20 August 2021

Made in USA

American flag made in China (sunwardflag.com/american-flags-should-be-made-in-america/).

Welcome back. Thanks for stopping by. I’ve got some news you may have missed. The Federal Trade Commission finalized a Made in USA Labeling Rule, effective 13 August.

In short, the rule prohibits Made in USA labels on products unless: (1) final assembly or processing of the product occurs in the U.S., (2) all significant processing that goes into the product occurs in the U.S. and (3) all or virtually all ingredients or components of the product are made and sourced in the U.S.

Hat that Warren bought in 2002 during a research study at the Naval Air Weapons Station in China Lake, Calif.
To be clear, the rule does not change the FTC’s requirement that imported products show information regarding the country of origin, and there is no requirement for products made in the U.S. to be labeled. The Made in USA label is solely for marketing purposes. The new rule is to stop deceptive claims.

The marketing Made in USA claim on the Naval Air Weapons Station hat label.

You might ask, “Does country of origin matter?”

“Made in USA” Didn’t Matter
A study presented in 2015 by a researcher with Towson University examined the importance of country of origin in consumers’ decision-making process.

The researcher conducted an internet-based empirical analysis of factors important to nearly 900 U.S. consumers when considering the purchase of a small home appliance. The focus was the consumers’ perception of a Made in USA claim separately and compared to a Made in China claim.

The analysis showed that country of origin was one of the least important factors in a purchase decision. Moreover, at least in 2015, products with a Made in China label were seen more favorably than those with a Made in USA claim.

Wait! “Made in USA” Does Matter
A recently released paper by researchers with the University of Chicago also examined the effect of the Made in USA label on consumer demand.

They studied four brands that had been the subject of FTC investigations for deceptive Made in USA claims. The brands included Gorilla Glue, Loctite Glue, Gorilla Tape and Tramontina cookware.

Comparing sales before and after the label was removed from the products as well as from advertising and websites, they found three of the four brands were affected negatively. Weekly store sales of Tramontina cookware dropped 19.5%, Loctite Glue, 6.1%, and Gorilla Glue,1.9%. The fourth brand, Gorilla Tape, experienced a “trend decline.”

Tramontina, a Brazilian company that makes kitchenware in several countries, including the U.S., was investigated by the FTC for deceptive Made in USA claims (Graphic from Amazon).
Pursuing the analysis further, the researchers conducted over 900 three-day auctions on eBay, selling a single product, screen protectors for handheld devices. They compared consumer demand when the product was advertised with and without the Made in USA claim.

The eBay experiment showed the claim mattered. Auction transaction prices were 28% higher when advertised as Made in USA. While the higher prices may not be enough to justify relocating manufacturing to the U.S., the increase certainly provides incentive to display the claim.

Wrap Up
Two studies aren’t enough to address the importance of country of origin in the global marketplace. Though I scratched the surface with two, it’s a popular topic.

Does a product’s country of origin matter to you? Did your concern arise over the last several years? Is your concern related to trust in product quality, support for American workers or the economy, patriotism or other factors? Is your concern directed only at China?

Once again, many thanks for stopping by. I hope it was worth your time.  

FTC’s new Made in USA rule:
Towson University study of Made in USA: link.springer.com/chapter/10.1007/978-3-319-18687-0_103
University of Chicago study of Made in USA: papers.ssrn.com/sol3/papers.cfm?abstract_id=3468543
Article on Univ. of Chicago study on EurekAlert! website: www.eurekalert.org/pub_releases/2021-06/ifor-di063021.php

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