Over the past several years, there has been a surge in American-made products. As a country, we shipped production and jobs overseas where cheap labor resulted in higher profit margins for many companies. Thankfully, we have begun to usher production back into the United States, which has resulted in a resurgence in the number of products made and manufactured right here on American soil.
However, despite this growth, there are many challenges associated with manufacturing made in American products. These challenges are not exclusive to large manufacturers, but also trickle down to smaller businesses trying to compete with cheaper, outsourced goods (and services).
For America to become the manufacturing giant it once was (remember post World War II?), here are four challenges we must address:
Unfortunately, American-made products tend to be more expensive than comparable foreign-made products. This is largely due to the extremely cheap labor found overseas. Where the median wage for an entry level manufacturing employee was $11.13 per hour in 2013, in China, the average hourly wage was just over $1.60 in 2009. Do the math, it’s obvious the savings in labor alone is significant, and as we know, cost savings are often reflected in the price of a product.
As a manufacturer, it’s not easy to compete with cheap labor and cheaply made goods, but fortunately, technology has allowed us to become more efficient and effective in the way we manufacture and produce goods. An American-made product is likely more expensive than its foreign counterpart and it’s one of the many reasons we need to address the next challenge: educating people why they should by American-made products.
Surprisingly, many individuals don’t comprehend the impact they could have on our country and the economy by buying American-made products. In the simplest of ways, manufacturing American made products creates jobs, putting people back to work and subsequently filtering money through our economy.
Beyond economic benefits of bringing production back to the US, people need to realize that by buying foreign made products, they’re contributing to and supporting unjust labor laws and working conditions. Additionally, we need to make Americans more aware of our policy of free trade with foreign countries is hurting American businesses. Where we “welcome” imports from other countries with little to no tax, our exports are taxed, making it that much more difficult for us to compete on a global scale. For example, goods imported from the European Union (EU) face zero tariffs, whereas US goods exported to the EU are taxed from 15 to 20 percent with a “value added tax”. We need to continue to push our government to ensure “FAIR” trade agreements are established and enforced.
Instead of supporting cheap labor overseas and import pricing we can’t compete with, people need to be aware that through buying American-manufactured goods, they can support their neighbors and community. Sure, it might be slightly more expensive to do so, but with gas prices so low, I think we can all afford to spend a little extra money on high-quality products made right here in the US! And in the long run, it will have a significantly positive effect on the U.S. economy.
While demand is certainly growing, there is always room for improvement. By educating society about the positive impact they can have on their communities and society, demand will naturally follow.
We need people to understand why they should by American-made products, how they are helping the economy, the difference in quality products versus cheap, foreign-made products, and again, how trade agreements must change to protect businesses in America.
By increasing demand for goods manufactured on American soil, more businesses will be able to bring production back to the US, creating more jobs for Americans.
Global competition is one of the biggest challenges American manufacturers face. After all, isn’t one of the main reasons we began to outsource was because of the cheaper labor overseas?
With the strengthening of the American dollar and continued economic troubles in foreign markets, America is an attractive destination for the world’s exporters. It’s becoming much harder for American companies to compete in their own backyard. Just look at the steel industry and the impact imported steel products have had on the industry as a whole.
When it comes down to it, price, which is largely a reflection of the costs endured by a business, is an important factor in the decision to make a purchase. However, if we can educate people, create the demand for domestic product, produce higher quality goods, and enforce “FAIR” free trade laws, just maybe, we will have a fighting chance against stiff global competition.
What are some additional challenges of manufacturing made in America products? Share your thoughts in the comments below.