Want to Buy American? Look Beyond the Label

 

Takeaway

  • For a product to qualify for “Made in USA” labeling, most of its parts and materials must have been produced domestically
  • However, the Federal Trade Commission relies on an honor system, investigating only if someone complains
  • Crowdsourced projects provide information about the global origins of product components

Nothing says red, white, and blue like where you spend your green.

As Independence Day rolls around, you might want to show your patriotism by going shopping. You’re incensed by reports of Chinese-made U.S. flags and Olympic uniforms. You want to support American jobs. Just look for a label like “Made in USA.” Right?

It's not so simple, according to supply chain expert Michael Hasler, director of the Master of Science in Business Analytics program at McCombs. In this age of globalization, he says, “The label does not tell the whole story, not by a long shot. There are few consumer items you can purchase in the U.S. that don’t have some level of international content.”

He points to a Dell laptop. It’s a familiar U.S. brand name, and it’s designed in the Austin area. “If I have a choice, I would buy a Dell,” he says, “because I have friends and colleagues who work for Dell.”

But he doesn’t pretend he’s buying American. “Virtually the entire manufacturing value stream is overseas,” he says. “If you compare it to a Toshiba, they’re using virtually the same suppliers. It just so happens the other product is designed and managed in Japan.”

So what’s a patriotic shopper to do? First, says Hasler, “people need to realize that everything has a global component, and embrace it.”

But there are ways to find products with higher percentages of domestic content:

Learn about labels. The Federal Trade Commission publishes a 44-page rulebook for products that claim to be U.S. made. The strictest guidelines govern stickers like “Made in USA” or “Made in America.” To qualify for those designations, most of the product’s parts and materials, as well as the factory that puts them together, must be domestic.

The catch is that it’s mostly an honor system. The FTC can fine violators as much as $16,000 per mislabeled item. But it only investigates if someone complains — usually a competing company.

The FTC encourages a variety of other phrases that make less sweeping claims. “Assembled in USA” means most parts probably came from overseas.

“Don’t assume that just because something is assembled in the U.S., that’s where the bulk of the value is being created,” notes Hasler. “Maybe you’re adding 10 percent of the value in the U.S., but 90 percent of the value is made elsewhere.”

The trickiest labels to decipher are those that use flags or words like “American.” They’re supposed to list the actual countries of origin, but to find the list, you might need to don reading glasses.

Look beyond the labels. Like consumers who want to preserve rainforests, those who want to preserve American jobs can research brands and products online.

Of many websites that offer such background, Hasler suggests www.sourcemap.com. It’s a crowdsourced directory of supply chains, using colorful maps to trace the components of an iPhone as they move around the globe. You can confirm that a manufacturer like American Apparel actually lives up to its name.

“If you’ve done the research, you have an opportunity to have an impact with your purchasing,” says Hasler.

Over time, you should find increasing options to do so, Hasler adds. More American manufacturers are onshoring some of their supplies — moving their operations back to the U.S. — as they find Asian firms sometimes carry hidden costs.

“If you discover a quality problem, you might have to wait three months before you can get quality replacements,” he explains. “Or you might have to air-ship it. In the end, it costs you more than if the shop was up the street in Round Rock.”

Faculty in this Article

Michael Hasler

Lecturer; Associate Academic Director for the Supply Chain Management Center of Excellence McCombs School of Business

Michael Hasler is a lecturer at the Red McCombs School of Business at the University of Texas at Austin where he teaches both graduate and...

Michael Hasler teaches in the Texas Executive Education program, featuring open enrollment, custom and certificate classes for executives and organization teams.

About The Author

Steve Brooks

Writer,

In a quarter-century as a journalist, Steve Brooks has won two Neal awards for excellence in trade reporting and a Press Club of New Orleans award...

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