What Is ‘Made in America’ Worth?

Probably more than you think. As more manufacturing returns to U.S. shores, early signs show that a “Made in America” label is a serious competitive advantage.

Think of the label “Made in America.” What brand images come to mind? Odds are, you’ve conjured up a picture of one of two scenes.

First, there’s that rugged, sturdy (if underappreciated), no-frills, American quality. It’s the stuff of Chrysler Automotive’s much-praised “Imported from Detroit” ad, and Bruce Springsteen’s “Born in the USA.” If you buy this two-fisted version of “Made in the USA,” you also likely buy American because you’re patriotic. You don’t care if elites would rather buy a BMW.

The other Made-in-America vision embraces an artisanal, moral, locavore sensibility. Think of Whole Foods, or, in apparel, Brooklyn Industries. In this vision, you buy boutique American goods because they’re holier-than-corporate and show off your elevated taste (not to mention your ability to afford such taste).

If one of these images is all that comes to mind, though, recent research and certain branding experts suggest that you’re selling “Made in America” short. The label still has far more international cachet than Americans are likely to give it credit for. Even in the United States, buyers have proven that they’ll pay considerably more for some kinds of American-made goods–simply because they expect them to be a better value.

International perceptions of “Made in America,” are rooted in global perceptions of the country itself–and that news is surprisingly favorable for domestic manufacturers. Simon Anholt is a British branding consultant and creator of the Anholt-GfK Roper Nation Brands Index, which measures a nation’s international reputation. In the market-research company’s most recent survey, released in late October, the U.S. ranked first–for the fourth year in a row.

“The strengths of America’s international standing continue to be innovation, opportunities, and vibrancy,” Anholt said in a press release. Germany placed second and the U.K. third. China didn’t crack the top 10.

None of this would come as a surprise to Drew Greenblatt, president, and owner of Baltimore-based Marlin Steel Wire Products, an Inc. 5000 honoree that manufactures only in the United States.

“American manufacturers have a reputation for getting it right the first time,” Greenblatt says. “And a lot of clients are comfortable that, if they don’t get it right, American companies will bend over backward to make good on it quickly.” Since companies that manufacture in America often can’t compete on price, they have to compete on quality, service, or speed–and they have a reputation for doing all they can to defend that brand edge.

Part of the advantage Greenblatt enjoys is technological. Forced to compete with companies that benefit from lower labor costs overseas, American manufacturers have invested heavily in advanced plants. That tends to provide an edge in manufacturing precision and flexibility.

“I can manufacture to tolerances of 10 microns,” he says. “My Chinese competitors can’t match that.”

And domestic customers? While U.S. buyers tend to be less impressed by American quality and innovation, they are willing to cut the “Made in USA” label considerable slack. In a study of consumer perceptions of clothing made in the United States vs. that made in China, Jung Ha-Brookshire, an assistant professor at the University of Missouri, found that when offered a choice between a shirt made in the U.S. with U.S. cotton and one made in China with local materials, American consumers strongly preferred the “Made in USA” label. They also valued the American-made garment nearly twice that of the Chinese one.

American Giant, a San Francisco-based maker of cotton shirts and sweats, trades on that preference. But it’s also cautious not to presume too much about consumers’ patriotic tendencies.

“We try to bring business savvy and innovation to bear so that we can compete on price and quality with foreign-made apparel,” says CEO and founder Bayard Winthrop. “By shouting that you’re American-made, you’re asking people to make an exception for you and accept lousy quality or higher prices for a ‘Made in USA’ label. You can’t build a scalable business that way.”

Contrary to the thrust of much election-season advertising, America’s reputation seems to be improving, not receding. In the Nation Brands Index, the United States was the only nation among the top 10 to improve its standing. A lot of this has to do with the American economy. While the United States has emerged sluggishly from the 2008 financial crisis, its recovery is firmly established and is now more than three years old. The U.S. faces nothing like the 25% unemployment of Spain or the shrinking GDPs of most European nations. “Success is a major dimension of the American brand,” as Allen Adamson, managing director of global-branding outfit Landor Associates, told Businessweek.

At the same time, the labor-cost penalty that American manufacturers have to compensate for continues to shrink. Greenblatt says that his Chinese competitors used to pay workers 28 cents an hour but now pay $2.38, not including the 50% tax for the Chinese version of social security.

The U.S. is still not a cheap place to manufacture, admits Greenblatt, but he is content to compete internationally on U.S. companies’ reputations for agility and quality.

“We’re not selling to ignorant people,” he says. “Our clients have plenty of choices, but they choose us because they are confident we’ll deliver what we promised. Regardless of what anyone says, the rest of the world has a lot of faith in American ingenuity.”

---

SOURCE: INC.com