Understanding The Value To Consumers Of “Made In The USA”

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February 16, 2016
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February 16, 2016
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Understanding The Value To Consumers Of “Made In The USA”

If a consumer hesitates to commit to the “Made in the USA” label, it’s likely because of cost. It’s largely accepted that items manufactured locally  — while usually of higher quality — will cost slightly more than those made in other parts of the world. The higher cost drove manufacturing overseas in past decades as companies made the choice for bulk over quality, and consumers followed suit.

However, U.S.-made products are making a comeback. While costs are evening out globally because of more uniform labor regulations and the cost to ship cancels out most of the savings, the fact remains that domestic products will probably continue to top those of foreign competitors.

There are several reasons for the higher cost of U.S. products, and even more reasons why they matter less and less:

1. Wages Are Less Regulated in Developing Nations

It’s no surprise that labor in Southeast Asia costs less than it does in the American Midwest. In 2012, for example, the average hourly wage for a U.S. manufacturer was roughly $24 per hour, according to the U.S. Bureau of Labor Statistics. Indian manufacturing workers, by comparison, made an average of $1.46.

Developing nations have fewer labor regulations that relate to wages, workweeks, working conditions and age of the actual laborer. For that reason, foreign manufacturers have an edge, and they use it to their competitive advantage.

However, the higher labor costs in the U.S. reflect better quality. American manufacturers live more comfortably and take pride in their work — and it shows.

2. Manufactures in Developing Nations Put Less Emphasis on Quality

Foreign manufacturers tend to opt for bulk over quality. Ultimately, the cost to the consumer is lower, but the process itself can result in diminished quality. Recalls of Chinese-made products are all too common.

In recent years, Americans have turned toward a greater emphasis on quality over quantity, which has helped U.S. manufacturers overcome many of the cost advantages of foreign companies and quick mass production.

3. Customization is Less Common Overseas

Foreign manufacturers rely on a business model where bigger is better by quickly turning out and selling huge amounts of merchandise. The downside is lack of customization, which puts that business model at a disadvantage. U.S. consumers continue to demand customized products, and U.S. manufacturers are happy to oblige.

A benefit of doing business with a U.S. manufacturer is greater control over the process itself. Proximity alone gives a business less room for error and the ability to change and modify an order at short notice. That means companies large and small can customize products — from cars and computers to consumer devices and clothing. The results are more diverse with satisfied consumers and increasing business. If it means a little extra in costs, consumers seem willing to accept it.