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At Work: Manufacturing Jobs Returning To U.S.

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A worker in Gautier, Miss., pours molten metal into a mold on a job site. (Photo: Mike Brantley, AP)

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Andrea Kay
Who would have thought that jobs like metal-refining furnace operators and tenders would be making a comeback in the year 2012?

But they are.
Such jobs, done by folks who “operate or tend furnaces … to melt and refine metal before casting or to produce specified types of steel,” as defined by the Bureau of Labor Statistics, have increased 16% from 2010 to 2012 after declining 16% from 2007 to 2009. That’s according to a study conducted by CareerBuilder and Economic Modeling Specialists International that tracked U.S. labor trends and includes data from more than 90 national and state sources.

And that’s not all. Other jobs in manufacturing now seeing a revival that had major job losses in the recession include metal pourers and casters. These people “operate hand-controlled mechanisms to pour and regulate the flow of molten metal into molds to produce castings or ingots,” according to BLS.

Also rallying are jobs for computer-controlled machine-tool operators for metal and plastic production and engine and machine assemblers. The resurgence is highest among computer-controlled machine tool operators, which has even more workers now than in 2007.

One thing is clear: These jobs are related to the types of industries tied to energy, production, technology and transportation.

You can find these jobs at such employers as iron and steel mills and steel product manufacturing and machine shops. They are at manufacturers who make machinery for mining, agriculture, engine and turbines, and plastic and rubber as well as manufacturers that make equipment for companies that make cars, motor vehicle bodies and parts, railroad stock and aerospace.

Yes, the country is “predominantly a service economy,” writes Professor Farok J. Contractor of Rutgers Business School in YaleGlobal Online Magazine. “But the nation is still the world’s biggest manufacturer,” he says, with “unrivaled productivity in terms of manufacturing value-added per employee or per hour worked.”

Among the factors cited for the resurgence is that “jobs once offshored are now returning in industries including automobiles and even unlikely areas like furniture and televisions.”

One of several factors that could inhibit the resurgence is U.S. companies’ lack of an apprenticeship system, he says.

The study also looked at other industries where new jobs have accelerated the most. They are in markets tied to health care and consulting.

Overall, job growth has increased by double digits in the past two years in these industries:

• Internet publishing and broadcasting and Web search portals — a 30% growth.

• Drilling of oil and gas wells, up 29%.

• Electronic shopping, up 23%.

• Crude petroleum and natural gas extraction, up 21%.

• Temporary help services, up 21%.

• Machine shops, up 18%.

• Marketing consulting services, up 13%.

• Computer systems design services, up 12%.

• Specialized freight, up 11%.

• Home health care services, up 10%.

I know it’s not easy to pick up and move. But if you are wondering where these jobs are, the survey found that the 10 areas with the most job growth are in some surprising places hard hit in the recession such as Detroit and Phoenix.

The other areas are Austin; Dallas-Fort Worth; Houston; Oklahoma City; Raleigh, N.C.; Salt Lake City; San Francisco; and San Jose.

After a depressingly negative election campaign season in which we were led to believe that the automobile industry was our last vestige of manufacturing and that the rest of our manufacturing had been outsourced to other parts of the world, statistics suggest otherwise.

In fact, they seem to indicate that we indeed are still No. 1 in the world. And that products — and jobs — are still made in America.

SOURCE:  USA Today

Career consultant Andrea Kay is the author of Life’s a Bitch and Then You Change Careers: 9 steps to get out of your funk and on to your future, www.andreakay.com orwww.lifesabitchchangecareers.com. See an index of Kay’s At Work columns here. Write to her: andrea@andreakay.com. Twitter: @AndreaKayCareer.

Aldermen Say – City Should Buy Milwaukee-Made Goods

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The Milwaukee Common Council approved a measure that would require the city to purchase Milwaukee-made goods, provided the purchase meets certain criteria

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NOV 27, 2012
Milwaukee Aldermen adopted an ordinance Tuesday, requiring the city to buy Milwaukee-made goods, when purchases total more than $30,000. The ordinance specifies that the “Milwaukee-made” purchases must not increase the cost by more than 12 percent.

Products are defined as Milwaukee-made if they are manufactured, mined or produced in the city of Milwaukee, “and the cost of the components made in Milwaukee County used in the production of the good exceeds 50 percent of the total cost of all the components.”

According to the ordinance, if a Milwaukee-made or Milwaukee County-made good is not available for purchase, the next choice should be an “American-made good.”  

The ordinance states that taxpayer funds should maximize the creation of American jobs “and restore the economic vitality of the community.” It mentions the fact that Milwaukee has a high unemployment rate, which “negatively affects the city’s property tax base, revenues and expenditures for city services.”

ABC World News with Diane Sawyer Invites Viewers to Have a “Great Made in America Christmas” — Are You In?

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By David Ford
Nov 28, 2012

“World News with Diane Sawyer” is once again asking viewers if they are “in” for “The Great Made in America Christmas.” The holiday installment of the popular “Made in America” series kicks off on Wednesday, November 29 asking families from across the country “are you in?” for creating more American jobs this holiday season by buying more American-made gifts. The National Retail Federation estimates Americans will spend more than $586 billion this year on holiday gifts and goodies –  that’s $750 per shopper. Economists tell “World News” that if we all spent just $64 more on gifts with a “Made in America” label, we could create 200,000 new American jobs.

Reports will air each Wednesday during the month of December as “ABC World News” weekend anchor David Muir scours the country for the best gifts that are made in American towns. Along the way he will introduce viewers to some proud American businesses, the people they employ, and the ingenious products they make.

Viewers who want to join in on “The Great Made in America Christmas” this holiday shopping season can get more information at ABCNews.com/WorldNews.

“ABC World News with Diane Sawyer” airs at 6:30 p.m., ET on the ABC Television Network.  Michael Corn is the executive producer of the broadcast. Follow Diane Sawyer and the “World News” team online: @DianeSawyer; @ABCWorldNews; facebook.com/DianeSawyer; facebook.com/WorldNews.

About “Made in America”
In 2011 “World News with Diane Sawyer” kicked off a special series, “Made in America,” to examine American manufacturing, the economy, and what simple things people can do every day to help power up jobs in this country. “World News” continues to highlight various American businesses that are contributing to their local economies and creating more jobs here in the U.S.

Follow the Made in America Movement on Facebook, Twitter, Pinterest, Tumbler, and Google+
Email us for corporate membership and/or sponsorship details: info@TheMadeinAmericaMovement.com

SOURCE: ABC News

A Documentary Examines the ‘Made in China’ Label

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By PETER NAVARRO
“I personally do look at the labels of where things are made, but sometimes I go to buy things and it’s impossible to find something that isn’t made in China.” These words from U.S.-China Commission member Carolyn Bartholomew from my new documentary film “Death By China” aptly summarize a dilemma many American consumers find themselves in as they learn more about the economic, social, and moral costs of buying seemingly cheap “Made in China” products.
(A spokesman for the Consulate General of China in Los Angeles didn’t return a request for comment for this essay.)

Since China joined the World Trade Organization in 2001 and gained full access to American markets, the AFL-CIO claims that over 50,000 factories in America have disappeared along with more than 6 million manufacturing jobs. For these reasons, AFL-CIO President Richard Trumka in the film urges people who pick up a product Made in China to “think about your relative that just got laid off or the factory that just got shut down. Think about the school that is doing with less because the manufacturing base has gone and the tax base has left. Think about the lower income that you’re receiving now because we’re not making products, and we’re not buying our own products.”

And here’s something else former Canadian Minister of Parliament David Kilgour wants you to think about as you consider your next Made in China purchase: That product may well have been made by prison labor. To emphasize his point, Kilgour in the film relates this darkly comic and well-documented tale about Charles Lee, an American citizen arrested in China and detained in one of China’s forced labor camps for three years: “When Lee was finally released thanks to pressure from the American people, he came back to New Jersey, and he was in a store, and he saw these big [Homer Simpson] slippers that he’d made in the work camp.”

Beyond the issues of jobs and human rights, there is also the prodigious air, soil, and water pollution generated annually by China’s factory floor. In fact, a study conducted by the World Health Organization found that China now has 16 of the 20 most polluted cities in the world.

Perhaps most unsettling is the well-documented tendency of at least some unscrupulous entrepreneurs in China to alter their products with toxic ingredient substitutes as a means of cutting costs and boosting profits. Well-publicized scandals to date have included the spiking of both pet food and baby formula with deadly melamine and the blood thinner heparin with lethal oversulfated condroitin sulfate. We’ve also seen lead paint in toys, antifreeze in toothpaste, baby cribs with choking hazards, tainted drywall, the list goes on and on.

The problem as Forbes columnist Gordon Chang describes it is “a political system that does not punish manufacturers for bad products. And it’s because it’s the nature of the political system. The Communist Party does not allow independent prosecutors, doesn’t allow a free press, doesn’t allow people to complain about bad products.”

Given the chronic failure of America’s politicians to confront China on these issues, in my opinion, if more consumers would pause at the Made in China label, that would be all to the good. As Judith Samuelson suggests at the end of the film: “I think that at every level, people could boycott to some extent, and there would be a shot heard around the world.”

Peter Navarro is a business professor at the University of California-Irvine. He wrote, produced, and directed the documentary “Death By China.” For for more information go here.  

Bangladesh Factory in Fire: WalMart & Disney Among Clients

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Firefighters hose down a blaze at a 10-story clothing factory on Nov. 26 in the Dhaka suburb of Uttara, Bangladesh. The fire broke out as people mourned more than 110 factory workers killed in a fire two days earlier at the Tazreen Fashion plant. | Photo Credit: AFP/Getty Images
DHAKA, Bangladesh (AP) — Amid the ash, broken glass and melted sewing machines at what is left of the Tazreen Fashions Ltd. factory, there are piles of blue, red and off-white children’s shorts bearing Wal-Mart’s Faded Glory brand. Shorts from hip-hop star Sean Combs’ ENYCE label lay on the floor and are stacked in cartons.

An Associated Press reporter searching the factory Wednesday found these and other clothes, including sweaters from the French company Teddy Smith, among the equipment charred in the fire that killed 112 workers Saturday. He also found entries in account books indicating that the factory took orders to produce clothes for Disney, Sears , nd other Western brands.

Garments and documents left behind in the factory show it was used by a host of major American and European retailers, though at least one of them — Wal-Mart — had been aware of safety problems. Wal-Mart blames a supplier for using Tazreen Fashions without its knowledge.

The fire has elevated awareness of something labor groups, retailers and governments have known for years: Bangladesh’s fast-growing garment industry — second only to China’s in exports — is rife with dangerous workplaces. More than 300 workers there have died in fires since 2006.

Police on Wednesday arrested three factory officials suspected of locking in the workers who died in Saturday’s fire, the deadliest in the South Asian country’s less than 35-year history of exporting clothing.

Local police chief Habibur Rahman said the three will be questioned amid reports that many workers trying to escape the blaze had been locked inside. He said the owner of the factory was not among those arrested.

The three officials were arrested Wednesday at their homes in Savar, the Dhaka suburb where the factory is also located. Rahman did not identify the officials or give their job status.

Workers who survived the fire say exit doors were locked, and a fire official has said that far fewer people would have died if there had been just one emergency exit. Of the dead, 53 bodies were burned so badly they could not be identified; they were buried anonymously.

The fire started on the ground floor, where a factory worker named Nasima said stacks of yarn and clothes blocked part of the stairway.

Nasima, who uses only one name, said that when workers tried to flee, managers told them to go back to their work stations, but they were ignored.

Dense smoke filled the stairway, making it hard to see, and when the lights went out the workers were left in total darkness. Another surviving worker, Mohammad Rajiv, said some people used their cellphones to light their way.

“Everyone was screaming for help,” Nasima said. “Total chaos, panic and screaming. Everyone was trying to escape and come out. I was pulling the shirt of a man. I fainted and when I woke up I found myself lying on the road outside the factory.

“I don’t know how I survived.”

Rajiv said the factory conducted a fire drill just three days before the fire broke out, but no one used the fire extinguishers. “Only a selected group of workers are trained to use the extinguishers. Others have no idea how to use them,” he said.

Now windows at the eight-story factory are broken, sewing machines melted or burned to ash. Much of the clothing on the lower floors was incinerated. Nightgowns, children’s shorts, pants, jackets and sweat shirts were strewn about, piled up in some places, boxed in others.

Prime Minister Sheikh Hasina and Interior Minister Muhiuddin Khan Alamgir have said arson is suspected. Police say they have not ruled out sabotage.

Wal-Mart had received an audit deeming the factory “high risk” last year, said it had decided to stop doing business with Tazreen, but that a supplier subcontracted work to the factory anyway. Wal-Mart said it stopped working with that supplier on Monday.

Calls made to The Walt Disney Company and to Sears Holdings were not immediately returned.

Local TV reports said about 3,000 garment workers held protests over the fire Wednesday, blocking roads and throwing stones at some factories and vehicles. It was the third straight day of demonstrations, and as they did previously, factories in the area closed to avoid violence.

Police used batons to disperse the protesters, but no injuries were immediately reported.

According to local television, most factories in the area closed after opening briefly because of the protests — a common tactic to avoid violence.
—–
Associated Press writer Farid Hossain in Dhaka, Bangladesh, contributed to this report.

SOURCE: USA Today

Is Traditional America Dying?

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Tim Martin
11/18/2012
On a recent Fox News show, Bill O’Reilly, the rabble-rousing host of the “O’Reilly Factor” stated that President Obama’s reelection was due to “entitlement” voters. He went on to call Obama the poster boy for “progressive secularism,” a movement bent on destroying traditional America and replacing it with dependency and poverty.
Bill’s comments made me wonder: is traditional America really dying? And is our country falling apart because of it? Or is O’Reilly spouting the politics of panic and fear because a free society is becoming more free? Is he hearkening back to a golden era of simplicity that never was?

Actually, I was not surprised by O’Reilly’s irrational observations. The Republican party threw every weapon it had at President Obama during the recent election, including racism, birtherism, homophobia, xenophobia, socialism, communism, sexism, tax laws, abortion, birth control, legitimate rape, Kenya, NPR and Big Bird.

It didn’t start there, either. Those Chicken Little cries of “The Sky is Falling” started long before President Obama ever arrived on the scene.

When we declared our Independence from England, there were some who said it would be a disaster and was doomed to fail. When we ended slavery, others also declared that it was the end of America. Likewise, when we stopped segregation, gave women the right to vote, and allowed gays to openly serve in the military. They were wrong in all cases, and today we are a stronger nation because of the changes.Despite O’Reilly’s accusations about the president, which include everything from losing the big picture of God and country, to bowing and apologizing to corrupt leaders, to wreaking havoc on society with welfare, abortion and the public school system, to running us off a fiscal cliff with entitlements for the poor, the death of traditional America has little to do with Obama. It has more to do with the wealthy. Ask yourself this: why aren’t tax perks for the rich, agricultural subsidies for mega-farms, $700 billion dollar bank bailouts and lobbyists securing legislation favorable only to the rich labeled entitlements? I don’t know about you, but I call that welfare at the highest level.

The real truth about traditional America, though, is that this country is shifting, not sinking. Someone needs to tell O’Reilly that you can’t run a modern government based on ideals that are hundreds of years old (or thousands, if you believe the Bible). It was once legal to own people, to force employees to work in unsafe conditions, and to not allow women the right to vote. Face it, traditional America was never good for women, Native Americans, African-Americans, Asians, the disabled or the elderly.

It’s funny how quickly we forget the bigotry, homophobia and racism that was so common in our past. Remember the centuries of slavery, followed by segregation, religious intolerance, sweat factories, Salem witch hunts, McCarthy era communism, exploitation of immigrant labor, racism, anti-Semitism, economic oppression of the poor, and the breaking of treaties with Native Americans? If that’s tradition, who needs it?

Bill O’Reilly is cherry picking history. The idealized version of America he envisions is one where white men were the dominant social class, diversity was feared, a person’s worth was measured by the size of their bank balance, and the regulation of a woman’s body by church and state was good. Bill would like to go back to a time when the government, not you, decides who you can and can’t marry. Back to when the votes of minorities and women didn’t count, and where it was perfectly OK for individuals in power to force their beliefs and ideology on others.

I hate to burst O’Reilly’s bubble, but American history is no Norman Rockwell painting.

If you’re searching for traditional America, the best place to look is in the White House. President Obama and the first lady are strong supporters of traditional values of faith, and caring for one’s neighbors and family. They don’t think people should go bankrupt over health insurance or go hungry for lack of food. They want all religious institutions protected, but don’t want them (or the government) to dictate who should have access to contraceptives. The president and his wife believe that the education of our children is important, and that we need to do everything possible to keep them happy and healthy. That’s the kind of America I want to carry forward into the future.

Tim Martin resides in McKinleyville
SOURCE:  Times-Standard

Made In America Has A New Ring

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TJ McCue
11/19/2012
It is no surprise that 80 percent of U.S. consumers vote for American-made. But over 60 percent of Chinese consumers also say that they are willing to pay more for products labeled “Made in USA” than for those labeled “Made in China,” according to new research released by The Boston Consulting Group (BCG).
In surveying Chinese consumers, BCG found a willingness to pay more for U.S.-made goods. The results showed the following:

  • More than 60 percent of Chinese consumers are willing to pay more for Made in USA goods.
  • Nearly 50 percent of Chinese consumers prefer a product made in the U.S. to a China-made product of equivalent price and quality.
  • The premium that Chinese consumers are willing to pay ranges from about 10 percent to almost 80 percent in the categories tested.
  • More than half had chosen U.S.-made products over less expensive Chinese goods at least once in the month before the survey.

The data shows that Made in the USA resonates even stronger for U.S. consumers, of course.

Naturally, this presents a great opportunity for the many small businesses and manufacturers to tap into a new market like China with over a billion people. Many have tried to tap overseas markets only to fail because of the cultural differences, government red tape (on both sides), and shipping logistics, just to name a few of the challenges. The good news is there are many international trade resources for navigating this complex arena.

If you are looking to understand what your competitors are shipping, you can check out a company like Manifest Journals where a business connection of mine, Michael Heffernan, helps companies make sense of U.S. Customs Import Trade Data. Or head to the International Trade Administration to start your exporting journey. The USA.gov site on international trade is also a powerful resource.

The findings—part of BCG’s ongoing study of the changing global economics of manufacturing and its Made in America, Again research series—support previous BCG analysis showing that the U.S. is becoming increasingly attractive as a location for making certain products for the U.S. market and as a base for global exports.

The U.S. has improved its cost competitiveness compared with China and the advanced economies of Western Europe and Japan, leading BCG to estimate that higher U.S. exports—combined with production “reshored” from China—could create 2.5 million to 5 million new U.S. jobs in manufacturing and related services by the end of the decade (which I’ve reported on earlier this year).

In both the U.S. and China, respondents of all age groups and income levels expressed a concern for quality, a key driver of the consumer preference for U.S.-made products. Eighty-five percent of U.S. consumers and 82 percent of Chinese said they “agree” or “strongly agree” that they feel better about Made in USA quality. Patriotism is another strong consideration among U.S. consumers: 93 percent said that they would pay more for U.S.-made goods in order to keep jobs in the U.S., and 80 percent said that buying U.S. products demonstrates patriotism.

In contrast to U.S. and Chinese consumers, European consumers strongly prefer products made in their own countries. More than 65 percent of consumers in both Germany and France said that they would be willing to pay more for products made in their home country than for those made in the U.S.

SOURCE: FORBES

Shopping for American-Made Holiday Gifts – Renewed Focus on Gifts Made in USA

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With many shoppers in a patriotic mood after the election, the focus turns to gifts made in the USA this holiday season.
Get ready for a red, white and blue Christmas.

Read more

The Revival of American Manufacturing: An Update

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Nov. 15, 2012
Chris Mayer
You know those little throwaway plastic red cups that you see at parties? You can buy a case of 288 of these Solo red plastic cups for about $36. I’ll do the math for you: That’s about 12.5 cents per cup. It’s a cheap, low-end item. Made in China, right?

Nope. Made in the USA. The Solo Cup Co. makes them in Lake Forest, Ill.

Recently, another company started making an almost identical-looking reusable red cup. Trudeau USA makes millions of these cups, which they call simply the Red Party Cup. This was a job that in another year not so long ago might’ve headed to China. Not today.

American manufacturing is quietly enjoying a revival on some levels. Goods once made in China are now coming back to the USA — a process called re-shoring. In May, I wrote to my Capital & Crisis readers about “A New Trend ‘Sneaking up on People’”. I talked to Scott Huff, a principal at Innovate International, an engineering design and contract manufacturer for several industries. Scott was actively involved in re-shoring. Recently, I talked to Scott again to get an update.

“That red cup has been one of the most successful things we’ve re-shored,” he told me. I love this story precisely because it goes against what so many people think they know. They think US manufacturing is in inevitable decline. The red cup story is another strand in a growing thread of anecdotal evidence to the contrary.

As Scott says:
“It’s against the paradigm that people have accepted [about what is made in China]. But people are usually about a decade behind in their perceptions. Anything that’s got a significant amount of money on the bill for shipping to the US, you’ve got to consider making it in the US. The shipping that we’re saving, and the fact that we don’t have to carry so much inventory, frees up cash.”
This is especially important now, when it is hard to finance trade. A business always has a certain amount tied up in bills yet to be collected (accounts receivable) and inventory. Usually, banks will finance a decent chunk of this. I was a banker before I started writing newsletters. Financing these trading assets was part of my meal ticket. (The other was financing real estate.) But today, banks are reluctant lenders, for a lot of reasons we won’t get into now.

The end result is kind of like what we see in the mortgage market: superlow rates that not many borrowers can access. Ergo, manufacturers need to run lean these days.

“So,” Scott continues, “if you can make your manufacturing process leaner, you can free up cash. One way to do that is to make it local and turn over the dollars faster.” This way, you don’t have cash sitting in goods on a boat from China.

Driving the renaissance is more than just shipping costs, of course. Many of the factors we talked about back in May are still in play today. Namely: It is getting expensive to do business in China.

“The glory days of China’s export business are over,” Scott says. “Now it is down to hard work. The adjustment in the renminbi [China’s currency] took some of the pressure off the export companies, but the cost of living continues to just crawl upward — the cost of food and the cost of housing, especially. Those don’t come down. There is only so much you can do with currencies.”

Cheaper US energy prices also help along the re-shoring trend. Fertilizer and chemical firms want to put down roots in the US and plug into cheap sources of natural gas. In Asia, natural gas costs at least four times the price.

“Natural gas production has gotten to the point where we can’t store it all,” Scott says. “Natural gas prices should be even lower. And things that include natural gas as a raw material, such as olefin plastics, propylene and ethylene, should be cheaper to make here. We should have the cheapest propylene and ethylene in the world in the US.”

The same could happen with oil. US production is up 25% since 2008 as new technology cracks up new supplies. As I write, the price of West Texas Intermediate, the US benchmark oil price, is down nearly 16% on the year.

So China’s cost advantages have been ground away in several ways. Still, there are challenges bringing stuff back to the US — like a dearth of manufacturing know-how.

“You have a base of experience in Illinois and Michigan and places that have traditionally been the centers of excellence for some of these manufacturing processes,” Scott said. “A toolmaker who is capable and has kept up with the technology — well, let’s just say there aren’t very many unemployed toolmakers. There’s plenty of opportunity now as people are trying to re-shore stuff.”

I was fascinated by a role reversal Scott described.

“The vast majority of my design engineers are Chinese and work in my office in China,” Scott said. “And these are guys that have been with me for five years or more, in some cases as long as I’ve been in China. I’ve been there eight years. They’ve got a lot of experience.

“So,” he says with a chuckle, “one of the things we’re starting to do is bring some interns from the States to work with them. It’s kind of a role reversal. We have design engineers that actually put lines on paper in China for the products being made in Chicago. Eight years ago, I was taking a handful of older American guys to China with me to help work with these young Chinese designers. And now it’s going back the other way. Now I have young American graduates I’m shipping over there for six months to get experience with people that know what they’re doing.”

Incredible, isn’t it? All things change. As I like to say, if you stand around long enough in markets, you’ll see them come full circle.

US consumers also favor US-made products — to a point. “People love this story,” Scott said. “Having US-made products is an advantage in the marketplace. But on consumer products in particular, as much as people love US-made products, there is a limit to what they’ll pay for them. The economics of it all will still rule the day.”

There are a handful of publicly traded US manufacturers headquartered in places like Milwaukee, Wis., and Mansfield, Ohio, that are lean and world-class competitors. They are in good position to gain from this trend. But, as always, patience is key.

The stock market may be somewhat overzealous in its enthusiasms at this very moment. While keeping my eye on this still-nascent trend, I’ve determined to wait for better prices — and they will come, I have no doubt. In the meantime, though, the revival of American manufacturing is an important story to keep in mind…especially for contrarians who don’t mind getting paid to go against the crowd.

Made in USA Label Popular in China, Too: Study

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China consumers are willing to pay more for certain products Made in USA. | Photo Credit: Getty Images

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Nick Zieminski
November 14, 2012
A new study found China consumers are willing to pay more for a product labeled “Made in USA” because they find those products to be higher quality.
Consumers in China are willing to pay a premium for certain products labeled “Made in USA” because they see them as more durable and of higher quality, a new study found.

The report, by the Boston Consulting Group (BCG), found 61 percent of Chinese consumers would pay more for a product made in the United States. When products are of similar price or quality, about 47 percent prefer the U.S.-made alternative, more than double the number who would pick the Chinese-made item.

“The Chinese consumer is quietly concerned about what they’re getting,” said Hal Sirkin, a BCG senior partner and co-author of the BCG study.

Consumers are responding to recent cases of lead paint in toys, tainted milk and other scandals that, in some cases, led to severe penalties for those responsible. As more Chinese enter the middle class, they will increasingly look for value in the goods they buy rather than just the lowest price, which will pressure Chinese manufacturers to improve quality, Sirkin said.

Chinese consumers’ preference for U.S. goods, of course, is not as strong as U.S. consumers’, and its causes are different: Chinese shoppers more often cite durability and environmental impact than do shoppers in the United States.

But the survey still shows a potential advantage for manufacturers or retailers of consumer products, who may be able to charge higher prices for goods made in the United States.

BCG cited several examples of U.S.-based manufacturing: Dell Inc. makes computers; Google Inc. makes Motorola-branded phones; and General Electric Co manufactures home appliances in Kentucky.

PREMIUM FOR U.S. GOODS

The survey of more than 5,000 consumers helps support the argument that more manufacturers should base production in the United States, according to BCG.

As the cost of producing and shipping goods from China rises, more U.S. manufacturers are expected to expand U.S. capacity, BCG predicts. And as U.S. factories churn out more autos and auto parts, electrical equipment and furniture, they could spark an industrial renaissance with 5 million new jobs, it says.

BCG recommends retailers lock in U.S. suppliers to attract shoppers, and is advising consumer brands to make their U.S. sourcing as visible as possible. For now, relatively few do.

“If you’re going to have things that have a long life, like mechanics’ hand tools, there’s real premiums for ‘Made in USA’ over a foreign brand because the quality is better,” Sirkin said. He named Stanley <SWK.N> brand tools as an example.

In both the United States and China, more than 80 percent of those polled cite quality as a reason to pay more for U.S. goods. Baby food, household appliances, tires, car parts and furniture are items for which most people are willing to pay a premium, generally of 10 percent or less.

Some categories are outliers: shoppers in China would pay 77 percent more for U.S.-made athletic shoes, a status symbol.

Patriotism motivates U.S. consumers. More than nine in 10 cited domestic jobs as a reason for choosing “Made in USA” goods. Overall, 81 percent of Americans are likely to pay more for goods that carry the “Made in USA” label. More than a quarter of people are willing to pay at least 10 percent more for appliances, furniture, and baby food.

The BCG study, to be published Thursday, focused on consumer goods rather than pricy capital equipment geared toward business and government. It found only minor differences in attitudes based on age, income and whether respondents had children.

The appeal of U.S. goods is by no means universal, however. French consumers see U.S.-made mobile phones, shoes or baby toys as less valuable than local equivalents, and almost two-thirds of Germans would pay more for German products.
SOURCE: MSN News

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