Brand Reputation from Made in the USA
Made In America Means Different Things to Different People
These days, most of the things that you purchase inside of any given supermarket, department store, home improvement store, or specialty retailer aren't labeled explicitly as being made in America, or somewhere else in the world. Yes, there is a little sticker on the bar code or in fine print on the tag, but the plain fact is that it really doesn't matter, because rarely, if ever, do you find a side-by-side product choice where you have an American-made product on the shelf next to, say, a Chinese-made product.
This is especially true in consumer goods in day-to-day purchases. At the time of this writing, I just spent $3.74 for a dozen Publix brand large eggs, which means four dollars with tax. Four years ago, eggs were $0.79 a dozen for the exact same eggs. But I've never changed my eating habits to consume less eggs, I just pay the price. That's what most of us do these days because we don't have any choices.
A few other examples would include your morning cup of coffee at Starbucks. A price increase won’t stop you from reappearing at the drive-through line the next day. Another example is gasoline, because we will pay whatever it costs, and for the most part we do not adjust our habits with respect to driving due to a spike in the price of gas. If you go to Lowe's or Home Depot looking for a rake, you should have more than one brand to choose from, but none of them are made in the USA.
It's worth dwelling on this perspective because if you don't have a choice, you will buy what you need, when you need it, at whatever price is on the shelf. There might be some comparison shopping when you shop online, such as Amazon.com, where a search for a simple product (like picture frames), gives you hundreds of choices and price points, but consumers are stuck.
So that brings us to the benefit of having products that are actually Made in America and leveraging that fact to drive increased brand loyalty and trust by consumers. One would think that if the option for Made in America was available, some percentage of the population, especially middle-class working Americans, would lean into the idea of buying an American-made product, for no other reason than to support the American worker.
After 40 years of offshoring and the loss of seven million manufacturing jobs and the corresponding closure of 70,000 factories to offshore firms, this consensus would seem likely, but there's plenty of cynicism that has been applied in the last few years around the notion that Made in America is somehow protectionist and xenophobic. Take for example the Washington Post. Here is a quote from an article written just two years ago, when even the Biden administration was trying to tout the ideas of foreign direct investment (FDI) and increasing the number of jobs in the US:
While it is tempting to view the phrase (Made in America) as an appeal to patriotism and a celebration of the U.S. working class, xenophobia and anti-immigrant fervor have been central themes in its assertion, and in efforts to label American-made goods, for well over a century.
– Washington Post, November, 2022(1)
One can only shake their head at such cynicism, then get back to the reason HermitCrab exists. The Mission of HermitCrab is to reoccupy and revitalize the abandoned “shells” of shuttered manufacturing facilities closed during the offshoring wave of the late 20th Century, producing products, restoring communities, and providing jobs for Americans. This is not xenophobic not anti-immigrant, it’s only common sense and good business, for the HermitCrab customers, the workers, and the communities that will benefit from this movement.
The chart below shows this sentiment to be true – Brand Image is the sixth most important reason to reshore manufacturing back to the US.
Figure 1: Main Drivers for Reshoring (2)
Why “Made in America” Still Means Something
The primary emphasis of today’s class is the emotional aspect of Made in America in terms of brand loyalty and trust. Products made in the U.S. often enjoy greater consumer trust and loyalty. The "Made in America" label stands for quality, ethical production, and community support, boosting brand reputation. While other classes touch upon the economic benefits of reshoring, here are four intangible but important reasons for returning to a “Made in America” mindset:
1. Perception of Quality and Safety: "Made in America" labels often evoke a sense of superior quality and safety among consumers. People tend to trust American-made products because of the rigorous manufacturing standards and quality control measures in place. This perception leads to increased consumer confidence, knowing they are purchasing items that have undergone strict testing and compliance procedures, thereby fostering brand loyalty.
2. Ethical Manufacturing Practices: Many consumers are increasingly concerned about the ethical practices behind the products they buy, particularly regarding labor conditions. American manufacturing is generally associated with fair labor practices, including reasonable wages and safe working environments, due to stringent labor laws. This ethical assurance resonates with socially conscious consumers, who prefer to support brands that align with their values, thus boosting brand trust and loyalty. China’s well-documented history of unethical treatment of workers (i.e. – Uyghurs in western China) has created controversy and unease with US consumers.
3. Patriotism and National Pride: Patriotism plays a significant role in consumer behavior. Many American consumers prefer to buy domestically produced goods as a way of expressing their national pride and supporting their country’s economy. This sense of patriotism translates into strong brand loyalty, as customers are likely to continue supporting brands that contribute to national prosperity and resonate with their pride in American craftsmanship. For hundreds of products that HermitCrab has considered, it is likely that the landed cost will not be more than a few percentage points higher than Asian-based suppliers, but the goodwill and patriotic momentum created by switching suppliers to the US will pay dividends downstream.
4. Transparency and Traceability: Freedom from complex international supply chains means better transparency and traceability in production. Consumers appreciate transparency, as it allows them to understand where and how their products are made. Only recently, in an Asian news outlet, there was a report of toxic substances found within Shein and Temu products. Click here for the story. This has become more and more common, as foreign suppliers take shortcuts in their manufacturing processes that could directly affect consumers in the US. American companies tend to be more transparent about their sourcing and manufacturing processes, leading to greater consumer trust. This transparency not only enhances brand credibility but also fosters a deeper emotional connection between the brand and its customers.
Public and Private Efforts to Increase Made in America
There are numerous examples of both Public (Federal, State and Local Governments) and Private (retailers, such as Walmart) entities that are trying to boost Made in America product choices.
Federal Government Role in Increasing Made in America
One example of the Federal Government getting involved in reshoring is the MadeinAmerica.gov site, which is designed to promote transparency in federal procurement by enabling manufacturers and other interested parties to easily identify opportunities by reviewing waivers to Made in America laws. This renewed emphasis on Made in America laws is a key facet in a broader economic strategy to increase U.S. productivity and competitiveness, as well as the resiliency of our manufacturing base. More examples in a future class!
State Agencies Role in Increasing Made in America
Every state in the HermitCrab ecosystem maintains robust Economic Development agencies at the state and county level. These agencies often look for the large-sized deals, such as FDI, but their work creates a wake for smaller entrepreneurs like HermitCrab to benefit from their policies. One example of this: SCEDA worked with the South Carolina legislature to pass the State Abandoned Buildings Revitalization Tax Credit in 2013, which was recently extended to 2035. By reoccupying the abandoned shell (where have you heard that before?) of a shuttered factory building, the state provides significant tax credits against the costs of refitting the building for new uses. We spend an entire class on this topic in a future post.
Walmart’s Role in Increasing Made in America
Walmart has taken several initiatives to support Made in America manufacturing, which underline Walmart’s commitment to boosting the American economy, supporting local businesses, and providing high-quality, domestically produced products to its customers. Here are some key efforts:
1. Commitment to American Jobs Initiative: In 2013, Walmart launched its "American Jobs Initiative," pledging to invest $250 billion over 10 years in products made, grown, or assembled in the United States.
2. Open Call Events: Walmart organizes "Open Call" events, inviting American entrepreneurs and manufacturers to pitch their products.
3. Supplier Academy and Support Programs: Walmart offers a Supplier Academy, providing resources and training to help manufacturers succeed in scaling their operations and navigating retail partnerships.
Focus on Innovation and Sustainability: Walmart encourages innovation in American manufacturing through its partnership with the Manufacturing Institute, which aims to revitalize the industrial sector.
Thank you for Reading!
Made in America is more than a catchphrase, with numerous economic and intangible benefits to making products here in the USA. We hope you enjoyed this read. Come back tomorrow for Day 9: Economic Security: Reducing dependency on foreign countries/adversaries. The stakes are higher than you think!
Thanks for reading,
The HermitCrab Team
Footnotes:
(1) Washington Post, November 3, 2022, Suzanne Enzerink
(2) Chief Executive, May 2023, “Reshoring Revolution: A Special Report” https://chiefexecutive.net/special-report-reshoring-revolution/
