Made in America
April 17, 2011 by Steve Meyer
Filed under Commentary, Design, Industry, Manufacturing Trends
It used to be a by-word. The slogan “Made in America” was once the universal expression for quality products. It was so prevalent that in an obscure village in Italy 20 miles outside of Florence, a local Italian kid that I used to hang out with nicknamed me “Made In America”. Which he was able to pronounce almost perfectly. It was our little joke. So I nicknamed him “Fatto in Italia” which means “Made in Italy”. We thought it was hilarious.
Who would have guessed that 30 years later, we would see an America in which our political leadership seemed uninterested in the health of our manufacturing economy. As a result the manufacturing economy of the U.S. has been in decline for the past 20 years. The US still leads with 21% of all goods produced worldwide. Japan, with a smaller workforce and limited resources produces 13%. China with it huge workforce and resources has quickly jumped to 12% and seems poised to grow significantly from its current position.
Manufacturing supremacy cannot be taken for granted. Manufacturing success is not subject to the whims of political leadership. We cannot legislate an industry into existence, such as the Wind Power industry or the Solar Power industry. Although we are trying very hard and spending a lot of public funds to try and prove otherwise.
Manufacturing success has a lot to do with good design and good execution. Sales of 1.7 million I-Phone 4G units in 3 days says a lot about a company. It says that customers are so impressed with the technology, packaging and content of Apple products that they are lining up and down the street to purchase them. That’s great design and great execution.
And Apple continues to dominate its markets world wide. We need more American companies with a similar commitment to their products and markets. More American companies that know how to compete using strategies other than outsourcing to markets with cheap labor. More American companies that pay their taxes in the country they are incorporated in.
Buying goods made in cheap labor markets has been going on for a long time. Over the years we have seen Japanese goods coming into the US market. After World War II the US established trade relations with Japan and purchased inexpensive Japanese goods. The slogan “Made In Japan” was synonymous with cheap goods that broke quickly. Over the years the Japanese manufacturers learned the skills that make them one of the leading suppliers in electronics, automotive products and a leader in technology.
Interestingly, manufacturing in Mexico has undergone a similar evolution. Where low labor costs came with high scrap rates, times have changed and the Mexican manufacturing community has learned to eliminate its scrap and produce more efficiently in order to compete in the world market.
Competitive pricing is not simply a result of lowest cost of labor. It is the lowest cost of quality. It must also include transportation and tariff costs to get offshore goods delivered to a target market. There are great examples of US companies that outsourced their products in the past which have discovered a number of hidden costs that make “Made in America” their lowest cost and highest quality solution.
And we need more of that too.
Along these same lines, you might want to read a poem I wrote called “It used to be made in America.” It’s about the loss of jobs and the consequences of the outsourcing of jobs to other countries. It paints a vivid picture of conflicting economic forces.
You can see it online at http://www.itusedtobemadeinamerica.com. If you would like any additional information about it, please give me a call.
Sincerely,
Robert Barrows
R.M. Barrows, Inc. Advertising & Public Relations
Burlingame, California
650-344-1951
http://www.barrows.com
http://www.itusedtobemadeinamerica.com
I don’t know from when are the datas you are using, but you’re wrong. You wrote: “The US still leads with 21% of all goods produced worldwide. Japan, with a smaller workforce and limited resources produces 13%. China with it huge workforce and resources has quickly jumped to 12% and seems poised to grow significantly from its current position.”
But, this year, China leads with 19.8% of all goods produced worldwide while the US “only” produced 19.4%.
http://www.industryweek.com/articles/china_tops_u-s-_in_manufacturing_24134.aspx
Paturel
I am pretty sure the data I was referencing is a year older than the report you quoted. Great input. Thanks for your email.
Paturel
Thanks for your email. The data your refer to is probably newer than mine. Great input.
With the US being the leading consumer of goods, the economic data tends to overstate the value US Manufacturing by a wide margin. For example, a gallon of gasoline refined in the US may contribute $4 to the total of US manufactured goods even though the crude oil to produce it accounts for most of the cost and was imported. Car “transplant” manufactures who assemble high value components “count” towards manufacturing output.
A better gage of the poor health of US manufacturing is in the trade deficit numbers.
Made in America, but…what country? It is different than “Made in USA”, Why? because America is a continent. None of the Spanish spoken countries of America, call America to the USA. When the USA started calling themselves with the name of the continent with so many countries? The date is unknown, but apparently, when the USA was ready to be a country, they expected that all the states in America were united as one. They didn’t think that some countries were already founded under their own name.
Would you imagine a France calling themselves Europe and Europeans? What England would think about it? What about…”MADE IN EUROPE”? Yeah..but where.
So please, just remember America belongs to Americans, the people who live in this WHOLE beautiful continent, not just some of them.
Have a great day.
Hi Steve– I agree wholeheartedly with the gist of your article. However, I am confused as to why you’re using Apple as an example for other US compaines to emulate. Thye I-Phone is indeed well engineered and wildly successful due to great marketing– but it is a product of outsourcing to China, notable for the fact that suicides are far too common in the plant where they are produced. Regarding Mexico…interestingly, the drug war is driving some manufacturing back to the states due to risk factors. Not the best circumstances for “re-shoring”, but I welcome the US jobs nonetheless. Now, as to why labor costs are so high in the US… that is a worthy discussion in an of itself. And then, there is the one-sided protectionist policies that keep US goods out of many markets. Ultimately, we’re seeing the effects of failed, short-sighted policies– public and private.
Isn’t the iPhone manufactured/assembled in China by Foxconn?
Steve D,
Thanks for your comment. Maybe I should have written the article as “Designed in America”, although Apple does employ a huge workforce. Clearly, the manufacturing advantage has shifted to Asia. But there are many examples of manufacturing returning to the US. The core issue is the political leadership, as you rightly point out.
Thanks for your comment.
I agree, broad statistical data needs to be segmented in order to get meaningful information. The scariest part of $4. gasoline is the $1.50 worth of taxes that goes the State and Federal government. With foreign car companies it’s a little harder. All the payroll and taxes are paid here, all the revenue comes in to a US company. Some of the product content may be brought in from offshore, and all the profit is sent overseas. So it’s a mixed bag.