It used to be a by-word. The slogan “Made in America” was once the universal expression for quality products. It was so prevalent that in an obscure village in Italy 20 miles outside of Florence, a local Italian kid that I used to hang out with nicknamed me “Made In America”. Which he was able to pronounce almost perfectly. It was our little joke. So I nicknamed him “Fatto in Italia” which means “Made in Italy”. We thought it was hilarious.
Who would have guessed that 30 years later, we would see an America in which our political leadership seemed uninterested in the health of our manufacturing economy. As a result the manufacturing economy of the U.S. has been in decline for the past 20 years. The US still leads with 21% of all goods produced worldwide. Japan, with a smaller workforce and limited resources produces 13%. China with it huge workforce and resources has quickly jumped to 12% and seems poised to grow significantly from its current position.
Manufacturing supremacy cannot be taken for granted. Manufacturing success is not subject to the whims of political leadership. We cannot legislate an industry into existence, such as the Wind Power industry or the Solar Power industry. Although we are trying very hard and spending a lot of public funds to try and prove otherwise.
Manufacturing success has a lot to do with good design and good execution. Sales of 1.7 million I-Phone 4G units in 3 days says a lot about a company. It says that customers are so impressed with the technology, packaging and content of Apple products that they are lining up and down the street to purchase them. That’s great design and great execution.
And Apple continues to dominate its markets world wide. We need more American companies with a similar commitment to their products and markets. More American companies that know how to compete using strategies other than outsourcing to markets with cheap labor. More American companies that pay their taxes in the country they are incorporated in.
Buying goods made in cheap labor markets has been going on for a long time. Over the years we have seen Japanese goods coming into the US market. After World War II the US established trade relations with Japan and purchased inexpensive Japanese goods. The slogan “Made In Japan” was synonymous with cheap goods that broke quickly. Over the years the Japanese manufacturers learned the skills that make them one of the leading suppliers in electronics, automotive products and a leader in technology.
Interestingly, manufacturing in Mexico has undergone a similar evolution. Where low labor costs came with high scrap rates, times have changed and the Mexican manufacturing community has learned to eliminate its scrap and produce more efficiently in order to compete in the world market.
Competitive pricing is not simply a result of lowest cost of labor. It is the lowest cost of quality. It must also include transportation and tariff costs to get offshore goods delivered to a target market. There are great examples of US companies that outsourced their products in the past which have discovered a number of hidden costs that make “Made in America” their lowest cost and highest quality solution.
And we need more of that too.