How to know which flag-waving products are true red, white, and blue
Our evidence shows that if not misled, consumers are at least confused. Readers flood Consumer Reports with letters and e-mail seeking explanations as to why, for example, frozen blueberries from Oregon are identified as a product of Chile; why a company named Florida’s Natural sells apple juice with concentrate from Brazil; why pants made in Vietnam are labeled “authentic, active, outdoor, American”; or why a T-shirt with the words “Made in the” above the U.S. flag comes from Mexico.
Though perplexing, such words and pictures don’t usually violate regulations that are issued by the Federal Trade Commission, the agency responsible for protecting consumers from false or deceptive product claims. The key factors in determining whether a “Made in the USA” claim is deceptive, says FTC senior attorney Laura Koss, are the claim’s context and whether it’s likely to mislead a reasonable consumer. Ultimately, the line between legal and illegal is determined by the overall impression planted in consumers’ minds.
But the line is blurry. Every case is different and subject to interpretation, Koss says. Most of the complaints the FTC receives are initiated by companies that are pointing a finger at competitors they claim are seeking an unfair advantage.
When a company definitely crosses the line, the FTC’s priority is stopping the behavior, not punishment. If a company refuses, it faces civil penalties—in theory. In practice, the FTC has brought only one civil penalty case since the late 1990s, slapping toolmaker Stanley with a $205,000 fine in 2006 to settle charges involving the pedigree of its Zero Degree ratchets. (Stanley claimed that the ratchets were made in America, but the FTC noted that much of their content was foreign.)
“Made in the USA” claims can be “unqualified” or “qualified.” Unqualified means that “all or virtually all” significant parts and processing are of U.S. origin. The product may contain a small amount of foreign ingredients if they’re not significant—the knobs of a barbecue grill, for instance. Companies must be able to document any claim.
Qualified claims, the main cause of confusion, come in many forms, but each must tell the whole story. Take the new iPad Mini. The packaging says, “Designed by Apple in California, Assembled in China.” That’s an acceptable claim. By contrast, a company could land in trouble if it said “created in the U.S.” without specifying the country of manufacture, since consumers are likely to interpret a vague, stand-alone term like “created” as all-inclusive. The FTC requires companies to post prominent, unambiguous statements (such as the actual country of origin) to leave an accurate impression.
Readers who have sent us complaints seem most irritated by foreign-made products whose makers have patriotic names (American Mills, Americana Olives, Great American Seafood, United States Sweaters, the U.S. Lock company) or whose packages have flag-waving slogans (“true American quality”) or symbols (pictures of the flag, eagle, Statue of Liberty). But all of those products are likely to be legal as long as they leave a clear impression about where they’re made.
Another type of labeling law, enforced by U.S. Customs and Border Protection with an assist from the Department of Agriculture, requires imported goods to bear a country-of-origin label when they enter the U.S. If an import combines materials or processing from more than one country, the agency considers the country of origin to be the last country in which a “substantial transformation” occurred—for example, the place where a computer was fabricated, not the country that supplied most parts.
The USDA’s Agricultural Marketing Service is responsible for administering and enforcing country-of-origin labeling of certain foods. Large retailers must use signs, labels, or stickers to identify the birthplace of covered commodities (most meat, fish, fresh or frozen fruits, vegetables, and some nuts). That’s why some brands of salmon are labeled both “wild-caught Alaskan” and “Product of Thailand.” The fish was caught in U.S. waters but took a detour to Asia to be skinned and boned (to take advantage of cheaper labor) before making its return voyage. Under the law, that side trip must be noted.
Bottom line. If you want to buy American products, these tips should help:
- Read labels carefully, using the info above.
- Consult websites that name companies making products in the U.S.
- Contact a manufacturer directly.
- Check our listing of some of the companies still manufacturing in America.
Why are foreign nations so appealing to manufacturers? Simple economics, for starters. In 2010, compensation costs (wages and benefits) for manufacturing jobs in the U.S. were $34.74 per hour on average, according to the BLS. That’s lower than in 13 northern and western European countries, but far higher than costs in China: $1.36 per hour (in 2008), based on BLS estimates. Another manufacturing powerhouse, India, has even lower hourly compensation costs than China.
But depending on the manufacturing sector, labor may account for only a small fraction of operating costs. So China may offer manufacturers “goodie packages” to relocate, including tax breaks, low-cost land rental, and reduced utility costs, according to Hal Sirkin, a senior partner with global-management consultants Boston Consulting Group. In exchange, U.S. companies might be required to take on local companies as business partners or cut other deals with area businesses or municipalities.
National security issues and an iffy supply chain are also concerns. “Natural disasters such as the 2011 tsunami in Japan can disrupt the product pipeline, leading to shortages of parts, products, and long shipping delays,” says John Hoffecker, a managing director of global business consultants AlixPartners in New York. By 2015, the Boston Consulting Group predicts, cost advantages (in electricity, natural gas, and labor) over Japan and several European countries in a range of industries will give U.S. exports a big boost. As a result, the group says, the U.S. could add as many as 2.5 million to 5 million manufacturing jobs by the end of the decade.
Jeff Faux, a distinguished fellow of the Economic Policy Institute in Washington, D.C., is not sanguine about the nature of those jobs. “When you think it through,” he says, “our default policy to compete in the global economy over the long run is to lower the wages and benefits of American workers, and no one at the top will admit that. There’s no question a few jobs are coming back. However, they’re jobs that once paid $22 per hour and are now paying $12. Globalization isn’t the problem. The problem is that we started to accelerate the opening of U.S. markets to foreign goods, but without preparing our workers for the brutalization of competition. For 30 years leaders have said we need to train and upgrade the skills of American workers, but it needs to be done before signing these trade agreements, not after the fact.”
Still, it’s a stretch to say, as is commonly heard, that the U.S. doesn’t make anything anymore. In fact, Sirkin says, the U.S. makes about three-quarters of all the manufactured goods (including components) it consumes. The chemical and plastics industries are thriving, thanks to declining natural gas prices, and foreign automakers including BMW, Hyundai, Kia, Mercedes, and Volkswagen have opened plants in the U.S. Master Lock returned (“onshored” or “insourced” in labor-speak) 100 union jobs to its Milwaukee lock factory. Among the companies that have dug in their heels and continued to manufacture domestically is Lenox, which says it’s the only maker of fine bone china in the U.S.
Some companies are bucking the outsourcing trend even in industries that have largely fled the U.S.: large appliances, electronics, and apparel.
Appliances. In 2000, Michigan-based Whirlpool manufactured most of its front-loading washers in Germany. Now the company is in the midst of making a five-year, $1 billion investment in U.S.-based plants, facilities, and equipment. Of the products Whirlpool sells in the U.S., it makes 80 percent in U.S. plants. And it continues to ramp up production of front-loaders in Ohio, where it already makes dryers, dishwashers, freezers, and top-loaders.
“On the one hand, U.S. labor costs are often higher than in other countries,” says Casey Tubman, Whirlpool’s general manager of cleaning. “But when you look at the higher productivity for American workers and consider the fact that it’s very expensive to ship something as big as a refrigerator or washer, we can quickly make up those costs.”
Last year, KitchenAid returned the manufacture of hand mixers from China to the U.S., and GE opened two factories in Kentucky to make hot-water heaters and refrigerators. A spokesman for Sears told us that “through our manufacturing partner, Electrolux, more than 1,200 new American jobs will be created at a plant being built in Memphis.”
There should be plenty of demand if the industry does come back. About a third of respondents to our survey said they’d tried to buy U.S.-made appliances during the past year. And more than half of respondents perceived such appliances as having much or somewhat better quality than those made abroad.
Apparel. The domestic industry has been scorched by job losses because of plentiful and cheap labor overseas. More than 90 percent of clothes and shoes sold in America are made elsewhere, according to Jack Plunkett of Houston-based Plunkett Research. Still, the industry is gaining traction in the U.S. There’s growth among designers with output too small to attract the interest of international manufacturers, and among those who simply want to be part of a Made in America movement. And as you’ll read in “American Made, But Well Made?” even some big names are offering at least a limited assortment of American-made garments and accessories.
To build on the momentum, President Obama, through the departments of Commerce and Labor, last fall launched the “Make It in America” challenge, offering $40 million in grants to applicants who come up with the best proposals to encourage “insourcing,” spur foreign investment, and expand job opportunities through employee training programs.
|Apparel and accessories||• Allen Edmonds shoes
• American Apparel
• Chippewa boots
• Filson apparel
• Kepner Scott children’s shoes
• Pendleton woolens (the Portland Collection and wool blankets and throws)
• Stetson hats
• True Religion and Texas jeans
• Wigwam socks
|Housewares||• All-Clad, Lodge, and Nordic Ware cookware
• Bunn coffeemakers
• Harden Furniture
• Kirby and Oreck vacuum cleaners
• Lasko (mostly fans)
• Pyrex glassware
• Sub-Zero refrigerators
• Viking and Wolf ranges
|Tools and home equipment||• Briggs & Stratton mower and tractor engines
• Channellock and Moody hand tools
• Maglite flashlights
• Purdy paintbrushes and rollers
• Shop-Vac wet-and-dry vacuum cleaners
• Stihl gasoline-powered equipment
|Others||• Airstream trailers
• Annin flags
• Crayola crayons
• Gibson and Martin guitars
• Hillerich & Bradsby (Louisville Slugger wooden bats)
• Little Tikes and K’Nex toys
• Sharpie markers
• Steinway pianos
• Wilson sporting goods (NFL footballs)
|More likely||Less likely||Neither|
|gives back to the local community||92%||2%||6%|
|treats its workers well||90||4||7|
|expresses public support for causes you believe in||82||5||13|
|engages in environmentally friendly practices||79||7||14|
|is American, not foreign||78||6||17|
|has manufacturing plants in your home state||75||7||18|
American made, but well made?
Respondents to our survey praised the quality of U.S.-made products: 61 percent said that U.S. clothing and shoes were of better quality than foreign goods (34 percent said “much better” and 27 percent said “somewhat better”). Just 5 percent said American-crafted clothing or shoes were of worse quality. And almost 60 percent of Americans said they had tried to buy U.S.-made clothing or shoes within the past year. No wonder more and more companies are adding at least a few U.S.-made items to their product lines. But no product is worth your hard-earned dollars if it’s poorly made. For a snapshot of how American-made products measure up, we bought one sample of six products from big brands and asked our experts to assess their quality. Price is what we paid.
Brooks Brothers cotton sport shirt, $84
Bottom line. “It’s a well-made, high-quality shirt,” our expert said, “with features that help it resist wear and touches you’d expect from a tailor.”
Lands’ End ragg socks, $30
Bottom line. “Construction could be better, and you’d expect higher wool content for the price,” our expert said.
L.L.Bean women’s braided leather belt, $35
Bottom line. “It’s well made overall,” our expert said, “and decent for the price.”
New Balance 587 running shoe, $115
Bottom line. “The shoes appear well made but are very stiff and use crude-looking materials,” our expert said. “For the money, there are better choices.”
Orvis cropped cotton pants for women, $54
Bottom line. “The fabric is nice, but the pants seem pricey for what they are,” our expert said.
Woolrich vintage throw, $129
Bottom line. “It’s a classic,” our expert said. “Good fabric choices and construction details mean it’s something you’ll have for a very long time.”