Friday, September 06, 2013

What does "Made in the USA" mean?

Yesterday's question was about Germany; taking a different tack, the All About Advertising blog has a post on “Made in the USA” that I find puzzling.  The claim is that the FTC’s rules for “Made in the USA” are too restrictive, because regular consumers usually define “Made in the USA” as “where the manufacturing facility is physically located” rather than “all or virtually all of the manufacturing costs, including the cost of inputs, is of domestic origin.” 

OK, that is plausible (though my guess is that most consumers haven’t thought a huge amount about marginal cases).  What I don’t get is the evidence offered: a chain email praising companies that manufacture in the USA versus companies that don’t because the former employ Americans.  (E.g., “MY CHALLENGE TO YOU IS to start reading the labels when you shop for everyday things and see what you can find that is made in the USA. The job you save may be your own or your neighbor’s!”).  The email repeats “made in the USA” a bunch, but never defines it, and I can’t see any evidence that the sender thinks that the location of the manufacturing facility is dispositive if, for example, all the parts are imported from China. 

It is certainly true that the scenario “parts made in China, assembled in US” probably involves more American jobs than “made in China.”  But it is equally true that “parts made and assembled in US” involves even more American jobs than that.  Part of the issue, entirely unanswered by this email, is whether someone interested in maximizing American jobs would think “parts made in China, assembled in US” is a good deal, and that depends on what the alternative is.  If one believed that the manufacturer would move everything to China if not allowed to use “made in the US” as a marketing inducement on the product, then maybe allowing that label is an American-jobs-protective move.  But if one believed that allowing broad use of “made in the US” allowed importers of foreign-made parts to make the same marketing claims as users of US-manufactured parts, then broadening the definition weakens the marketing advantage of US manufacturers and therefore risks American jobs. 

What I really doubt is that the email writer, or most of the recipients, parsed the question that finely.  If asked, they might well say that “parts made overseas, assembled in US” is better than nothing.  But I suspect they might want that label, rather than a generic “made in the USA” label, if they were asked to consider the niceties.

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