembly operations idled by 2011 floods in Thailand.
Of course, all indicators are not positive. Three factors could inhibit the US resurgence:
> The culture devalues science or engineering education. “Nerds,” “geeks” or “wonks” are at the bottom of the social totem pole compared to sports, film and media celebrities. A culture that emphasizes quick results and instant gratification deters students from tackling math, engineering and other challenging subjects.
> US companies lack an apprenticeship system. In other OECD nations like Germany, alternative paths in education lead to diplomas or cer
tificates in techn
ical areas, with employees trained by the company in a particular technology and then retained in well-paying careers. Some US companies are trying this approach, highlighted by G. Bussey in an April Wall Street Journal article. For example, General Electric is sending new employees for crash courses in hands-on manufacturing or sponsoring two-week summer camps at universities on lean manufacturing for high-school students.
But don’t hold your breath. Few American companies are providing apprenticeships and only in selected areas of the country. Unlike Germany, the US is a very mobile society. The average household moves every five years. In an environment where companies can easily sack workers and where workers leave for better opportunities, firms are loath to invest in worker training, only to see skilled workers leave for competing companies. The current economic slowdown, which is reducing such churn in American society and jobs, could lead to a better appreciation for the benefits of apprenticeship programs for both companies and workers.
The time is propitious for a resurgence of manufacturing in the US. Unlike the exuberance of the bubble years, new economic conditions, which may persist for years to come, suggest more sober social attitudes, more career-focused college majors, more buckling down to learn harder subjects, less churn in jobs, and greater willingness to settle for somewhat lower wages in return for company investment in worker training and greater job security. In short, some aspects of the future may look like the old days when Detroit was king and skilled technical jobs meant reasonably secure careers with a moderate middle-class living standard.
Farok J. Contractor is a professor of management and global business with Rutgers Business School.
———-
The US may be a service economy, but it’s still the world’s largest manufacturer. There are many reasons to remain bullish on US manufacturing and the American worker, suggests Farok Contractor, professor of management and global business at Rutgers Business School. US firms invest in high-tech equipment, and the US worker is tops in adding value per hour on products. Recent economic difficulties also help fuel a manufacturing resurgence: falling wages allow the US to compete with low-cost China; anxious Americans work long hours; high energy prices and an uptick in natural disasters could prompt multinationals to relocate factories closer to the big US market. Contractor also points to factors that could stall the resurgence: US students show little interest in science or engineering. And because American workers enjoy great mobility, US manufacturers hesitate to provide apprenticeships that provide state-of-the-art training. Tough economic conditions could usher in new serious attitudes on career and education choices.
– YaleGlobal
Manufacturing in America: Start of a Renaissance?
in Uncategorized08/12/2012
Wages in China are rising so rapidly that the insourcing vs. outsourcing calculus has changed. In 2000, U.S. wages were almost 22 times larger than those in China. By 2015, U.S. wages will be only four times larger. Adjusted for productivity, the differential shrinks even more. In the Yangzi River Delta, the epicenter of China’s skilled manufacturing workforce, the effective wage rate will be about 61 percent of U.S. wages in 2015.
At those levels, it makes sense to return manufacturing of a wide range of goods , with moderate levels of labor content and high logistics costs, to the U.S. For an automotive part, where labor contributes one quarter of total cost, the total cost advantage for China shrivels to less than 10 percent.
Ten percent is a key threshold. When you factor in the risks and realities of doing business in China–weak intellectual property protection and rule of law, long lead times, and lack of proximity to key customers, among others–companies are willing to bring manufacturing back when the cost difference is in the single digits.
Within the next three or four years, that threshold will be crossed for seven key categories of goods: computers and electronics; appliances and electrical equipment; transportation goods; plastics and rubber; machinery; furniture; and fabricated metals. These goods account for about two-thirds of the annual $325 billion in imports from China.
The upcoming insourcing revolution is not just about rising wages in China but also the often-unheralded productivity of the U.S. The U.S. economy is 33 percent more productive than Japan and 25 percent more productive than Germany. This helps explain why Siemens is exporting gas power turbines, made in the U.S., to Saudi Arabia and Toyota has announced it would export cars made in Kentucky and Indiana to South Korea.
Economics is driving insourcing but government policy can facilitate it. Here are seven helpful steps that the U.S. government can take to create good jobs for our children and ensure the long-term success of the economy.
First, adjust tax policy to favor insourcing rather than outsourcing by providing a targeted tax credit for job creation in the U.S. and for the repatriation of funds to the U.S. that foster job creation. U.S. Senator Richard Blumenthal has proposed legislation to create tax credits for re-shoring.
Second, level the playing field by addressing key trade-agreement violations and insisting on stronger IP protection and an end to currency management by the Chinese government.
Third, secure and train critical talent: retain foreign students by issuing six-month green cards in selected disciplines that become permanent upon employment; subsidize job training for new and expanded manufacturing facilities; and create “vocational colleges” that combine liberal arts education with training in such trades as welding, plumbing, electrical, and computer-assisted manufacturing.
Fourth, rethink regulations that impair competitiveness without corresponding benefit.
Fifth, facilitate the creation of industry clusters — such as Silicon Valley or, in an earlier era, Detroit — that bring together competitors, suppliers, schools, and talent to create a winning ecosystem.
Sixth, encourage foreign manufacturers to locate facilities in the U.S., the largest domestic market and one of the lowest-cost in the developed world.
Seventh, change the perception that China is low cost and the U.S. is high cost and uncompetitive. Companies should “do the math” rather than just assume China is cheaper.
More than any major economy, the U.S. responds quickly to threats. We do not curl up in a ball or complain. We adapt and we thrive. We faced down a similar threat from Japan in the 1970s and 1980s, and we are doing it again.
Hal Sirkin is Senior partner and managing director, The Boston Consulting Group (Chicago)
Manufacturing is Returning to America
in UncategorizedBy Vivek Wadhwa
But Ralph Lauren berets aside, the larger trends show that the tide has turned, and it is China’s turn to worry. Many CEOs, including Dow Chemicals’ Andrew Liveris, have declared their intentions to bring manufacturing back to the United States.
What is going to accelerate the trend isn’t, as people believe, the rising cost of Chinese labor or a rising yuan. The real threat to China comes from technology. Technical advances will soon lead to the same hollowing out of China’s manufacturing industry that they have to U.S industry over the past two decades.
Several technologies advancing and converging will cause this.
Robotics
The robots of today aren’t the androids or Cylons that we are used to seeing in science fiction movies, but specialized electromechanical devices run by software and remote control. As computers become more powerful, so do the abilities of these devices. Robots are now capable of performing surgery, milking cows, doing military reconnaissance and combat, and flying fighter jets. Several companies, such as Willow Garage, iRobot and 9th Sense, sell robot-development kits for which university students and open-source communities are developing ever-more sophisticated applications.
The factory assembly that China is currently performing is child’s play compared to the capabilities of the next generation of robots — which will soon become cheaper than human labor. One of China’s largest manufacturers, Taiwan-based Foxconn Technology Group, announced last August that it plans to install one million robots within three years to do the work that its workers in China presently do. It has found even low-cost Chinese labor to be too expensive and demanding.
Artificial intelligence
Artificial intelligence is software that makes computers, if not intelligent in the human sense, at least good enough to fake it. This is the basic technology that IBM’s Deep Blue computer used to beat chess grandmaster Garry Kasparov in 1997 and that enabled IBM’s Watson to beat TV-show Jeopardy champions in 2011. AI is making it possible to develop self-driving cars, voice-recognition systems such as the iPhone’s Siri and Face.com, the face-recognition software Facebook recently acquired.
Neil Jacobstein, who chairs the AI track at the Silicon Valley-based graduate program Singularity University, says that AI technologies will find their way into manufacturing and make it “personal”: We will be able to design our own products at home with the aid of AI design assistants. He predicts a “creator economy” in which mass production is replaced by personalized production, with people customizing designs they download from the Internet or develop themselves.
3D printing
How will we turn these designs into products? By “printing” them at home or at modern-day Kinko’s using shared public manufacturing facilities such as TechShop, a membership-based manufacturing workshop featuring manufacturing technologies now on the horizon.
“Additive manufacturing” is making it possible to cost-effectively “print” products. In conventional manufacturing, parts are produced by humans using power-driven machine tools, such as saws, lathes, milling machines and drill presses, to physically remove material until you’re left with the shape desired. This is a cumbersome process that becomes more difficult and time-consuming with increasing complexity. The more complex the product, the more labor is required and the greater the effort.
In additive manufacturing, parts are produced by melting successive layers of materials based on three-dimensional models — adding materials rather than subtracting them. The “3D printers” that produce these parts use powdered metal, droplets of plastic and other materials — much like the toner cartridges that go into laser printers. This allows the creation of objects without tools or fixtures. The process doesn’t produce waste material and there is no additional cost for complexity. Just as, thanks to laser printers, a page filled with graphics doesn’t cost much more than one with text (other than the cost of toner), with 3D printers we can print a sophisticated 3D structure for what it would cost to print something simple.
Three-D printers can already create mechanical devices, medical implants, jewelry and even clothing. The cheapest ones, which print rudimentary objects, currently sell for between $500 and $1,000. Soon, we will have printers for this price that can print toys and household goods. By the end of this decade, we will see 3D printers doing the small-scale production of previously labor-intensive crafts and goods.
It is entirely conceivable that, in the next decade, manufacturing will again become a local industry and it will be possible to 3D print electronics and use giant 3D-printing scaffolds to print entire buildings. Why would we ship raw materials all the way to China and then ship completed products back to the United States when they can be manufactured more cheaply locally, on demand?
• • •
Other advances in the next decade will likely affect manufacturing, particularly advances in nanotechnology that change the equation further. Engineers and scientists are today developing new types of materials, such as carbon nanotubes, ceramic-matrix nanocomposites and new carbon fibers. These materials make it possible to create products that are stronger, lighter, more energy-efficient and more durable than existing manufactured goods.
A new field — “molecular manufacturing” — will take this one step further and make it possible to program molecules inexpensively, with atomic precision. “Over the next two decades,” Mr. Jacobstein says, “molecular manufacturing will do for our relationship with molecules and matter what the computer did for our relationship with bits and information — make the precise control of molecules and matter inexpensive and ubiquitous.”
All of these advances play well into America’s ability to innovate, demolish old industries and continually reinvent itself. The Chinese are still busy copying technologies we built over the past few decades. They haven’t cracked the nut on how to innovate yet.
It’s a near certainty that robotics, AI and 3D-printing technologies will advance rapidly and converge. American companies already find the rising cost of labor, shipping costs and time lags, and intellectual-property protection to be major issues in doing business in China. And the Chinese government has done itself no favor by hoarding key raw materials, such as rare-earth minerals, forcing Western manufacturers to start looking for alternatives.
The mo
st advanced automobile of today — the Tesla Roadster — is already being manufactured in the United States using robotic and AI technologies. Google just announced that it will produce its highly-acclaimed Nexus 7 tablet in the United States. This is just the beginning of the trend.
So, let me predict a future headline: “Protests break out in China over 2020 Summer Olympic uniforms, 3D-printed with U.S.-made technology.”
Vivek Wadhwa is director of research at the Center for Entrepreneurship and Research Commercialization at Duke University and a fellow at the Arthur and Toni Rembe Rock Center for Corporate Governance at Stanford University.
For Some U.S. Companies, ‘Reshoring’ Jobs from China Makes 'Cents'
in UncategorizedAugust 10, 2012
“We just kind of got kicked right in the teeth dealing with China. It wasn’t any fun by any means. But it helped us learn to bring stuff back to the United States,” said Calibur11 owner Coy Christmas.
The hassle of operating abroad has triggered some companies to move production stateside, a move called “reshoring” by some. Coming home not only bolsters the speed, quality and simplicity of doing business, it’s also more economical than it used to be. Average wages in China have jumped 10 to 25 per cent a year, hitting $4 to $6 an hour in some plants. Add in shipping and high fuel costs, and offshore manufacturing is no longer such a bargain.
The return of offshore production to America has emerged as a surprising silver lining in the U.S. economic recovery. The government doesn’t track corporate reshoring efforts, but experts say they are hearing of more companies bringing work back to the States.
“Lots of very encouraging anecdotes, and obviously the more of that we see, the better off we all are,” said Alan Tonelson, researcher for the U.S. Industry and Business Council.
Since 2002, about 3.5 million manufacturing jobs have been lost nationwide. Returning jobs could create opportunities for thousands of U.S. workers.
Mark Phillips, commissioner of the Minnesota Department of Employment and Economic Development, said companies that have moved jobs back to the U.S., such as Calibur11 and 3M Co., have different reasons for the change. But all have discovered that operating in China, Mexico, Poland and other countries is not always rosy.
“When you are dealing across the ocean, there are logistical issues and language issues,” Phillips said. “It’s not perfect.”
Christmas called Calibur11’s experience in China a nightmare, with one vendor losing $700,000 in tooling equipment and another demanding a $150,000 “fee” to release his product.
“And then we found out our product was being sold on the black market. It’s been a horror story,” Christmas said. The company, which makes cases for popular consoles such as the Xbox 360, will now add a few employees in Duluth and many more in Chicago, where it plans to hire contractors to handle molding, assembling and packaging.
Ryan Kanne, director of the U.S. Commercial Service Office in Minneapolis, said the obstacles overseas are rising and many companies are bringing manufacturing back because of quality concerns. While it is sometimes cheaper to do business abroad, companies can keep a tighter rein on how products are made if manufacturing is done in the U.S.
“Some were subsidiaries (overseas) while others were contract manufacturing, but (companies) are bringing it back to the U.S. for quality control,” Kanne said.
Darlene Miller, owner of Permac Industries, a high-precision machine shop based in Burnsville, Minn., said her company always had quality issues in China. In 2006, she hired a Chinese contractor to make machine blades with exacting specs. But each shipment turned up flawed, with some blades not uniform, made of the wrong material, or falsely labelled “certified.” What complicated matters is that she had to buy a year’s worth of blades at a time.
Miller spent thousands on an outside testing lab, but was at her wit’s end after three years.
“We found a Wisconsin company to make the blades. And without the shipping, testing and reject costs, they actually beat the price in China,” she said.
For Dan Shimek, owner of the Outdoor GreatRoom Co. in Eagan, Minn., it became too inefficient to lean on offshoring. Shimek used to buy all his wooden pergolas from China, and fibreglass fire pits and pergolas from India. But minor problems on hardware orders created major issues, because reshipping took six weeks. And sometimes reorders on a hot product arrived too late, causing him to miss an entire season’s worth of sales.
“The impact, for sure, is tens of thousands of dollars. And the impact to cash flow for a small business can be even more dramatic than that,” Shimek said.
Today, his company makes most of its firepit and grill tables in Eagan, or orders from Minnesota firms. The change, carried out in the past two years, helped Shimek become more nimble and has added about a dozen jobs to Minnesota’s economy, either at his site or at contractors.
Some economists say reshoring will continue to add U.S. jobs, but others, including Tonelson, worry that the reshoring trend could remain largely anecdotal. “I think the offshoring craze is still going on,” he said.
Certainly conglomerates like 3M Co. continue to operate globally. But even it has brought divisions home, when it has made sense. The Maplewood, Minn.-based company said it consolidated production of its Littmann stethoscope from 14 domestic and foreign contractors to just one 3M factory in Columbia, Mo., a move that will improve efficiency for its operations.
“What we are doing is trying to shorten the supply chain,” said 3M spokeswoman Jackie Berry. “We were making pieces around the world and then consolidated, so our supply cycle fell to 50 days from 165 days.”
Calibur11’s Christmas is expecting to increase its business. The company made and sold $4.5 million worth of gaming cases last year, and this year it will make $5 million to $8 million “and we will do it right here in the United States,” Christmas said.
“I’m pumped up,” he said. “I’m looking forward to bringing us back to the United States.”
We Don't Cotton to Tax Cuts for the Rich
in UncategorizedAUG 09, 2012
North Carolina is the nation’s third-largest producer of cotton. We formed Cotton of the Carolinas with other manufacturers and farmers to promote the use of locally grown cotton in a supply chain that keeps jobs, investment and tax dollars right here in our own communities.
Our supply chain is completely transparent, from Ronnie Burleson’s farm in Richfield to his nephew’s cotton gin down the street in New London. From Hill Spinning in Thomasville to Mortex Apparel in Middlesex and back west to Statesville to MoCaro Dyeing and Finishing then back to Mortex before ending up at our company to be printed and dyed.
Years ago, I studied to be an economist at UNC-Chapel Hill, the nation’s first public university. Our public schools, colleges and universities are among the important places we can see our tax dollars at work.
When the first Bush tax cuts passed in 2001, our nation had a budget surplus and we were told the tax cuts would pay for themselves by boosting economic growth and job creation. Many people like myself thought that was bunk. You’d think the economic meltdown and large budget deficit would have shown that giving tax breaks for the best-off Americans makes them richer – it doesn’t pay for itself, it doesn’t trickle down and it doesn’t create jobs, at least not in America.
I know first-hand that investment is the key to keeping my business healthy. I know that the taxes I pay allow the government to reinvest in teachers, roads, clean water and other infrastructure and services that my business depends on to succeed.
North Carolina benefits significantly from government investment. For every tax dollar we send to Washington, we get $1.08 back in everything from supports for our cotton farmers, jobs at our military bases, investments in our national parks that bring tourists to our state, and research and education investments that support the Research Triangle.
The Senate recently passed a bill extending the Bush tax cuts on income below the $250,000 level for households. Almost everyone – 98 percent of Americans including small business owners – have income below that. The richest 2 percent would keep their tax cuts on their income below $250,000 but not their extra tax cuts above that level.
On Aug.1, the House passed a bill to extend the Bush tax cuts for 2.7 million high-income earners and pay for these tax breaks by raising taxes on Americans with less income – reducing the child tax credit, college tuition tax credit and earned income tax credit, which help 13 million working families, with 26 million children. North Carolina is home to more than half a million of these working families who would be hurt.
Taking money from the budgets of families struggling to make ends meet and giving it to the most prosperous families won’t help my business or our economy. Instead it will continue us down the path of subsidizing the already well-off instead of making the investments in our economy and our people that truly strengthen our nation and our homegrown jobs.
Eric Henry is president of TS Designs of Burlington
Manufacturing in U.S. and Nation's Future Depend on Attracting Skilled People into Field
in UncategorizedBy: By Troy A. Mills
While I could go on and on about how we got ourselves in this position, I think that most don’t need, or want, the refresher course. The good news is, that it’s not too late.
It takes about 10 years to develop into a top-level tradesman. This means we have to start now. All American manufacturers need to get involved. We need to develop or continue the development of a skilled trades “campaign.” We have to attract new people in to the industry by showing them how fascinating and exciting it is and also how important they are to the success of our nation. This could be accomplished through radio, television and print advertisements as well as job fairs.
But our job fairs need to be different than the same old folding tables, handouts and sample parts. Some companies have already started kids programs, but I think this can be expanded upon by creating summer programs and mini-programs that teach a different discipline at each session. These programs need to be geared toward our middle and high school age children.
We are only in the early stages of this and could use all the help we can get. In addition to ideas, I am also asking every company discuss this on a regular basis and decide, not if, but how much you are willing to contribute to the survival of American manufacturing.
I cannot express the importance of doing something. All of us have experienced over the past year the difficulty in finding qualified candidates. This will get worse every year, until each of us can no longer staff our companies.
This is about more than just the survival of our industry. It’s about survival of our nation, the one our great grandparents and grandparents worked so hard to build. It’s about the legacy of American manufacturing.
Let’s rebuild American manufacturing. I believe our best is yet to come.
Troy A. Mills is Vice President of Albion Machine & Tool Co. The family-owned business opened in 1927.
Original Sin: Complying with Country of Origin Laws
in Uncategorized8/10/2012
Section 304 of the Tariff Act of 1930 (19 U.S.C. 1304) requires that products and packaging imported into the United States be marked “legibly, indelibly, and permanently” to indicate to the “ultimate purchaser the English name of [its] country of origin…” When an imported product involves elements or processes from more than one country, the country of origin is the last country in which a “substantial transformation” took place. A “substantial transformation” is defined as any “manufacturing process that results in a new and different product with a new name, character, and use that is different from that which existed before the change.” Meeting this test is decided by Customs on a case-by-case basis, and Customs issues letters of guidance to manufacturers on the interpretation and application of the regulations it enforces. The FTC’s jurisdiction over foreign origin claims relating to products and packaging extends beyond that of Customs, even covering marketing materials related to foreign and domestically produced goods. Promotional materials for textile and wool products, such as catalogs and Internet copy, must state whether a product is made domestically, abroad, or both.
For a product to bear a U.S. country of origin label without limitations or qualifications, the product and all of its constituent parts must entirely originate, or substantially originate, in the U.S. Any company claiming that its product originates in the U.S. must be able to provide reasonable and reliable evidence for the claim. In examining a U.S. origin claim, the FTC will look at the percentage of manufacturing costs that are attributable to U.S. materials and processes, and also the extent to which any foreign countries played a role in the product’s manufacture. Additionally, the Textile Fiber Products Identification Act and Wool Products Labeling Act require that a textile include a “Made in the U.S.A.” label if the final product is “manufactured in the U.S. of fabric that is manufactured in the U.S.” By contrast, a textile or wool product partially manufactured in the U.S. and partially manufactured in another country must be labeled to identify foreign and domestic countries of origin.
Regulations similarly focus on the location of manufacture when determining country of origin for labeling purposes. Consider the example of a T-shirt that is made from American-grown cotton, but assembled in the Dominican Republic. Pursuant to Customs Regulation § 10.22, Customs Regulations (19 CFR 10.22), assembled articles are products of the country where the assembly occurs. Therefore the T-shirt’s country of origin is the Dominican Republic, although the company could affix a label to the T-shirt claiming that the T-shirt’s materials originate in the U.S.
The consequence of improperly labeling products is considerable. Failing to label a product correctly is considered fraudulent activity by the FTC. The FTC recommends that consumers contact their respective state’s Attorney General or Better Business Bureau to report mislabeling, and courts have found that state law claims for false labeling are not preempted by Federal law. Additionally, the Lanham Act enables a company’s competitors to assert claims against the company for false designations of a product’s origin.
With this newfound focus on promoting American-made products, it is important to note that the identification of a product’s country of origin to consumers is a well-regulated area. Moreover, there has been a resurgence of public interest in domestic textile manufacturing, as evidenced by the recent crowd funding success of “Flint & Tinder”, a startup retail company that promises consumers a quality American-made line of men’s underwear. The startup aimed to raise $30,000 and has received nearly $300,000 from donors to date. The Team U.S.A. Made in America Act and the crowd funding phenomenon both demonstrate that making apparel in the U.S. resonates with consumers. Studies have repeatedly verified the relationship between consumer perception of product quality and the perceived country of origin, and many consumer activist groups in the U.S. exist specifically to promote the purchase of domestically made products.
Therefore, whether the retailer is a startup funded by online investors or a major apparel brand, the specter of overlapping liability under Federal law and general U.S. consumer perception regarding products’ origination ensures that compliance with Federal regulations concerning the labeling of clothing is a sound investment.
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
Complying with the Made in USA Standard
in FTC, Made in USA(Copied in its entirety from the FTC page. Nothing has been edited)
The Federal Trade Commission (FTC) is charged with preventing deception and unfairness in the marketplace. The FTC Act gives the Commission the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin. Traditionally, the Commission has required that a product advertised as Made in USA be “all or virtually all” made in the U.S. After a comprehensive review of Made in USA and other U.S. origin claims in product advertising and labeling, the Commission announced in December 1997 that it would retain the “all or virtually all” standard. The Commission also issued an Enforcement Policy Statement on U.S. Origin Claims to provide guidance to marketers who want to make an unqualified Made in USA claim under the “all or virtually all” standard and those who want to make a qualified Made in USA claim.
This publication provides additional guidance about how to comply with the “all or virtually all” standard. It also offers some general information about the U.S. Customs Service’s requirement that all products of foreign origin imported into the U.S. be marked with the name of the country of origin.
This publication is the Federal Trade Commission staff’s view of the law’s requirements. It is not binding on the Commission. The Enforcement Policy Statement issued by the FTC is at the end of the publication.
Basic Information About Made In USA Claims
Must U.S. content be disclosed on products sold in the U.S.?
U.S. content must be disclosed on automobiles and textile, wool, and fur products. There’s no law that requires most other products sold in the U.S. to be marked or labeled Made in USA or have any other disclosure about their amount of U.S. content. However, manufacturers and marketers who choose to make claims about the amount of U.S. content in their products must comply with the FTC’s Made in USA policy.
What products does the FTC’s Made in USA policy apply to?
The policy applies to all products advertised or sold in the U.S., except for those specifically subject to country-of-origin labeling by other laws. Other countries may have their own country-of-origin marking requirements. As a result, exporters should determine whether the country to which they are exporting imposes such requirements.
What kinds of claims does the Enforcement Policy Statement apply to?
The Enforcement Policy Statement applies to U.S. origin claims that appear on products and labeling, advertising, and other promotional materials. It also applies to all other forms of marketing, including marketing through digital or electronic mechanisms, such as Internet or e-mail.
A Made in USA claim can be express or implied.
Examples of express claims: Made in USA. “Our products are American-made.” “USA.”
In identifying implied claims, the Commission focuses on the overall impression of the advertising, label, or promotional material. Depending on the context, U.S. symbols or geographic references (for example, U.S. flags, outlines of U.S. maps, or references to U.S. locations of headquarters or factories) may convey a claim of U.S. origin either by themselves, or in conjunction with other phrases or images.
Example: A company promotes its product in an ad that features a manager describing the “true American quality” of the work produced at the company’s American factory. Although there is no express representation that the company’s product is made in the U.S., the overall — or net — impression the ad is likely to convey to consumers is that the product is of U.S. origin.
Brand names and trademarks
Ordinarily, the Commission will not consider a manufacturer or marketer’s use of an American brand name or trademark by itself as a U.S. origin claim. Similarly, the Commission is not likely to interpret the mere listing of a company’s U.S. address on a package label in a non-prominent way as a claim of U.S. origin.
Example: A product is manufactured abroad by a well-known U.S. company. The fact that the company is headquartered in the U.S. also is widely known. Company pamphlets for its foreign-made product prominently feature its brand name. Assuming that the brand name does not specifically denote U.S. origin (that is, the brand name is not “Made in America, Inc.”), using the brand name by itself does not constitute a claim of U.S. origin.
Representations about entire product lines
Manufacturers and marketers should not indicate, either expressly or implicitly, that a whole product line is of U.S. origin (“Our products are made in USA”) when only some products in the product line are made in the U.S. according to the “all or virtually all” standard.
Does the FTC pre-approve Made in USA claims?
The Commission does not pre-approve advertising or labeling claims. A company doesn’t need approval from the Commission before making a Made in USA claim. As with most other advertising claims, a manufacturer or marketer may make any claim as long as it is truthful and substantiated.
The Standard For Unqualified Made In USA Claims
What is the standard for a product to be called Made in USA without qualification?
For a product to be called Made in USA, or claimed to be of domestic origin without qualifications or limits on the claim, the product must be “all or virtually all” made in the U.S. 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.
What does “all or virtually all” mean?
“All or virtually all” means that all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no — or negligible — foreign content.
What substantiation is required for a Made in USA claim?
When a manufacturer or marketer makes an unqualified claim that a product is Made in USA, it should have — and rely on — a “reasonable basis” to support the claim at the time it is made. This means a manufacturer or marketer needs competent and reliable evidence to back up the claim that its product is “all or virtually all” made in the U.S.
What factors does the Commission consider to determine whether a product is “all or virtually all” made in the U.S.?
The product’s final assembly or processing must take place in the U.S. The Commission then considers other factors, including how much of the product’s total manufacturing costs can be assigned to U
.S.
parts and processing, and how far removed any foreign content is from the finished product. In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a significant amount of the product’s overall processing. The same could be true for some foreign parts. In these cases, the foreign content (processing or parts) is more than negligible, and, as a result, unqualified claims are inappropriate.
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.
What items should manufacturers and marketers include in analyzing the percentage of domestic content in a particular product?
Manufacturers and marketers should use the cost of goods sold or inventory costs of finished goods in their analysis. Such costs generally are limited to the total cost of all manufacturing materials, direct manufacturing labor, and manufacturing overhead.
Should manufacturers and marketers rely on information from American suppliers about the amount of domestic content in the parts, components, and other elements they buy and use for their final products?
If given in good faith, manufacturers and marketers can rely on information from suppliers about the domestic content in the parts, components, and other elements they produce. Rather than assume that the input is 100 percent U.S.-made, however, manufacturers and marketers would be wise to ask the supplier for specific information about the percentage of U.S. content before they make a U.S. origin claim.
Example: A company manufactures food processors in its U.S. plant, making most of the parts, including the housing and blade, from U.S. materials. The motor, which constitutes 50 percent of the food processor’s total manufacturing costs, is bought from a U.S. supplier. The food processor manufacturer knows that the motor is assembled in a U.S. factory. Even though most of the parts of the food processor are of U.S. origin, the final assembly is in the U.S., and the motor is assembled in the U.S., the food processor is not considered “all or virtually all” American-made if the motor itself is made of imported parts that constitute a significant percentage of the appliance’s total manufacturing cost. Before claiming the product is Made in USA, this manufacturer should look to its motor supplier for more specific information about the motor’s origin.
Example: On its purchase order, a company states: “Our company requires that suppliers certify the percentage of U.S. content in products supplied to us. If you are unable or unwilling to make such certification, we will not purchase from you.” Appearing under this statement is the sentence, “We certify that our ___ have at least ___% U.S. content,” with space for the supplier to fill in the name of the product and its percentage of U.S. content. The company generally could rely on a certification like this to determine the appropriate country-of-origin designation for its product.
How far back in the manufacturing process should manufacturers and marketers look?
To determine the percentage of U.S. content, manufacturers and marketers 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.
Example: The steel used to make a single component of a complex product (for example, the steel used in the case of a computer’s floppy drive) is an early input into the computer’s manufacture, and is likely to constitute a very small portion of the final product’s total cost. On the other hand, the steel in a product like a pipe or a wrench is a direct and significant input. Whether the steel in a pipe or wrench is imported would be a significant factor in evaluating whether the finished product is “all or virtually all” made in the U.S.
Are raw materials included in the evaluation of whether a product is “all or virtually all” made in the U.S.?
It depends on how much of the product’s cost the raw materials make up and how far removed from the finished product they are.
Example: If the gold in a gold ring is imported, an unqualified Made in USA claim for the ring is deceptive. That’s because of the significant value the gold is likely to represent relative to the finished product, and because the gold — an integral component — is only one step back from the finished article. By contrast, consider the plastic in the plastic case of a clock radio otherwise made in the U.S. of U.S.-made components. If the plastic case was made from imported petroleum, a Made in USA claim is likely to be appropriate because the petroleum is far enough removed from the finished product, and is an insignificant part of it as well.
Qualified Claims
What is 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.
Example: “60% U.S. content.” “Made in USA of U.S. and imported parts.” “Couch assembled in USA from Italian Leather and Mexican Frame.”
When is a qualified Made in USA claim appropriate?
A qualified Made in USA claim is appropriate for products that include U.S. content or processing but don’t meet the criteria for making an unqualified Made in USA claim. Because even qualified claims may imply more domestic content than exists, manufacturers or marketers must exercise care when making these claims. That is, avoid qualified claims unless the product has a significant amount of U.S. content or U.S. processing. A qualified Made in USA claim, like an unqualified claim, must be truthful and substantiated.
Example: An exercise treadmill is assembled in the U.S. The assembly represents significant work and constitutes a “substantial transformation” (a term used by the U.S. Customs Service). All of the treadmill’s major parts, including the motor, frame, and electronic display, are imported. A few of its incidental parts, such as the handle bar covers, the plastic on/off power key, and the treadmill mat, are manufactured in the U.S.
Together, these parts account for approximately three percent of the total cost of all the parts. Because the value of the U.S.-made parts is negligible compared to the value of all the parts, a claim on the treadmill that it is “Made in USA of U.S. and Imported Parts” is deceptive. A claim like “Made in U.S. from Imported Parts” or “Assembled in U.S.A.” would not be deceptive.
U.S. origin claims for specific processes or parts
Claims that a particular manufacturing or other process was performed in the U.S. or that a particular part was manufactured in the U.S. must be truthful, substantiated, and clearly refer to the specific process or part, not to the general manufacture of the product, to avoid implying more U.S. content than exists.
Manufacturers and marketers should be cautious about using general terms, such as “produced,” “created” or “manufactured” in the U.S. Words like these are unlikely to convey a message limited to a particular process. Additional qualification probably is necessary to describe a product that is not “all or virtually all” made in the U.S.
In addition, if a product is of foreign origin (that is, it has been substantially transformed abroad), manufacturers and marketers also should make sure they satisfy Customs’ markings statute and regulations that require such products to be marked with a foreign country of origin. Further, Customs requires the foreign country of origin to be preceded by “Made in,” “Product of,” or words of similar meaning when any city or location that is not the country of origin appears on the product.
Example: A company designs a product in New York City and sends the blueprint to a factory in Finland for manufacturing. It labels the product “Designed in USA — Made in Finland.” Such a specific processing claim would not lead a reasonable consumer to believe that the whole product was made in the U.S. The Customs Service requires the product to be marked “Made in,” or “Product of” Finland since the product is of Finnish origin and the claim refers to the U.S. Examples of other specific processing claims are: “Bound in U.S. — Printed in Turkey.” “Hand carved in U.S. — Wood from Philippines.” “Software written in U.S. — Disk made in India.” “Painted and fired in USA. Blanks made in (foreign country of origin).”
Example: A company advertises its product, which was invented in Seattle and manufactured in Bangladesh, as “Created in USA.” This claim is deceptive because consumers are likely to interpret the term “Created” as Made in USA — an unqualified U.S. origin claim.
Example: A computer imported from Korea is packaged in the U.S. in an American-made corrugated paperboard box containing only domestic materials and domestically produced expanded rigid polystyrene plastic packing. Stating Made in USA on the package would deceive consumers about the origin of the product inside. But the company could legitimately make a qualified claim, such as “Computer Made in Korea — Packaging Made in USA.”
Example: The Acme Camera Company assembles its cameras in the U.S. The camera lenses are manufactured in the U.S., but most of the remaining parts are imported. A magazine ad for the camera is headlined “Beware of Imported Imitations” and states “Other high-end camera makers use imported parts made with cheap foreign labor. But at Acme Camera, we want only the highest quality parts for our cameras and we believe in employing American workers. That’s why we make all of our lenses right here in the U.S.” This ad is likely to convey that more than a specific product part (the lens) is of U.S. origin. The marketer should be prepared to substantiate the broader U.S. origin claim conveyed to consumers viewing the ad.
Comparative Claims
Comparative claims should be truthful and substantiated, and presented in a way that makes the basis for comparison clear (for example, whether the comparison is to another leading brand or to a previous version of the same product). They should truthfully describe the U.S. content of the product and be based on a meaningful difference in U.S. content between the compared products.
Example: An ad for cellular phones states “We use more U.S. content than any other cellular phone manufacturer.” The manufacturer assembles the phones in the U.S. from American and imported components and can substantiate that the difference between the U.S. content of its phones and that of the other manufacturers’ phones is significant. This comparative claim is not deceptive.
Example: A product is advertised as having “twice as much U.S. content as before.” The U.S. content in the product has been increased from 2 percent in the previous version to 4 percent in the current version. This comparative claim is deceptive because the difference between the U.S. content in the current and previous version of the product are insignificant.
Assembled in USA Claims
A product that includes foreign components may be called “Assembled in USA” without qualification when its principal assembly takes place in the U.S. and the assembly is substantial. For the “assembly” claim to be valid, the product’s last “substantial transformation” also should have occurred in the U.S. That’s why a “screwdriver” assembly in the U.S. of foreign components into a final product at the end of the manufacturing process doesn’t usually qualify for the “Assembled in USA” claim.
Example: A lawn mower, composed of all domestic parts except for the cable sheathing, flywheel, wheel rims and air filter (15 to 20 percent foreign content) is assembled in the U.S. An “Assembled in USA” claim is appropriate.
Example: All the major components of a computer, including the motherboard and hard drive, are imported. The computer’s components then are put together in a simple “screwdriver” operation in the U.S., are not substantially transformed under the Customs Standard, and must be marked with a foreign country of origin. An “Assembled in U.S.” claim without further qualification is deceptive.
The FTC and The Customs Service
What is the U.S. Customs Service’s jurisdiction over country-of-origin claims?
The Tariff Act gives Customs and the Secretary of the Treasury the power to administer the requirement that imported goods be marked with a foreign country of origin (for example, “Made in Japan”).
When an imported product incorporates materials and/or processing from more than one country, Customs considers the country of origin to be the last country in which a “substantial transformation” took place. Customs defines “substantial transformation” as a manufacturing process that results in a new and different product with a new name, character, and use that is different from that which existed before the change. Customs makes country-of-origin determinations using the “substantial transformation” test on a case-by-case basis. In some instances, Customs uses a “tariff shift” analysis, comparable to “substantial transformation,” to determine a product’s country of origin.
What is the interaction between the FTC and Customs regarding country-of-origin claims?
Even if Customs determines that an imported product does not need a foreign country-of-origin mark, it is not necessarily permissible to promote that product as Made in USA. The FTC considers additional factors to decide whether a product can be advertised or labeled as Made in USA.
Manufacturers and marketers should check with Customs to see if they need to mark their products with the foreign country of origin. If they don’t, they should look at the FTC’s standard to check if they can properly make a Made in USA claim.
The FTC has jurisdiction over foreign origin claims on products and in packaging that are beyond the disclosures required by Customs (for example, claims that supplement a required foreign origin marking to indicate where additional processing or finishing of a product occurred).
The FTC also has jurisdiction over foreign origin claims in advertising and other promotional materials. Unqualified U.S. origin claims in ads or other promotional materials for products that Customs requires a foreign country-of-origin mark may mislead or confuse consumers about the product’s origin. To avoid misleading consumers, marketers should clearly disclose the foreign manufacture of a product.
Example: A television set assembled in Korea using an American-made picture tube is shipped to the U.S. The Customs Service requires the television set to be marked “Made in Korea” because that’s where the television set was last “substantially transformed.” The company’s World Wide Web page states “Although our televisions are made abroad, they always contain U.S.-made picture tubes.” This statement is not deceptive. However, making the statement “All our picture tubes are made in the USA” — without disclosing the foreign origin of the television’s manufacture — might imply a broader claim (for example, that the television set is largely made in the U.S.) than could be substantiated. That is, if the statement and the entire ad imply that any foreign content or processing is negligible, the advertiser must substantiate that claim or net impression. The advertiser in this scenario would not be able to substantiate the implied Made in USA claim because the product was “substantially transformed” in Korea.
Other Statutes
What are the requirements of other federal statutes relating to country-of-origin determinations?
Textile Fiber Products Identification Act and Wool Products Labeling Act — Require a Made in USA label on most clothing and other textile or wool household products if the final product is manufactured in the U.S. of fabric that is manufactured in the U.S., regardless of where materials earlier in the manufacturing process (for example, the yarn and fiber) came from. Textile products that are imported must be labeled as required by the Customs Service. A textile or wool product partially manufactured in the U.S. and partially manufactured in another country must be labeled to show both foreign and domestic processing.
On a garment with a neck, the country of origin must be disclosed on the front of a label attached to the inside center of the neck — either midway between the shoulder seams or very near another label attached to the inside center of the neck. On a garment without a neck, and on other kinds of textile products, the country of origin must appear on a conspicuous and readily accessible label on the inside or outside of the product.
Catalogs and other mail order promotional materials for textile and wool products, including those disseminated on the Internet, must disclose whether a product is made in the U.S., imported or both.
The Fur Products Labeling Act requires the country of origin of imported furs to be disclosed on all labels and in all advertising. For copies of the Textile, Wool or Fur Rules and Regulations, or the new business education guide on labeling requirements, call the FTC’s Consumer Response Center (202-382-4357). Or visit the FTC online at www.ftc.gov Click on Consumer Protection.
American Automobile Labeling Act
Requires that each automobile manufactured on or after October 1, 1994, for sale in the U.S. bear a label disclosing where the car was assembled, the percentage of equipment that originated in the U.S. and Canada, and the country of origin of the engine and transmission. Any representation that a car marketer makes that is required by the AALA is exempt from the Commission’s policy. When a company makes claims in advertising or promotional materials that go beyond the AALA requirements, it will be held to the Commission’s standard. For more information, call the Consumer Programs Division of the National Highway Traffic Safety Administration (202-366-0846).
Buy American Act — Requires that a product be manufactured in the U.S. of more than 50 percent U.S. parts to be considered Made in USA for government procurement purposes. For more information, review the Buy American Act at 41 U.S.C. §§ 10a-10c, the Federal Acquisition Regulations at 48 C.F.R. Part 25, and the Trade Agreements Act at 19 U.S.C. §§ 2501-2582.
What To Do About Violations
What if I suspect noncompliance with the FTC’s Made in USA standard or other country-of-origin mislabeling?
Information about possible illegal activity helps law enforcement officials target companies whose practices warrant scrutiny. If you suspect noncompliance, contact the Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, DC 20580; (202) 326-2996 or send an e-mail to MUSA@ftc.gov. If you know about import or export fraud, call Customs’ toll-free Commercial Fraud Hotline, 1-800-ITS-FAKE. Examples of fraudulent practices involving imports include removing a required foreign origin label before the product is delivered to the ultimate purchaser (with or without the improper substitution of a Made in USA label) and failing to label a product with a required country of origin.
You also can contact your state Attorney General and your local Better Business Bureau to report a company. Or you can refer your complaint to the National Advertising Division (NAD) of the Council of Better Business Bureaus by calling (212) 754-1320. NAD handles complaints about the truth and accuracy of national advertising. You can reach the Council of Better Business Bureaus on the web at adweb.com/adassoc17.html.
Finally, the Lanham Act gives any person (such as a competitor) who is damaged by a false designation of origin the right to sue the party making the false claim. Consult a lawyer to see if this private right of action is an appropriate course of action for you.
For More Information
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and i
nvestigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Your Opportunity to Comment
The National Small Business Ombudsman and 10 Regional Fairness Boards collect comments from small businesses about federal compliance and enforcement activities. Each year, the Ombudsman evaluates the conduct of these activities and rates each agency’s responsiveness to small businesses. Small businesses can comment to the Ombudsman without fear of reprisal. To comment, call toll-free 1-888-REGFAIR (1-888-734-3247) or go to www.sba.gov/ombudsman.
December 1998 –
{Made in America Movement Note} Cleary this needs to be updated.
How America Can Win an Olympic Gold for Its Economy
in UncategorizedBy PAUL A. ARGENTI
Professor of corporate communication at the Tuck School of Business at Dartmouth College.
Earlier this year, I gave a presentation in Singapore on country reputations while on sabbatical there. I was shocked to find that the United States ranks 23rd, or three places behind Singapore, and far behind the number one country in the world in terms of reputation, our neighbor to the north, Canada, according to research from the Reputation Institute. Our educational system is rated slightly better at number 17 in the world. And while our infrastructure was the newest and best when I was growing up in the ’50s and ’60s, a return from Singapore’s Changi airport to the United States through JFK airport in New York quickly reminds us how far our star has fallen. And if you travel anywhere in Europe this summer by rail, you will be appalled that all we have to offer is the Amtrak Acela in the Boston to Washington corridor. As HBO’sNewsroom anchor, Will McAvoy, stated in the fictional show’s pilot:
There is absolutely no evidence to support the statement that we’re the greatest country in the world. We’re seventh in literacy, 27th in math, 22nd in science, 49th in life expectancy, 178th in infant mortality, third in median household income, number four in labor force and number four in exports. We lead the world in only three categories: Number of incarcerated citizens per capita, number of adults who believe angels are real, and defense spending (where we spend more than the next 26 countries combined; 25 of whom are allies)…
How did it come to pass that the greatest capitalist nation on earth seems to have lost its mojo? What role can American business play in breaking us out of our torpor? And, what can you do to try to inject some positive energy back into the atmosphere when the heat of summer turns into the crisp, promising chill of early autumn in a few weeks? Warren Buffett took a crack at this a few weeks ago in a CNBC interview:
The U.S. economy is doing better than virtually any big economy around the world. This economy has come back a long way, with the exception of housing, from where it was a few years ago. And you can see it in corporate profits.
That may very well be true, but I don’t think this kind of rhetoric is going to get you away from staring at your computer to start thinking about what you can do for your country anytime soon. So, here is my version of an Olympic heptathlon guaranteed to bring gold back to America’s reputation:
I end my class each year with a quote from my anthropology instructor at Columbia University, Margaret Mead: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”
Do your part to restore the American dream off the field as well as on by being part of that small group.<br
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Fake Chinese Parts in US-Made Arms Leave India at Risk
in Uncategorizedby Uttara Choudhury
Defence Minister AK Antony told the Rajya Sabha in a written reply on Wednesday that India was verifying if “faulty spare parts made in China” were used in defence equipment being sold by the US to India.
“There have been media reports in this regard, which are being verified,” Antony said this week.
According to Bloomberg, the US Air Force had in January this year suspended a company called Hong Dark Electronic Trade Co., in Shenzhen (in southern China), from supplying parts to US contractors after it supplied about 84,000 fake components to a middleman, who then sold the suspect electronic parts to Boeing, Lockheed Martin, Raytheon, L-3 Communications, among others.
Bloomberg quoted Air Force Deputy General Counsel Steven Shaw’s memo saying; “Many of the 84,000 electronic parts from Hong Dark have been installed on aircraft such the C-17 transport and helicopters such as the AH-64 Apache and CH-46.”
Given Shaw’s memo, India should double-check what it is paying for when it receives new aircraft. The first of the 10 Boeing C-17 Globemaster III aircraft ordered last year will be delivered to the Indian Air Force in June next year. India is forking over $4.1 billion (Rs 22,960 crore) to buy the US Air Force’s workhorse used extensively in Iraq and Afghanistan, making it the largest defence contract to have been signed by the two governments.
Antony listed some of the other US military equipment India had bought in the last five years. Last year, India purchased an amphibious transport vessel, the USS Trenton (re-christened INS Jalashwa), for nearly $50 million with six-UH-3H helicopters to operate alongside, costing another $49 million.
It also bought Harpoon anti-submarine missiles under a package worth $200 million, and long-range acoustic devices, modern hull penetrating periscopes, side scan sonar, C-130J transport aircraft, sensor-fused weapons, P-8I long range maritime reconnaissance aircraft and quick reaction team boats from the US.
One reason India is beefing up its arsenal is China, which has been expanding its military and modernising its equipment at a tear. This has triggered a simultaneous build-up of advanced weaponry in the Asia-Pacific region on a scale and at a speed not seen since the Cold War arms race between America and the Soviet Union.
India has purchased some $12.7 billion in arms, 80 percent of them from Russia, during 2007-2011, according to the Stockholm International Peace Research Institute (SIPRI). India and the US want to eventually move beyond a seller-buyer relationship to substantial co-production and eventually, high-technology joint research and development of weapons.
Honda’s 2016 Civic Will Be Developed, Built In The U.S.
in UncategorizedAugust 9, 2012
The announcement comes on the heels of last month’s news that all U.S.-market 2013 Honda Civics will be made in the U.S.
According to the Detroit Free Press, Erik Berkman, president of Honda R&D Americas said the decision was made last month by global top management, hinting that the next-generation Civic will have some “fairly substantial styling changes” over the existing model.
Berkman said Honda plans to build the next-generation Civic at 14 different plants and sell it in 160 countries worldwide, but said that 55 percent of all global Civic sales currently happen in Canada and the U.S.
Given that U.S. buyers and journalists alike criticized the then-new 2012 Civic for its cheap plastic interior and budget feel, forcing Honda to move forward a planned mid-cycle redesign, basing development of its successor in the U.S. is a smart move.
Development in the U.S. won’t just mean that the 2016 Civic will be more desirable to U.S. buyers either. It will hopefully be cheaper.
With the drive towards ever-more efficient cars and Honda’s ongoing commitment to greener engines, Berkman says the 2016 Civic will be offered with a variety of different powertrains, but gave no specifics on exactly which fuel types would be included.
Interestingly however, Berkman said Honda is considering reintroducing a hatchback Civic to its U.S. lineup.
Last sold in 2005, the hatchback Civic was dropped because of poor sales figures in the U.S. In Europe however, the Civic hatchback outnumbers sales of the Civic sedan by several orders of magnitude.
Of course, the 2016 Honda Civic won’t be the first Honda to be developed and built in the U.S. Earlier this year, Honda announced that its highly-anticipated Acura NSX hybrid supercar would be developed and built in the U.S. too.
But we should also note that it would be unusual for Honda to entrust the entire design and development of its popular C-segment car to designers and engineers outside Japan. We’re not sure if this news means that the U.S. Civic will be unique to the country, or if the entire car and its underlying architecture will be U.S.-developed. Because the 2016 Civic will be a ground-up refresh on an all-new platform, either is possible.
What would you like to see offered on the 2016 Honda CIvic? Which features should Honda include?
Made in China's Getting Expensive
in UncategorizedBy MarketWatch
China’s export growth peaked in 2004 at 35.4% year-on-year. Since then, costs for manufacturers have increased across the board.
Average wages have risen more than 150%. Land prices have risen more than 70%. Nate Taplin, China energy analyst at Dragonomics, says electricity prices are up more than 30%. Compounding woes for exporters, the yuan has appreciated more than 30% against the dollar.
Rapid increases in factor prices are bad news. The vast majority of China’s exporters compete on price, with no edge on technology or brand to distinguish them. Improvements in labor productivity–which the World Bank estimates is growing at more than 8% a year–offset some of the impact of rising costs, but not all of it.
Among those feeling the pinch is Hong Kong’s Li & Fung, which has grown rapidly mainly by sourcing Chinese goods for Wal-Mart and other western retailers. The company’s core operating profit fell 22% in the first six months of 2012 compared with the same period last year as lower margins took their toll. Its shares fell 20% Friday.
July’s terrible export data, taken together with decelerating growth in industrial output, and a sharp fall in new loans, makes it virtually certain that China will do more to stimulate growth. Yuan appreciation will stay on hold, and Beijing also has scope to cut interest rates and increase public spending.
There is enough policy firepower to support growth in China’s gross domestic product above the government’s 7.5% target this year. Turning around deteriorating export competitiveness will be a tougher challenge.
Instead of Industrial Giants, Brooklyn Has Niche Factories
in UncategorizedPublished: August 7, 2012
Rather, this building, at 1205 Manhattan Avenue, has been sliced and diced into several dozen small factories, each with a niche clientele. One forges exhibits out of wood and metal for the city’s museums. Another makes props and models for advertisers of products like Absolut Vodka to use in their magazine photo spreads. A third restores stained-glass masterpieces for museums like the Cloisters.
This is the face of manufacturing in 2012 Brooklyn. The big industrial behemoths that until the 1960s once made Brooklyn a rival to Chicago’s image as the “stormy, husky brawling City of the Big Shoulders” are mostly gone. Domino sugar, Eberhard Faber pencils, Schaefer beer, Pfizer pharmaceuticals, companies that sold their products across much of the country and sometimes the world, have found locations where wages, taxes and real estate costs are lower, traffic is not as snarled, regulations are not as burdensome, and there is elbow room for the scale required by modern machinery and trailer trucks. Their departures have cost the city thousands of jobs nearly every year for decades.
But in a shift that has been both celebrated and parodied, Brooklyn is increasingly retaining some of its remaining industrial spaces for small-scale, small-batch manufacturing.
A surge of young entrepreneurs eager to produce $7 chocolate bars made from hand-roasted and hand-ground cocoa, or build theater and movie sets or fashion high-end furniture for a connoisseur’s market find the smaller spaces carved out of these old factories precisely what they have been looking for.
Often the rents are affordable and the entrepreneurs can commute to work by bicycle. Such businesses also operate in New York because it has a wealth of the skilled employees they need for idiosyncratic operations that often find their customer bases within the city’s borders.
“We think this is the future of urban manufacturing,” said Brian T. Coleman, chief executive of Greenpoint Manufacturing and Design Center, a nonprofit group that has bought four weathered industrial buildings and converted them into lofts for small factories housing 110 businesses with 500 employees.
“There is a highly skilled work force making products for local consumption,” he said.
Jonathan Bowles, executive director of the Center for an Urban Future, a policy-research institute, said he was optimistic about this “revival of entrepreneurial manufacturing.”
But he noted that these niche enterprises do not employ anything like the thousands of workers the mass producers did; Brooklyn averaged 11.2 workers per business in 2011, compared with an average of 16.8 workers in 2000.
Kay S. Hymowitz, a fellow at the Manhattan Institute, pointed out last year in “How Brooklyn Got Its Groove Back,” that the refashioned Brooklyn Navy Yard rented space to 275 businesses employing 5,800 people, a figure that pales next to the 15,000 the yard employed in 1959.
Still, Mr. Bowles said, while “the overall trend continues to be that manufacturing employment is dropping, it is dropping at a smaller rate in Brooklyn than it has in decades.”
Between 2000 and 2003, Brooklyn hemorrhaged about 11,000 manufacturing jobs, dropping to 32,298 from 43,212, according to New York State Labor Department figures Mr. Bowles cited. But between 2009 and 2011, the drop was far smaller, to 19,445 from 20,650, or just 1,205 jobs.
Marty Markowitz, the Brooklyn borough president, said Brooklyn “is going back to the future.”
“What is emerging is the artisanal approach rather than the mass production for millions of items of something,” he said.
A prime example of the new frontier in Brooklyn factories is Swell, a tenant in the building along Newtown Creek. Swell, a six-year-old company owned by a Japanese-born entrepreneur, Makoto Aoki, has many of the fixings of a factory — a band saw, table saw and drill press.
But with just 1,500 square feet of loft space and two employees, he is not making a mass product for hundreds of thousands of people to use, the way Eberhard Faber did.
If Absolut Vodka wants its orange-flavored vodka sheathed in an orange rind to lure the eye of a magazine reader, Swell will shape such a model for the photographer. When Money magazine wanted a split dollar sign made out of shiny aluminum to grace its July cover story, it turned to Swell.
Swell’s clients are in Midtown and often have tight deadlines that could not be met by a similar operation in, say, Iowa or China. “Most of the jobs I deliver myself,” said Mr. Aoki, 43, as he sat in his office with a view of the Manhattan skyline. “I cannot trust messengers. If there is a delay, they would have to wait for our model to take a picture.”
Being in Brooklyn also gives Mr. Aoki access to artists and craftsmen who do the fine detail work that his company requires. One of his employees is an installation artist whose work has been shown in galleries; another is an industrial designer.
Two floors down from Mr. Aoki is South Side Design and Building, a 12-year-old company with 6 to 10 employees that builds display cases, pedestals and other fixtures for almost 50 medium-sized museums, like the Asia Society and the Jewish Museum; it even built the rostrum and backdrop for the commencement speech that President Obama gave in May at Barnard College.
Most clients are only a cab ride away, allowing them to see whether the work meets their specifications. South Side is also experienced with working around precious objects, like the Modigliani paintings that the Jewish Museum featured in 2004 and the 50 rare medieval manuscripts for the museum’s planned exhibition; South Side will build climate-controlled cases for their display.
“There are 240 museums in New York City and we can respond very quickly,” said Sam Morse, president of South Side. “If you’re shipping stuff all over the world, you probably need to be in Ohio. But certain kinds of products require certain kinds of training and education and you have a more skilled pool of workers in New York than anywhere else.”
In another onetime rope factory in Brooklyn’s gentrifying East Williamsburg, Twosevencreat
es win
dow displays for upscale stores like Louis Vuitton, Saks Fifth Avenue, Cole-Haan and Dolce & Gabbana, fabricating them out of wood, plastic and metals.
“It’s good to be in New York because the designer can come here and look at the prototype and make changes,” said Franco Götte, a Swiss-born artist and woodworker who heads the 11-year-old company.
But he has also run into some of the difficulties of manufacturing in New York. For example, he plans to buy a $7,000 carbon filter for a laser cutting machine that emits fumes a congested city will not tolerate.
Still, Brooklyn is where he wants to be.
“There was a need for people to be able to work with their hands again,” he said. “It was something that had gotten lost.”
Made in The USA is Cool Again
in UncategorizedAugust 01, 2012
The message I’m trying to send here is for building contractors to be more selective in their construction material purchases. They should buy American made components where all possible. Wisconsin homeowners and U.S. manufacturers will appreciate it, and our overall economy will benefit from it, I guarantee it.
I’ve noticed that homeowners respond in a very positive way when I tell them I only use American-made gutter covers. When more people are buying American, more jobs will be created, our economy will be stimulated and more taxes paid to our government. Some people argue that American-made products are more expensive, but they are missing the big picture because the money is staying here and not going to another country.
Gutterglove is designed to keep leaves and pine needles out of your roof gutters. With every 1,000 feet I install locally, it keeps a U.S. manufacturing worker employed for one month and infuses $2,500 back into the American economy. The Gutterglove company sells millions of feet a year. That’s a great feeling to have. I’m hoping statistics like these will encourage homeowners to make sure that any home improvements they get done, they will require the contractor to supply American-made components.
If you are a contractor, you can even look for U.S.-made tools for doing your installations.
It has never been a surprise to me, the number of people who ask where Gutterglove is made. I can hold my head up high and tell them it’s manufactured right here in the United States of America!
Then there is the moral issue that other countries illegally use child labor to make U.S. products. It is hard for me to close my eyes to this. America has laws in place to protect our youth from such misuse. Buying American assures me this isn’t happening with Made in USA products.
Matt Steiner is the owner and founder of River’s Rain Gutters in Hartland.
—————-
The Made in America Movement will have a separate “Contractors Section” within the Made in USA products section of the website.
Manufacturing Boom: Trade School Enrollment Soars
in UncategorizedJuly 31, 2012
American manufacturers in certain sectors are enjoying a rebirth fueled by the return of overseas production back to the United States. As factories crank up, they have an urgent need for high-skilled workers such as machinists and tool-and-die makers knowledgeable in computers.
Workers are drawn not only by the opportunity but also the pay: Starting salaries of $50,000 to $60,000 are not out of range for high-skilled talent.
But the surge in enrollment is posing unique challenges for schools, many of which are running at or beyond full capacity for the first time in decades.
School administrators are clamoring to hire more instructors and secure funding to buy additional equipment and add classes.
These infrastructure limitations, and the fact that it can take a year or more to train high-skilled factory workers, mean that the current labor shortage could persist for several years.
Unlike 20 years ago, manufacturing today requires workers who are computer literate and skilled in computer-aided design and engineering, said Sandra Krebsbach, executive director of the American Technical Education Association.
Demand through the roof: The Dunwoody College of Technology, a private nonprofit school in Minneapolis, offers two-year programs in tool and die, computer-aided and robotics manufacturing.
Dunwoody will have 120 students across its manufacturing programs this year.
“That’s the highest level of enrollees we’ve had in 15 years,” said E.J. Daigle, the school’s director of robotics and manufacturing.
For the first time in the school’s 99-year history, Dunwoody will this fall introduce a six-month certificate program designed to fast-track training.
The program will allow the school to churn out an additional 40 graduates trained specifically in computer-aided manufacturing, said Daigle.
“Most of these fast-track students are older, in their 30s and 40s, who can’t take two years off to go to school,” he said, adding that these students have the option to return at any time and complete the two-year degree.
Demand for skilled workers has shot through the roof in his area, spurred largely by Minneapolis’ robust medical devices industry led by Medtronic, said Daigle.
“We graduated 20 students in June and we had 400 inquiries about them from manufacturers,” he said.
It’s a similar story in parts of Wyoming, said Ami Erickson, dean of agriculture and technical careers at Northern Wyoming community college in Sheridan and Gillette.
Demand for skilled workers in Wyoming is coming primarily from mining and natural gas companies, she said.
Both industries also have incumbent workers nearing retirement who will need to be replaced, Erickson said.
Starting salaries run as high as $80,000, and possibly more with overtime because of the worker shortage. Not surprisingly, the school’s diesel and welding technology programs have large waiting lists, she said.
Erickson is on the hunt to add instructors in both schools but money is tight. “As a public school, we’re funded by the state. Lately, we’ve had a pullback in funding,” she said.
High-skilled workers are a hot commodity in Georgia as new manufacturers set up base, and existing ones expand operations, said Linda Barrow, vice president of academic affairs at Lanier Technical College, a two-year public school outside Atlanta.
“We expect enrollment in our programs will jump 8% to 15%, said Barrow. But accommodating more students is a challenge. “Our most hands-on classes have at most 20 students each, for adequate training and safety reasons,” she said.
So the school’s come up with a creative solution — “virtual training.”
Barrow said the school recently purchased a “virtual welding trainer” that allows students to learn and practice skills on a screen.
“If a student takes too long on a conventional machine, they can go practice on the virtual trainer,” she said. “This way the whole class isn’t held up and we can also train more students.”
Stylish Geometrics in American Made Dorm's Home Collection
in UncategorizedThe Made in America Movement continues to grow, and gather momentum. When consumers seek to furnish their homes, American Made Dorm provides the solution: products that are 100% made in America.
Increasingly, companies are selling their bedding as “American made” when in fact the companies are simply importing the comforter shells pre-made, and then having the bedding “finished” in the USA.
American Made Dorm is proud to take the lead in providing American made bedding and accessories to consumers.
Source: Fibre2Fashion.com
U.S. Slaps Tariffs on Washing Machine Imports
in Uncategorized07/30/12
Daewoo received an 82 percent duty for its Korean-produced washers, while LG and Samsung were hit with tariffs of 12.2 percent and 9.6 percent respectively.
Samsung and Whirlpool subsidiaries in Mexico were also given 72 percent duties.
In all, South Korea and Mexico combined to produce around $1 billion worth of large residential washing machines that were exported to the U.S. – $434 million from Mexico, and $569 million from Korea.
Whirlpool had complained last year that rival manufacturers were selling washers below market value in the U.S., and receiving subisidies from their home countries.
In a Monday statement, a Whirlpool spokeswoman said that the Michigan-based manufacturer felt vindicated by the Commerce Department decision.
“Whirlpool is committed to building products in the regions where they are sold and investing in our U.S. manufacturing presence,” said the spokeswoman, Kristine Vernier. “Our investments will continue as long as we can compete on a level playing field, with all of our foreign competitors playing by the established rules.”
Whirlpool also said that it had stopped shipping washing machines from Mexico to the U.S., and expects to make close to 100 percent of the large washers it sells in the U.S. in 2013 in Ohio.
Samsung also said that it had stopped producing washers in Mexico, and said that the government’s decision was based on a faulty methodology.
“Samsung strongly disagrees with this finding, and it is confident that once the final phase of the investigation is completed, the Department of Commerce will determine that Samsung has not engaged in dumping and is in compliance with U.S. trade laws,” a company spokesperson said in a statement.
The federal government is expected to make its final decision in the case in December.
Sales Explode as ‘Buy Local’ Movement Grows Up
in UncategorizedThe Virginian-Pilot
July 30, 2012
At a small table surrounded by a crowd at the Ynot Wednesdays? Farmers Market, Shannon Rice offered samples of her goat cheese infused with herbs or sun-dried tomatoes.
“That’s fantastic,” said Tabitha Lilly, who had strolled over with her husband and 2-year-old son. As she left Rice’s stand, the 31-year-old Virginia Beach mom said she tries to buy as much food from local purveyors as possible.
“In the summer, I think 80 percent of my pantry is local goods,” she said. “I’d rather pay a little extra and know what I’m getting.”
Small-scale growers, artisanal foodmakers and at-home producers all over Hampton Roads are finding success serving an expanding number of consumers like the Lillys, who try to buy their food from suppliers close to home.
Selling local has become a viable business proposition – no longer just a labor of love or a feel-good venture. These operators are starting up at a more rapid pace and watching sales climb as a result of their local flavor. Some are breaking even or making a profit for the first time after years of operation.
“We’re self-sustaining now,” said Alison Wilson, who operates Full Quiver Farm in Suffolk with her husband and nine children. Selling pasture-raised meat and eggs full-time since 2008, Full Quiver enhanced its on-the-farm sales with a table at the Old Beach Farmers Market on 19th Street and Cypress Avenue on Saturdays. “Our business has doubled here this year.”
Sales made from Virginia farms directly to consumers – mostly through farmers markets and community-supported agriculture programs – increased by 72 percent, from $16.8 million in 2002 to $28.9 million in 2007, according to “Virginia Farm to Table,” a report released this year by Virginia Cooperative Extension, Virginia Tech and Virginia State University.
Those numbers likely have climbed to $30 million or more, said Eric Bendfeldt, chief author of the report and the extension’s specialist for community viability, though he had no recent data. Besides consumer purchases, more institutions such as schools and hospitals are emphasizing local products, he said.
“The trend for buying local has really taken off in the past four years,” said Bendfeldt, who works in Harrisonburg. “The growth is happening so quickly that it’s hard to keep up.”
A greater emphasis on food safety – spurred by reports of contamination at corporate farms in recent years – has contributed to the growing numbers of those who prefer to eat locally, said Rachel Burns, director of Buy Fresh Buy Local Hampton Roads. The belief that products that travel shorter distances generally taste better and a desire to support businesses in the local economy are other factors feeding the “locavore” movement.
FoodRoutes Network, a Millheim, Pa.-based group that launched the Buy Fresh Buy Local organization 12 years ago to support locavore activity, has increased its chapters by 50 percent since 2007, Burns said. Chapters now top 70 in 20 states.
“People are looking for it,” Burns said. “It is a lot easier to get your product to market than it was five to 10 years ago.”
In April, Rice quit her job as director of development for the local chapter of the National Multiple Sclerosis Society to focus on Shady Goat Farm. Her husband, Tim, supports the venture by working as a government contractor doing software training, currently at a hospital in Afghanistan.
They estimated that their investments in milking and pasteurizing equipment, alterations to their Indian River Road property to meet state requirements, and animal care have totaled about $50,000.
“We had to know that it would be a marketable product,” Rice said. “We’re not huge risk-takers. We wanted to make an educated decision on our future.”
Rice isn’t the only Virginia cheesemaker who saw this as the right time to launch. For about 25 years, the Virginia Department of Agriculture and Consumer Services licensed only one or two operators under its Farmstead Cheese Program. In 2005, the program had issued 13 permits, a number that has since grown to 27 as of March.
Just as crucial as consumer demand to the small suppliers’ boom in business is having the channels to reach those customers – mostly through farmers markets. According to the U.S. Department of Agriculture, the number of farmers markets operating nationwide grew 17 percent between 2010 and 2011, to 7,175 as of last year. That marked a 63.6 percent increase in five years.
In Virginia, the farmers markets listed with the Virginia Grown program of the state Agriculture Department have more than doubled since 2006, from 88 to 208, said Elaine Lidholm, the department’s spokeswoman. Most communities in Hampton Roads have at least one farmers market, and many have several that operate at least once a week.
This year, Jessica Harkness and Kristal Miller started the weekly Farmers’ Fare market in East Beach to give local food to that and nearby neighborhoods in Norfolk, where residents previously had few options other than supermarkets. “That was important to me, to fill the gap,” said Harkness, who lives in the nearby Bayview area.
The market has attracted shoppers who express gratitude that they can find items such as eggs and meat, seafood, produce, baked goods and ice cream near their homes and “not have to drive to Pungo to the farm itself,” she said.
Outdoor seasonal markets aren’t the only way for small suppliers to sell their goods. Year-round small grocers have popped up, such as Westside Produce & Provisions on Colley Avenue in Norfolk, offering local fruits and vegetables, seafood, baked goods, jam, honey and soaps made within 100 miles.
Coastal Farms LLC launched its online, year-round farmers market in April 2010 to gather the bounty across Hampton Roads. Members who pay a six-month fee can place orders and pick them up at locations in most of the region’s cities.
“We work with a lot of small farms that wouldn’t necessarily have the amounts to sell at a farmers market,” said Kimberly Atkinson, who left her job at Windsor Elementary School to start Coastal Farms, which she envisions helping those budding operators build a customer base. “Our business is just one more little tool that they can put in their pocket.”
Greater access to retail customers has changed the scope of Don Edmonds’ business. About 15 years ago, when Edmonds Farm started selling bison meat in Lancaster, on the Northern Neck, most of his customers were restaurants – many of which were reluctant to take his product.
“I would seriously have to put on a suit, show up at restaurants, bring the meat” and show them how to cook it, he said.
Now, his sales at three weekly farmers markets leave him with too little supply to commit to restaurants or stores, some of which have b
egged
him for product. His herd has grown from about a dozen bison to more than 75.
At the Old Beach market, in the parking lot of Croc’s 19th Street Bistro, a pound of Edmonds’ ground meat costs $8.50, and filet mignon goes for $28.99 a pound. This year, Edmonds said, his sales about doubled from two years ago and he might cover his costs for the first time.
“I wouldn’t have the clientele base without it,” Edmonds said of the growth in farmers markets, as he folded up his Old Beach table at noon on a recent Saturday. “I have to do a lot of educating about the meat and the animal. I couldn’t do that on the farm.”
The value of selling local isn’t lost on big retailers and national restaurant chains. Discount giant Walmart, fast-food operator Chipotle and regional grocer Harris Teeter all have promoted programs for locally grown produce. Larger operators tend to define “local” as coming from producers within the same state as the store, while groups such as Buy Fresh Buy Local and some farmers market operators limit the “foodshed” to a 100-mile radius.
BJ’s Wholesale Club rolled out its Farm To Club program last year in Florida and worked its way up the East Coast, reaching Virginia stores just two weeks ago.
The chain added “locally grown” signs and package stickers on at least five products – including peppers, squash, eggplant and corn – identifying the farms within the state that grew them, said Dominic Viglione, a produce buyer for the retailer, based in Westborough, Mass.
BJ’s sales on those vegetables jumped after the “local” labels appeared, Viglione said. “Our sales were up 27 percent in units and 21 percent in dollars” in North Carolina. Georgia stores saw an 84 percent increase in unit sales and 64 percent in dollar value.
Some of those stores already were getting the vegetables from local farmers. “We never called out the fact that it was locally grown,” he said of the new marketing. “It has just drawn incredible attention.”
Laura Habr, co-owner of Croc’s and a co-founder of the Old Beach market, agreed that the marketing of the locally sourced elements of her menu “makes good business sense for us.” Customers frequently tell her that they come to the restaurant because of its local items, which include Virginia Pork Chili Verde using meat from Full Quiver Farm.
“They wanted to try us and support us,” she said, “and it has brought them back.”
On a recent Saturday at the Old Beach market, Rice sold out of her goat cheese in just over an hour. At her table, she displays several goat-farming and goat-cheese books, including her text from Goat School, a two-week class in Maine that she took in 2010.
That’s when she decided to try her hand as a hobby farmer, making her own cheese, butter and milk. She shared her chevre (French for goat cheese) with friends, who insisted that she should offer it commercially.
She sells plain and flavored goat cheese, infused with herbs or nuts and honey, in 4-ounce cups for $8 each and slabs of feta cheese for $9 or $12 marinated, plus goat cheese truffles in chocolate and lemon.
She now has 24 goats, as well as free-range chickens supplying eggs, and milks every day at 5 a.m. and 5 p.m. It’s a hefty commitment, but Rice foresees a payoff, particularly with no other cheesemaking competition in Hampton Roads – for the moment.
“If there was anytime to do it,” she said, “it was going to be now.”
About Carolyn Shapiro
Contact info:
757-446-2270
carolyn.shapiro@pilotonline.com
U.S. Raises Tariffs on Chinese Wind-Turbine Makers
in UncategorizedPublished: July 27, 2012
The finding is the fourth this year in favor of American wind and solar manufacturers and is likely to intensify tension with the Chinese, who have been rapidly expanding manufacturing capacity for alternative energy technologies and flooding global markets with inexpensive products, especially solar panels.
Earlier this year, the Commerce Department ruled that China was dumping solar panels on the American market and imposed duties of 31 percent on most of the imports, which added to earlier duties imposed over what the department said were unfair subsidies for its manufacturers.
On Thursday, a group of about 20 European solar manufacturers announced that they had filed an antidumping case against the Chinese with the European Commission.
The Chinese government has responded to the trade complaints by beginning its own investigation into whether American and Korean manufacturers of polysilicon, the main ingredient in the solar panels, were selling the material below cost. Dumping occurs when a company sells a product in another country at less than fair value.
In the wind tower case, the decision is preliminary, but the Commerce Department will direct customs agents to begin collecting cash deposits equivalent to the tariffs, which are in addition to duties of 13.7 to 26 percent that the department imposed in May for what it said were unfair subsidies of the industry by the Chinese government. The department set the tariffs for the companies that account for the bulk of Chinese exports at 20.85 to 30.93 percent. Any others would be required to pay the highest rate.
“Commerce has taken an important step to address the significant dumping that is taking place,” said Alan H. Price, a lawyer at Wiley Rein, which is representing the American wind manufacturers that brought the complaint. The duties “will help to remedy the material injury already suffered by the U.S. industry and force the Chinese and Vietnamese producers to compete fairly,” he said.
The Chinese embassy in Washington did not respond to an e-mail seeking comment on the decision.
How the tariffs will affect the market is unclear. Like solar, the wind industry has been under pressure to bring down the cost of producing power to better compete with conventional fuels, a task made more difficult by the low price of natural gas and the expiration of an important subsidy at the end of this year. Wind industry executives say that the looming end of the support, a production tax credit, has already led to a decrease in demand for equipment and layoffs.
“On one hand, you say this is good for American manufacturing to have tariffs if they’re truly dumping towers below their cost into the U.S.,” said Michael Garland, chief executive of Pattern Energy, a wind developer. “On the other hand, it’s not going to solve the bigger problem we have, which is a dysfunctional Congress that can’t get anything passed. Because there’s this cliff that everybody’s facing at the end of the year, you’re not going to have any manufacturing in the U.S. anyway.”
The towers, which can cost $600,000 each, often account for 20 percent of the cost of a turbine. So although the tariffs might end up adding only a small percentage to the overall cost of a project, they could cut substantially into profits because that margin is only 7 to 10 percent, Mr. Garland said.
On the solar side, there are also questions about the impact of the duties. The major Chinese solar manufacturers have been able to keep prices low and skirt the tariffs by purchasing cells, the component of the panels to which the tariffs apply, elsewhere.
Imports of Chinese panels and cells decreased in May to $124 million from $226 million the year before, according to the Coalition for American Solar Manufacturing, an industry group that supports the trade cases. But shipments from other countries like Malaysia, Taiwan and the Philippines were up sharply. In the case of Malaysia, shipments were up by 950 percent over the previous May, to $135.5 million, exceeding China, according to the coalition.
Although the overall solar market continues to grow, executives and analysts warned that uncertainty about the outcome of the trade cases, which are only at the preliminary stage, could damp enthusiasm for future projects because costs are unclear.
“I’m paying X rate today. Am I going to have to pay a duty on that six months, a year down the road?” asked John Smirnow, a vice president of the Solar Energy Industries Association, a trade group that is advocating for negotiations between China and the United States to occur simultaneously to the legal cases.
But those who brought the trade cases say it comes down to adhering to the law.
“We have to be doing legal activity when we’re doing business,” said Steve Ostrenga, chief executive officer of Helios Solar Works, a panel manufacturer based in Milwaukee. “It’s not trying to penalize them. It’s just trying to make it right.”
Fighting GMO Labeling in California Is Food Lobby's "Highest Priority"
in UncategorizedPublic Health Lawyer
07/30/2012
In case you had any doubt that California’s Prop 37 — which would require labeling of food containing genetically-modified organisms (GMOs) — is a significant threat to industry, a top food lobby has now made it perfectly clear.
You may not know the Grocery Manufacturer’s Association, but its members represent the nation’s largest food makers — those with the most at stake in the battle over GMO labeling; for example, soft drink and snack giant PepsiCo, cereal makers Kellogg and General Mills, and of course, biotech behemoth Monsanto.
According to state filing reports, so far GMA has spent $375,000 on its efforts to oppose the labeling measure, with its members adding additional out-of-state lobbying power in the tens of thousands of dollars.
Never mind polling demonstrating that a whopping 90 percent of Californians think they deserve the right to know what they are eating. GMA also won’t bother to mention the more than 40 other nations (including the European Union, Brazil, and China) that already require food makers to disclose GMOs.
Big Food Lobbying to Undermine Health
This is hardly the first time the nation’s most powerful trade association of food manufacturers has marshaled its resources to oppose common sense food and nutrition policy — at both the national and state levels.
As I documented in my book, Appetite for Profit, for years GMA flexed its lobbying muscle in state legislatures all over the country fighting bills that were simply trying to remove junk food and soda from school vending machines.
Big Food lobbyists have also banded together to vociferously fight any attempt to restrict out of control junk food marketing to children on TV and other media.
For example, in 2005, GMA was a founding member of the Alliance for American Advertising, whose stated purpose was to defend the food industry’s alleged First Amendment right to advertise to children and to promote voluntary self-regulation as an alternative to government action.
More recently, the Grocery Manufacturers Association was among leading trade groups and corporations opposing the federal government’s attempt to improve industry’s own voluntary guidelines for food marketing to children. As this Reuters special report from April explains, GMA’s chief lobbyist visited the White House last July along with several top food industry representatives (including from Nestle, Kellogg, and General Mills) to scuttle an effort by four federal agencies that would have protected children from predatory junk food marketing.
But Food Makers Love Labels Don’t They?
It seems rather ironic that the same food makers taking advantage of every inch of food packaging space to convince shoppers to purchase its products would object so strongly to labeling for something they claim is not harmful.
Indeed in recent years, the federal government , in recognizing that food companies’ so-called “front of package” labeling is so out of control that it commissioned not one but two Institute of Medicine reports to make recommendations to fix the problem and un-confuse consumers.
Unwilling to tolerate government intervention designed to help Americans, the Grocery Manufacturers Association has been aggressively promoting its own new nutrition labeling scheme it calls “Facts Up Front.” But as Food Politics author Marion Nestle has explained, this is an obvious end-run around the feds. Here is how the food industry describes its own voluntary program:
– Facts Up Front is a nutrient-based labeling system that summarizes important information from the Nutrition Facts Panel in a simple and easy-to-use format on the front of food and beverage packages.
Translation: We are repeating information already required on the back of the package, now placing it in a format we like better on the front.
See how that works? The food industry is always in charge. That’s why the nation’s largest packaged food lobby and its members are shaking in its boots over 90 percent of Californians wanting to see GMO labeling on food.
And no wonder, because as GMA President Bailey correctly warned her audience: “If California wins, you need to be worried the campaign will come to your state.”
Very worried.
A Mission to Self-Destruct: America's Culture of Imports
in Uncategorized07/27/2012
How did we create this culture of imports? After World War II, America was the lone superpower remaining. The Marshall Plan was ushered in to help devastated European countries get back on their feet. It was a rousing success. American products were the best in the world and it was important that other countries had enough money to purchase them in order to keep our industries growing.
Later, America made concerted efforts to continue knocking down trade barriers and to buy foreign goods. It helped other countries greatly, but by the 1990s, it was apparent that the money was not coming back in equal measure, eventually forming large deficits in trade. Japan became an industrial powerhouse after the war — mostly thanks to American efforts to help them rebuild their country. We assisted in the drafting of a constitution that placed a newly developed focus on industry. Soon, Japan became an industrial leader in a number of fields, to the point where six of the top 10 best-selling cars in America today are Japanese. America helped many countries back on their feet, and our consumers delighted in the lower prices their imported goods could offer.
At the same time, other countries made purchasing their own domestically manufactured products a national priority over the following half century. As an example country, South Korea created a national manufacturing policy that today has them at the top of the world in manufacturing and industry. Until recently, it was strictly taboo for South Koreans to be caught handling or buying foreign-made goods. South Korea’s sense of consumer nationalism has survived to this day, long after a time when it was “necessary” for them to uphold it. This kind of “us-first” thinking lifted these countries and their largest corporations to a stature previously unfathomable. It is easy to see why companies like Hyundai have reached international success when you consider that 99% of the cars on the roads of Korea are Korean-made. This is true for Japan and many other countries, too. Their consumers’s domestic buying preferences are a crucial benefit for their private manufacturers. Similar preferences and cultural attitudes have prevailed in Germany, now economically the strongest country in Europe.
In America, younger generations have been brought up in a culture of “free trade,” where the pervasive attitude is that “industry doesn’t matter.” A culture of imports dominates. Manufacturing as a share of total employment has fallen from 30% in 1970 to only 10% in 2011. Other countries have suffered losses in the manufacturing employment sector as well, as a natural response to increased productivity and mechanization. Even with this, the industrial employment of Germany is still 20%, Japan is 17% and France manages to have 13%. Come on, America. Let’s use our combined efforts to at least match the manufacturing employment rate of France. It would bring our unemployment rate of 8% back down to the traditional 5%.
In this new race to the bottom, we are trading satisfying, higher-paying, higher-skilled jobs in manufacturing and industry for low paying, low-impact jobs stacking shelves at endless superstores packed with low-grade imports from other countries. Salaries get depressed, unemployment rises, and people can soon afford only the cheapest, usually imported, goods, accelerating the cycle and digging a deeper hole for all of us. Those cheap imports aren’t so cheap any more. The exchange became: good jobs sent abroad for which we received low-quality items and low paying jobs.
Those Olympic uniforms are a symbol of our current, culturally caused unemployment problem. We felt comfortable outsourcing the production of everything we used to make, from American flags to the trinkets at the Smithsonian gift shop. As we did with pollution, smoking, and car safety, we need to wake up, recognize we have an import addiction problem, and start making the individual and governmental changes to pull ourselves out of this mess.
About Alan Uke:
Alan Uke is a San Diego entrepreneur, community leader, and founder of Underwater Kinetics, which he started 41 years ago as a sophomore at the University of California San Diego. He holds more than 50 patents, and the majority of his SCUBA diving and his industrial lighting products are exported to more than 60 countries. He has won the Entrepreneur of the Year Award for Consumer Products from the Entrepreneur of the Year Institute, is a member of the World Presidents Organization, and conceived of and founded the San Diego Aircraft Carrier Museum. He is the author of Buying America Back: A Real-Deal Blueprint for Restoring American Prosperity.
Why We Can't End Poverty In America: It's The Ignorance
in Uncategorized7/29/2012
That isn’t what people mean by poverty in such advanced nations though. The idea is much closer to Adam Smith’s point about a linen shirt. Such may not be a necessity: but if you live in a society where not being able to afford one means you are regarded as poor then not being able to afford one makes you poor in that society.
So the US, or UK, Swedish, South Korean or Japanese definitions of poverty are not to do with being able to eat: they’re to do with what each society thinks you need to have in order not to be poor.
Which brings us to how the US measures that: through the poverty level. This is, roughly speaking, three times the household budget of the early 1960s for a cheap yet nutritious diet for that household. Upgraded for inflation since then. Maybe that’s a good measure and maybe it isn’t (just about everywhere else uses a percentage of median income but so what? That’s more a measure of inequality than poverty) but that is what it is.
At which point we should get very alarmed by the opening of Edelman’s Op/Ed:
“RONALD REAGAN famously said, “We fought a war on poverty and poverty won.” With 46 million Americans — 15 percent of the population — now counted as poor, it’s tempting to think he may have been right.
Look a little deeper and the temptation grows. The lowest percentage in poverty since we started counting was 11.1 percent in 1973. The rate climbed as high as 15.2 percent in 1983. In 2000, after a spurt of prosperity, it went back down to 11.3 percent, and yet 15 million more people are poor today.”
This just isn’t the way is is supposed to work. It’s a basic observation that wages tend to rise faster than inflation: no, not every year, but over time, the decades, we most certainly expect to see this happening. Further, we can see that the US government has been spending ever more on poverty alleviation of these decades. Yet poverty is rising, not falling. This must be a catastrophe which cries out for concerted attention, no?
Well, no actually, it isn’t. For Professor Edelman then goes on to show that he hasn’t got a clue what he’s talking about in the very next paragraph.
“At the same time, we have done a lot that works. From Social Security to food stamps to the earned-income tax credit and on and on, we have enacted programs that now keep 40 million people out of poverty.”
No, no and thrice no. I’m sorry but this is the sort of mistake that disqualifies one from commenting upon poverty in America. For it is absolutely true that food stamps and the EITC alleviate poverty: of course they do, giving poor people money and food alleviates poverty, how could it not? But it does not reduce poverty by a fraction of a percentage point: it doesn’t reduce poverty by one single person.
Which is where we have to get grubby in the detail of how the US counts the incomes that mount up to that poverty level, that three times the 1960s food budget. Included in the incomes used to calculate who is poor and who is not are cash incomes into the household. So, anything earned by going to work, any money from investments (yes, I know, silly, for poor don’t have investments. But if you don’t do this then you’re counting a retired billionaire living off his dividends as poor. Hello George Soros!) and any money that the government just gives you, like say traditional welfare. Social security gets included here.
What is not included is anything that the government gives you either through the tax system or in kind. So that knocks out the EITC: we know this alleviates poverty but it does not reduce the number in poverty. The same with SNAP or food stamps: these are in kind. So maybe you’re getting $5,000 a year (a little over $400 a month is entirely possible based upon family size) in free food through the program. But this is not counted as your income, does not take you above the poverty line because it is not counted as your income. Which is how we can continually expand the EITC and SNAP (and Section 8 housing vouchers, Medicaid and on and on as they are all treated the same way) without ever reducing the number of poor people in America.
And that’s what’s wrong with Peter Edelman’s thesis about poverty in the USA. He doesn’t actually understand how it is measured. And as I never tire of pointing out if you misdiagnose the problem then you will never, unless through pure blind luck, manage to produce a viable solution.
Another way of looking at this is that the New York Times Op/Ed page is where distinguished professors go to flaunt their ignorance. Given that there are many things I’m ignorant of perhaps I should give it a go? Say, a piece insisting that the Laffer Curve shows that all tax cuts all the time increase tax revenues.
Hmm, no, that won’t work, not even the NYT would fall for something that silly. Anyone got the WSJ phone number?
For Olympic Rowers, Uniforms Will Be Made in USA
in UncategorizedBy Bob Fernandez
Inquirer Staff Writer
“We compete because a) we are custom and b) we are fast,” the company’s founder, John Strotbeck, himself a former Olympic rower, said in an interview. “You should never turn your back on your core.”
He was talking about Boathouse’s rowing niche, but he also could have been talking about Philadelphia, having spurned offers in the late 1990s to relocate to cheaper-labor Southern states.
Bitten with the rowing bug at Marietta College in Ohio, Strotbeck “sweep rowed” in a double (a two-person boat) at the 1984 Olympics in Los Angeles, then sculled in a quad (a four-man boat) at the ’88 games in Seoul, South Korea.
In 1989, he launched Boathouse Sports in a factory in Northern Liberties. Within a few years, Boathouse had expanded into an almost-exclusive outerwear company that sold parkas, award jackets, and warm-ups to athletes for Division I football teams, the National Football League, and other sports.
Times were good in the 1990s. But then Nike and Adidas crashed the party by paying multimillion-dollar sponsorships to outfit Division I teams for the national TV exposure, wiping out part of Boathouse’s business.
Seeking new revenue, Strotbeck recast Boathouse to supply full lines of apparel, uniforms, and accessories for lacrosse, field hockey, rugby, rowing, track and field, volleyball, and other sports that “flew under the radar,” he said. It also supplies nontraditional sports clubs, such as those for ultimate Frisbee, chess, and paintball.
The company processes about 45,000 orders a year and has annual revenues of about $20 million. It pitches its products to coaches and athletic directors with the simple message that Boathouse will manufacture custom uniforms and deliver them within 20 days of an order – a difficult timetable for a Chinese factory.
“We do everything from design, graphics, inventory of raw materials, cutting and sewing, screening and sublimation, to putting it in a box,” Strotbeck said. “We produce, pretty much, 100 percent of what we ship.”
Dressed one day last week in blue jeans and a black short-sleeve shirt, Strotbeck, 55, said that before he moved into his current factory he had been wooed with incentives by three Southern states: Mississippi, North Carolina, and Tennessee.
He had doubts. Auto companies were investing heavily in assembly plants in the South, which Strotbeck thought could put pressure on their labor markets. Instead of relocating, he bought the former GE aerospace factory on the 400 block of East Hunting Park Avenue in 1999. The company’s mostly female workforce is comprised of Asian and Hispanic immigrants.
A member of the Vesper Boat Club in Philadelphia, Strotbeck said rowing is growing as a sport because of Title IX rules that require colleges to invest in women’s sports.
In 2009, Boathouse signed a deal with the United States Rowing Association, based in Princeton, to sponsor the national rowing teams, leading it to supply with gear the 44 U.S. male and female rowers in London. That gear includes unisuit racing uniforms, practice uniforms, basic training gear, cold-weather vests, long-sleeve shirts, and other items.
“Rowing is out of the Ivy League. It is getting to be an everyman’s sport,” said Strotbeck.
“We did it,” he said of the sponsorship, “because we like rowing and we were getting back into the uniform business. . . . It’s important for us to be an Olympic brand.”
When he was an Olympic athlete in 1984, the official clothing sponsor was Levi’s. Four years later, the clothing sponsor was Adidas. With both companies, the garments were sourced overseas, said Strotbeck.
“This is not anything new,” he said of the made-in-China Ralph Lauren clothing for the London Olympics, “but given the changes in the economy, there’s a realization that we can make stuff in the U.S., and should make things in the U.S.”
That, Ralph Lauren now says, is where it will manufacture clothing for the 2014 U.S. Olympic athletes.
As China Costs Rise, Technology Lures U.S. Factories Home
in UncategorizedBy Scott Malone and Ernest Scheyder
Schenectady, NY/NEW YORK
“When we do the numbers we’re actually ahead manufacturing here instead of paying for air freight and dealing with the logistical issues that we’re having in China,” said Raymond Sjolseth, the company’s president and co-founder.
With just $11 million in revenue last year, Seesmart is a tiny company, but it is one of many manufacturers of all sizes – from Master Lock to blue-chips General Electric Co and Caterpillar Inc – that are expanding production in the United States.
After decades roaming the world in search of lower costs, U.S. manufacturers are finding that factories at home can compete with China, India, Mexico and other low-cost countries.
To be sure, labor-intensive industries like clothing and electronics, which are heavily dependent on hand assembly, are seen as unlikely to come back to the United States in a major way. And the trickle of returning jobs is far from a flood.
But higher transportation costs and wage inflation in China could drive more production back to the United States.
Prime candidates for return are bulky, heavy items. GE has shifted production of appliances from Mexico and China to Louisville, Kentucky, partly due to rising shipping costs. The new plant that Caterpillar is building near Athens, Georgia, will employ about 1,400 and make small bulldozers and excavators.
As manufacturers have learned to run factories with fewer workers – whose jobs consist of keeping high-cost, high-speed machines running smoothly, rather than assembling goods by hand – they have found that wages are a less critical issue in choosing a factory site.
Caterpillar, which has announced nine new plants or expansion projects in the past year alone, said it has chosen to grow in the United States both to meet local demand and because it has been able to find a steady supply of workers able to run the advanced equipment that powers its plants.
A survey by the Hackett Group Inc consultancy found that 46 percent of executives at European and North American manufacturing companies said they were considering returning some production to the United States from China, while another 27 percent said they were actively planning for or are in the midst of such a shift.
In the face of continued high unemployment, outsourcing and offshoring have become potent issues with U.S. voters. In the race for the White House, President Barack Obama, a Democrat, has called attention to job cuts made by private equity firm Bain Capital, formerly run by Mitt Romney, the presumed Republican nominee.
Despite the gloom, there has been a slight rise in U.S. factory employment. Some 11.95 million Americans worked in production jobs as of May, up 4 percent from the sector’s recessionary low in January 2010.
Manufacturing gained its reputation as a key to the U.S. middle class, in part thanks to its historically unionized work force. However, companies including Caterpillar and the Detroit automakers have succeeded in winning concessions in labor negotiations that include two-tier wage structures that provide substantially lower wagers for the newest workers.
At Seesmart, shifting production from China to the United States is cutting logistics costs by about 30 percent as it no longer needs to fly merchandise across the Pacific. Products can also be made and shipped to customers more quickly, Sjolseth said.
“The LED business involves a very compulsive buy, and the client can’t tolerate long lead times,” he said. “So if you’re not delivering in four to six weeks, it’s not going to happen. You’re going to lose the deal and they’re going somewhere else.”
Higher wages have not been a roadblock for the company because its automated factories mean that labor costs represent less than 2 percent of the cost to manufacture lighting.
“Are our labor costs higher in the U.S. versus China? Yes, but in our case the total cost to produce our U.S. units is lower when all factors are calculated,” said Sjolseth. The company today makes 20 percent of its products in the United States, a number it aims to push to 75 percent by the end of next year.
NARROWING COST GAP
The falling share of wages in total costs also played a role in a new battery plant opened by General Electric in Schenectady, New York, this month.
“With all the manufacturing technology we have, labor is a relatively small component” of costs, said GE’s chief executive, Jeff Immelt. “That’s different today than it was 10 years ago.”
The new plant will employ 450 people, a slice of the 14,500 positions the largest U.S. conglomerate has added since 2009. It employs 301,000 people worldwide and 131,000 in the United States.
The plant is highly automated, with high-tech machines processing the ceramic forms that surround the batteries. Some processes are still done by hand; during a recent tour of the site, workers were applying a layer of carbon paint to the cells with paint brushes.
The hand-painting is a technique that GE researchers used in developing the batteries, and it remains a more reliable approach than applying the carbon by machine, said Prescott Logan, general manager of GE’s newly formed energy storage technologies unit. But GE is working on a way to reliably automate the process.
“There are a lot of parts of that factory that will look very different five years from now,” Logan said.
Rising wages in emerging markets and higher shipping costs are also closing the cost gap between developing markets and the United States.
In 2005 it cost 45 percent less to make electric motors for automobile windshield wipers in China and ship them to the United States, rather than make them domestically, according to an analysis by AlixPartners.
Today, the Chinese motor costs only 18 percent less than a U.S.-made model. The consultancy forecasts that by 2015 the Chinese motor will cost just 9 percent less, due to rising wages and shipping costs and an appreciation in the Chinese yuan versus the U.S. dollar.
The study also looked at costs for motors made in India and Mexico and found they had risen, though not as dramatically as in China.
“If you go back to the heyday of outsourc
ing to
China, at that time with the exchange rates and the ocean freight it was pretty hard to go wrong from a cost standpoint,” said Steve Maurer, a managing director at AlixPartners who specializes in manufacturing efficiency.
“Now that costs in China are increasing … people are stepping back and saying, ‘We need to reevaluate this.'”
(Editing by Patricia Kranz and Leslie Adler)
Steel for America’s Military Will Once Again be ‘Made in USA’
in Government“ArcelorMittal is pleased with the Department of Defense’s decision to reinstate the longstanding requirement that steel armor plate procured for defense purposes be melted domestically. We are grateful for the support of leaders like Senator Brown who have fought tirelessly for this policy to be reinstated. This is an important decision for our hardworking employees in Ohio and nationwide. ArcelorMittal is proud to support the defense efforts of the United States through our production of steel armor plate, and we commend the Department of Defense for its decision to help ensure a vibrant industrial base in the years to come,” said John Mengel, Chief Operating Officer, ArcelorMittal USA Plate.
“As a major supplier of raw materials to the domestic steel industry, Cliffs is encouraged by the Department of Defense’s proposal to again require that all stages of steel armor plate manufacturing occur domestically. This proposed rule reflects the importance of producing strategically significant steel products in the United States from a domestic supply chain,” said Kelly Tompkins, Executive Vice President – Legal, Government Affairs and Sustainability and Chief Legal Officer at Cliffs Natural Resources Inc.
Steel armor plate is used for military vehicles, tanks, and equipment. Under DoD regulations, specialty metals procured for defense purposes—including steel armor plate—must be produced in the United States. Despite more than 35 years of legal interpretation and administrative practice requiring that specialty metals be melted in the United States, DoD in 2009—in the midst of the wars in Iraq and Afghanistan and during a time when the demand for steel was high—published a final rule defining the word “produced,” as it applies to armor plate under the Special Metals Amendment, to include simple finishing processes. This means that armor plate melted in foreign countries, including Russia and China, could be imported and subjected to simple finishing processes in the United States and then deemed to have been “produced” domestically.
After numerous Congressional inquiries and report language questioning DoD’s interpretation of “produced,” the FY11 National Defense Authorization Act included a provision requiring a review and, if necessary, revision of the existing regulation to ensure the definition is consistent with Congressional intent (the review was required to be completed within 270 of enactment of the law, i.e., early October 2011). On July 25, 2011, DoD published its request for comment, and the deadline for public comment was September 8, 2011. Earlier this year, Brown introduced the United States Steel and Security Act, which would have required steel armor plate to be both melted and finished in the United States, not only protecting American steel jobs, but our country’s national security. Cleveland’s ArcelorMittal manufactures steel armor plate, as does Nucor.
In September 2011, Brown—along with Sens. Richard Burr (R-NC), Robert P. Casey, Jr. (D-PA), Kay Hagan (D-NC), Daniel Coats (R-IN), Jay Rockefeller (D-WV), Al Franken (D-MN), and Amy Klobuchar (D-MN)—sent a letter to Defense Undersecretary Ashton Carter urging him to revise the Department’s requirements on steel plate. A copy of that letter can be seen here. During consideration of the National Defense Authorization Act in December 2011, Brown and Senate Armed Services Committee Chairman Carl Levin (D-MI) called for the DOD to expedite its review of this issue.
Yesterday, the DoD published in the Federal Register a proposed amendment to the Defense Federal Acquisition Regulations revising the definition of “produce” as it relates to the Specialty Metals Amendment. The proposed amendment is the result of section 823 of the FY 2011 National Defense Authorization Act, in which Congress directed DoD to review the current the definition of produced to ensure its consistency with congressional intent. There will be a 60-day comment period on the proposed rule.
Cargill Recalls Ground Beef After Link to Salmonella
in UncategorizedPublished: July 23, 2012
Hannaford is offering refunds to customers who have any ground beef in their freezers bought in its stores with its store brand and stamped with sell-by dates ranging from May 29 through June 16. It has posted signs in its meat departments and on its Web site, and sent media advisories locally and nationally.
In a pop-up announcement on its Web site, Cargill Meat Solutions Corporation, which processes and distributes pork, beef and turkey products to retailers and food service outlets, said it was voluntarily recalling the meat, which it described as an 85 percent lean ground beef product.
Hannaford bought the meat in bulk from Cargill and repackaged it under its own name. It will be making refunds on all such ground beef stamped with the specified dates regardless of the fat content, a spokesman said.
Salmonella infections, which tend to be most severe among infants, older adults and the sick, can be life-threatening to those with weak immune systems. Typically, they strike within 72 hours after the consumption of tainted food. The Department of Agriculture recommends cooking meat to an internal temperature of 160 degrees Fahrenheit, as measured by a thermometer, to ensure against salmonella poisoning.
The department’s Food Safety and Inspection Service has been investigating an outbreak of salmonella Enteriditis, one of the most common types of salmonella serotypes, affecting 33 patients in seven states, including those where Hannaford has stores, as well as Rhode Island and Virginia. That continuing inquiry involves the health departments in those states as well as the Centers for Disease Control and Prevention.
Through epidemiology and by tracing purchases, investigators were able to link the illnesses of five people, two of whom had been hospitalized, to meat produced at Cargill Meat Solutions. Not all meat samples led back to a specific point of sale.
A Nation That’s Losing Its Toolbox
in UncategorizedPublished: July 21, 2012NEW ROCHELLE, N.Y.
It’s all very handy stuff, I guess, a convenient way to be a do-it-yourselfer without being all that good with tools. But at a time when the American factory seems to be a shrinking presence, and when good manufacturing jobs have vanished, perhaps never to return, there is something deeply troubling about this dilution of American craftsmanship.
That should be a matter of concern in a presidential election year. Yet neither Barack Obama nor Mitt Romney promotes himself as tool-savvy presidential timber, in the mold of a Jimmy Carter, a skilled carpenter and cabinet maker.
The Obama administration does worry publicly about manufacturing, a first cousin of craftsmanship. When the Ford Motor Company, for example, recently announced that it was bringing some production home, the White House cheered. “When you see things like Ford moving new production from Mexico to Detroit, instead of the other way around, you know things are changing,” says Gene B. Sperling, director of the National Economic Council.
Ask the administration or the Republicans or most academics why America needs more manufacturing, and they respond that manufacturing spawns innovation, brings down the trade deficit, strengthens the dollar, generates jobs, arms the military and kindles a recovery from recession. But rarely, if ever, do they publicly take the argument a step further, asserting that a growing manufacturing sector encourages craftsmanship and that craftsmanship is, if not a birthright, then a vital ingredient of the American self-image as a can-do, inventive, we-can-make-anything people.
That self-image is deteriorating. And the symptoms go far beyond Home Depot. They show up in the wistful popularity of books like “Shop Class as Soulcraft,” by Matthew B. Crawford, in TV cooking classes featuring the craftsmanship of celebrity chefs, and in shows like “This Old House.”
Traditional vocational training in public high schools is gradually declining, stranding thousands of young people who seek training for a craft without going to college. Colleges, for their part, have since 1985 graduated fewer chemical, mechanical, industrial and metallurgical engineers, partly in response to the reduced role of manufacturing, a big employer of them.
The decline started in the 1950s, when manufacturing generated a hefty 28 percent of the national income, or gross domestic product, and employed one-third of the work force. Today, factory output generates just 12 percent of G.D.P. and employs barely 9 percent of the nation’s workers.
Mass layoffs and plant closings have drawn plenty of headlines and public debate over the years, and they still occasionally do. But the damage to skill and craftsmanship — what’s needed to build a complex airliner or a tractor, or for a worker to move up from assembler to machinist to supervisor — went largely unnoticed.
“In an earlier generation, we lost our connection to the land, and now we are losing our connection to the machinery we depend on,” says Michael Hout, a sociologist at the University of California, Berkeley. “People who work with their hands,” he went on, “are doing things today that we call service jobs, in restaurants and laundries, or in medical technology and the like.”
That’s one explanation for the decline in traditional craftsmanship. Lack of interest is another. The big money is in fields like finance. Starting in the 1980s, skill in finance grew in stature, and, as depicted in the news media and the movies, became a more appealing source of income.
By last year, Wall Street traders, bankers and those who deal in real estate generated 21 percent of the national income, double their share in the 1950s. And Warren E. Buffett, the amiable financier, became a homespun folk hero, without the tools and overalls.
“Young people grow up without developing the skills to fix things around the house,” says Richard T. Curtin, director of the Thomson Reuters/University of Michigan Surveys of Consumers. “They know about computers, of course, but they don’t know how to build them.”
Manufacturing’s shrinking presence undoubtedly helps explain the decline in craftsmanship, if only because many of the nation’s assembly line workers were skilled in craft work, if not on the job then in their spare time. In a late 1990s study of blue-collar employees at a General Motors plant (now closed) in Linden, N.J., the sociologist Ruth Milkman of City University of New York found that many line workers, in their off-hours, did home renovation and other skilled work.
“I have often thought,” Ms. Milkman says, “that these extracurricular jobs were an effort on the part of the workers to regain their dignity after suffering the degradation of repetitive assembly line work in the factory.”
Craft work has higher status in nations like Germany, which invests in apprenticeship programs for high school students. “Corporations in Germany realized that
there wa
s an interest to be served economically and patriotically in building up a skilled labor force at home; we never had that ethos,” says Richard Sennett, a New York University sociologistwho has written about the connection of craft and culture.
The damage to American craftsmanship seems to parallel the precipitous slide in manufacturing employment. Though the decline started in the 1970s, it became much steeper beginning in 2000. Since then, some 5.3 million jobs, or one-third of the work force in manufacturing, have been lost. A stated goal of the Obama administration is to restore a big chunk of this employment, along with the multitude of skills that many of the jobs required.
And there is an incipient upturn in the monthly employment data, although the president will almost certainly finish his first term with the manufacturing work force well below the 12.6 million it was when his administration began. (It was nearly 11.9 million last month.)
“We sit in rooms with manufacturers who tell us that location decisions to move overseas that were previously automatic are now a close call, and that the right policies can make a difference,” Mr. Sperling says.
THAT is particularly the case if federal, state and local governments intervene with generous subsidies, like those seen in China, Germany, Japan, France, India and other countries eager to sustain manufacturing.
Government subsidies are helping to make manufacturing in America more attractive, but the turnaround may be hard to sustain. And it may be too late. Big multinationals already operate factory networks in Europe and Asia, as well as in the United States. Stepping up exports to those markets from the United States, rather than producing in them, is becoming less of an option — short of an international agreement like the Plaza Accord of 1985, which realigned currencies and gave American manufacturers a temporary boost.
As for craftsmanship itself, the issue is how to preserve it as a valued skill in the general population. Ms. Milkman, the sociologist, argues that American craftsmanship isn’t disappearing as quickly as some would argue — that it has instead shifted to immigrants. “Pride in craft, it is alive in the immigrant world,” she says.
Sol Axelrod, 37, the manager of the Home Depot here, fittingly learned to fix his own car as a teenager, even changing the brakes. Now he finds immigrant craftsmen gathered in abundance outside his store in the early morning, waiting for it to open so they can buy supplies for the day’s work as contractors. Skilled day laborers, also mostly immigrants, wait quietly in hopes of being hired by the contractors.
Mr. Axelrod also says the recession and persistently high unemployment have forced many people to try to save money by doing more themselves, and Home Depot in response offers classes in fixing faucets and other simple repairs. The teachers are store employees, many of them older and semiretired from a skilled trade, or laid off.
“Our customers may not be building cabinets or outdoor decks; we try to do that for them,” Mr. Axelrod says, “but some are trying to build up skill so they can do more for themselves in these hard times.”