The Case for ‘Made in America'[p][/p]
I proudly add the “Made in USA” label to every product I manufacture in my San Francisco factory. Making bags in this country is fundamentally important to me and to my company–but maybe not for the reasons you think.
Here at Rickshaw Bagworks, making our own products is a celebration of our passion for making things, not a protest of outsourcing or offshoring. I’m not a protectionist, and I’m not a Made-in-America zealot. We live in the modern global economy–I get it. In fact, my original plan was to import partially made bags from China and do only the final assembly in our shop.
But, alas, I’m a stubborn maker at heart. We soon found ourselves designing products that we could produce from scratch in our own factory–and getting great feedback from customers for our made-in-San-Francisco goods. So we encouraged letting our manufacturing story be our key point of differentiation: We don’t just design what we sell, we make what we sell.
That’s always been my true love. When I was in high school, I took wood and metal shop classes, and I started my own stained glass business, crafting windows, lampshades, and terrariums for my parents’ friends. Then I headed off to college, got a degree in engineering, and started working in Silicon Valley. My crafting days were over–or so it seemed. Twenty years later, I happened into the bag-making business and reconnected with my dormant passion for making things. As fate would have it, that happened at a time and in a place particularly challenging for makers–but also full of opportunity.
We live in an age when production is more often than not outsourced to anonymous contract manufacturers, predominantly in low-cost labor markets. There are good reasons for that, as well as some horrific and well-publicized downsides. Though economies of scale and low-cost labor have yielded tremendous cost savings for consumers, it seems we may be approaching the limits of this business model, especially after factory disasters abroad have focused more attention on the poor working conditions and environmental impact of these practices. There is a small but growing group of “conscious consumers,” who care about the who, what, why, where, and how behind the products they buy. These customers want to connect with the companies they purchase goods from, and share their enthusiasm with others like themselves.
So, does it really matter where it’s made? Yes, and no. I believe it’s less about specifically where we manufacture–though San Francisco has fabulous geographic cachet–than about the fact that we make our own products, in our own factory, under our own brand name. It’s about connection and accountability–knowing and dealing directly with the maker and trusting the brand. Here at Rickshaw, we design and make what we sell. We own it. The buck starts and stops right here. Making what we sell is our primary differentiator. “Made in USA” is the where of our brand story.
As a conscious consumer myself, I’m concerned about the environmental and social justice issues that come with manufacturing in less-developed, poorly regulated countries. As a maker, I’m optimistic that there’s a promising future for small-scale, innovative, specialty manufacturing in America. In my bags, those “Made in USA” labels are shorthand for “quality products, made with integrity by a company that’s accountable and that cares for its employees, customers, business partners, and community, and for our shared planet.”
This is not something that’s exclusively American. Nor is it universally American. But I like to think it’s fundamentally American.
It’s time for America’s annual holiday study of contrasts.
First comes Thanksgiving, a heritage slightly scarred by glitzy parades, football, turkey fryer incidents, and overeating, but still imbued with volunteerism, thankfulness, and family.
Then comes Black Friday. Read more
American Giant: Made in America.
With the prevalence of outsourcing factory work to Bangladesh and China, fewer retailers can use those three short words on popular clothing.
I mapped the state data below. While all states showed steep drops in new firms, New York stands out for its much smaller decline in the share of new companies than other states — only 18 percent, compared with the 50-state average of 47.2 percent. Illinois, Texas, New Jersey and Missouri round out the top five.
At the very least, the Brookings findings strongly suggest that when it comes to luring new businesses to a given state, there are a lot more factors at play than straightforward calculations of corporate tax rates.
At a time when flag-waving couldn’t be more in fashion, David MacNeil knows a thing or two about standing up for American products. Or at least resting your muddy boots on them. While creating jobs in the process.
AP Business Writer
“Shipping costs are tremendous,” he says. “I could put that money into the manufacturing side in the U.S.,” he says.
Reverie is one of a growing number of small businesses that are chipping away at the decades-old trend of manufacturing overseas. They’re doing what’s known as reshoring, moving production back to U.S. factories as labor costs grow in countries like China and India and shipping also becomes more expensive. Over the last 20 years, the price of a barrel of oil has risen to about $95 from $20.
There are other issues encouraging the shift. Owners are tired of having to wait weeks for shipments on slow-moving container ships, and they want to get products to customers faster. Some newer businesses aren’t even considering overseas manufacturing. It’s not just small businesses. Some of the largest companies in the U.S. are also joining the trend. Apple Inc. and Caterpillar Inc. are among the manufacturers planning to bring production back to the U.S.
Reverie has had the bases of its beds made in Taiwan since the company was founded. Rawls-Meehan and a business partner in Taiwan agreed that the cost savings and proximity to many customers were good reasons to manufacture there.
“The mentality was that products were going to be manufactured more cheaply in Asia than in the U.S.,” Rawls-Meehan says.
But shipping costs have risen to as much as 20 percent of the wholesale cost of a bed made in Asia. In 2004, it was just 10 percent on some of Reverie’s products. So the company is now making a new line of upscale beds in Silver Creek, N.Y., near Buffalo. Shipping on those beds accounts for no more than 5 percent of the wholesale price. That offsets the higher cost of labor in this country.
Rawls-Meehan is considering moving more of his manufacturing to the U.S., but because the company also sells beds to Asia and Australia, he says it likely will always have overseas production.
A good deal of U.S. manufacturing shifted to foreign shores in the 1990s and early 2000s. Workers in China, India and other countries earned far less than workers in U.S. factories. That lowered costs substantially for U.S. companies. Between 1997 and 2008, the U.S. lost nearly 4.5 million manufacturing jobs, according to the Census Bureau. And the amount of overseas manufacturing by U.S. companies grew 141 percent between 1997 and 2010, according to the government’s Bureau of Economic Analysis.
But the growing middle class in countries such as China and India have been demanding and getting higher wages. In Asia, labor costs are rising 20 percent a year, compared to 3 percent in the U.S., says David Simchi-Levi, a professor at the Massachusetts Institute of Technology whose specialties include supply chain management.
A weaker dollar has also made foreign-made goods more expensive. A study by the consulting firm AlixPartners predicts that the costs of manufacturing in the U.S. and China on average would be equal in 2015. For products including disposable packaging and some metal parts, costs are already equal or less when they’re made in the U.S., the study found.
Reshoring began picking up momentum in 2010 after the recession and as the dollar began to lose value, says Lisa Ellram, a professor at Miami University of Ohio who specializes in supply chain management. Businesses that were unsure how strong their sales would be in a weak economy didn’t want to make as many commitments to far-flung factories.
“They really just didn’t have as much certainty about their volume and their needs, so it was maybe a little bit easier to deal with somebody closer,” she says.
Innovations in manufacturing in the U.S. are encouraging the shift. Many U.S. companies use robots and highly specialized processes that allow them to make custom components for the automotive and aerospace industries.
“Instead of hiring people, we’re using robots,” Ellram says. Chinese companies are also using robots, but U.S. manufacturers are ahead of them, she says.
The government doesn’t have figures tracking how much manufacturing companies are bringing back the U.S., according to Jeannine Aversa, a spokeswoman with the Bureau of Economic Analysis. About 50,000 manufacturing jobs came back to the U.S. between 2010 and 2012, many of them in factories that turn out electrical equipment and components and metal parts, according to the Reshoring Initiative, a nonprofit group that advocates moving manufacturing back to the U.S.
The trend could gain momentum because demand for U.S. goods is growing. Ninety-five percent of manufacturers surveyed last year said they are increasing their purchases from domestic companies, or keeping them at the same level as 2011, according to ThomasNet, a company that operates an online marketplace where businesses can connect with manufacturers, distributors and service companies.
The amount of time it takes to get goods made overseas is another reason manufacturing is coming back to the U.S. It’s taking longer to ship finished products because cargo ships have lowered their speed by 20 percent to conserve fuel, Ellram says. That reduction adds four or five days to a container ship trip from China, she says. It takes two weeks or more for a ship to travel from China to the U.S., depending on which ports it departs from and where it makes its deliveries.
Shipping times matter for companies that need to get their goods to market quickly. Now that Cotton Babies, a manufacturer and retailer of baby merchandise, has moved manufacturing of its cotton diapers to Denver from Egypt, it has cut in half the time it takes to get them to market, says CEO Jennifer Labit.
Product development can be slowed by the distance between designers in the U.S. and manufacturers in other countries, Labit says. Communication takes longer and expensive overseas trips are often necessary to make sure that the products are being made to specifications.
Quality, and the ability to fix problems faster, gives small domestic manufacturers an advantage over foreign companies, Ellram says.
“Those are the things that (domestic) small businesses can use as a selling point,” she says.
A myriad of problems helped Reading Truck Body decide to bring manufacturing of truck parts back to the U.S. from China.
Shipments were disorganized. The compan
y didn’t know until it opened containers which parts had been shipped. That meant it couldn’t be sure ahead of time which of its truck bodies could be finished and sold, national sales director Craig Bonham says. Reading, based in Reading, Pa., also was concerned about the amount of time it took to get shipments.
“It spans about three months from purchase order to the time you get products to North American shores,” Bonham says. “That timeline did not allow us to become reactionary to market demands.”
Reading lost some sales because it didn’t have the parts to finish a truck a customer wanted. But the impact of unpredictable shipments went beyond lost revenue — it also led to chaos on the production line and frustration among the company’s managers.
“You feel a larger sense of dependency when you’re relying on someone that far away,” Bonham says. The company received its last shipment from Asia in December.
It also dealt with high expenses to send two employees to China each quarter, at a cost of $100,000 a year.
But with production now entirely in the U.S., the company is more confident.
“We have more control of our destiny,” he says.
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