Made in USA Making a Big Comeback
Exports play a key role in American businesses’ ability to spur economic growth and create jobs. The U.S. stands out as the anchor for the North American region with the highest level of manufacturing investments, a strong energy profile, and high-quality talent, infrastructure and innovation. With so much talk about the need to revive U.S. manufacturing and create jobs, more companies are touting their American-made roots in order to lure customers. Made in USA is a label that evokes patriotism, carries an unspoken promise of quality and has a political undertone of job security for American workers.
Made in USA label is regulated by the Federal Trade Commission (FTC). The Federal Trade Commission (FTC) is charged with preventing deception and unfairness in the marketplace. The FTC Act gives the Commission the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin.
According to Federal Trade Commission Regulations, a product has to be “all or virtually all” produced in the United States (or one of its territories or protectorates) to stamp “Made in America” on its packaging or advertising, according to Federal Trade Commission regulations. “All or virtually all” means that all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no or negligible foreign content. The product’s final assembly or processing must take place in the U.S. The Commission then considers other factors, including how much of the product’s total manufacturing costs can be assigned to U.S. parts and processing, and how far removed any foreign content is from the finished product.
In 2012, U.S. manufacturers sold $5.6 trillion of goods, $4.4 trillion (79 percent) of which was “Made in America” value added directly by the manufacturing sector accounted for $1.9 trillion, while value added indirectly from all industries (including manufacturing) accounted for the remaining $2.5 trillion, according to the U.S. Department of Commerce Food, beverages, and tobacco products accounted for 16 percent of total gross output in the sector, followed by petroleum and coal products (14 percent), and chemicals (13 percent).
In 2010, China overtook the United States as the world’s largest manufacturer. But the United States remains a major manufacturing power—home to less than five percent of the world’s population but generating more than one-sixth of global manufacturing activity. According to the Bureau of Labor Statistics, American manufacturing lost almost 6 million jobs between 2000 and 2010. “Offshoring” became a buzzword with the implementation of the North American Free Trade Agreement in 1994, which made it cheaper to buy and sell things between Mexico, the U.S. and Canada. 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). Another manufacturing powerhouse, India, has even lower hourly compensation costs than China. By 2017, Chinese wages will average $7 per hour, still well below the U.S. minimum wage, but American worker productivity is significantly higher.
Walmart promised to purchase $250 billion in Made in USA products by 2023, a move it said would create 1 million U.S. jobs over time. Two-thirds of the goods in its domestic stores are already made, sourced, assembled, or grown in the United States, the company added. China’s overwhelming manufacturing cost advantage over the U.S. is shrinking fast. When global market research firm Oxford Economics released its latest report on March 14, it contained a surprise for U.S. manufacturers: Labor costs adjusted for productivity in China are only 4% cheaper than in the United States. According to the 2016 Global Manufacturing Competitiveness Index Research by Deloitte Global and the Council on Competitiveness, the U.S.now ranked second, is expected to take the top spot by 2020, while Germany holds firm at number three.
The U.S. improved its ranking from 4th in 2010 to 2nd in this year’s study, and is expected to reach No.1 by 2020.
As the U.S. invests heavily in talent and technology, the nation ranks highest as an advanced manufacturing economy. It performs higher than its peers with a greater share of high skill and technology in exports compared to labor productivity measurements as GDP. The U.S. made itself a global leader in research and development (R&D) activities by investing more dollars and establishing the presence of top-notch universities, R&D talent and venture capital.
95% of the world’s potential consumers live outside the U.S. borders. That means, for America to remain a globally competitive leader in the 21st century economy, American workers and businesses need every opportunity to export their goods and services abroad. Trans-Pacific Partnership, will reduce tariffs and and other costs associated with importing and exporting goods between the U.S. and other participating countries, including Vietnam and Japan, and it will help increase Made-in-America exports, grow the American economy, support well-paying American jobs, and strengthen the American middle class.
TPP levels the playing field for American workers and American businesses by eliminating over 18,000 taxes that various countries impose on Made-in-America exports, providing unprece- dented access to vital new markets in the Asia-Pacific region for U.S. workers, businesses, farm- ers, and ranchers. TPP represents a big opportunity for apparel and footwear companies. The TPP would remove trade barriers among 12 nations on both sides of the Pacific, including the United States, which collectively account for about 40% of the global economy. The TPP countries represent about 40% of all U.S. international trade, and they include three of the top four U.S. trade partners: Canada (No. 1), Mexico (No. 3) and Japan (No. 4).
It is important to note that trade in products that are made in America, or partially-made in America, or designed in America but produced abroad, or entirely designed and produced abroad from components manufactured abroad supports U.S. jobs up and down the supply chain through various channels. Both exports and imports support U.S. jobs. Increased demand for American-made goods also means more— and better—jobs. As the U.S. invests heavily in talent and technology