In a recent blog, we discussed the advancement of manufacturing equipment and the quality of U.S. made products as possible factors that will help bring back manufacturing jobs to the U.S. This point leads us to wonder how much of an impact does “Made in the USA,” have on buying decisions regarding components and finished goods.
As consumers, we often struggle with the decision of buying products made in the U.S. versus buying foreign made products based on price. Price differences often drive many buying decisions in our quest to lower costs; this is especially true for manufacturers bidding for jobs against their competitors and dealing with shrinking margins. As consumers, we struggle with the decision of saving money upfront vs. potential long term savings from extended product life cycles associated with better quality.
In our purchasing decisions we are also faced with safety concerns. Lower quality can often pose safety risks. Safety risks are a big issue when we deal with consumer goods our families use, aerospace components, and military components, to name a few examples. Cutting cost in the short term can cause long term issues which can be very expensive; in particular recalls, accidents, and even deaths. Other costly issues deal with the image of a brand, product, or company. The costs of these issues can add up on a scale which is often difficult to calculate. They can often tarnish a company’s reputation and lead to a decrease in customer loyalty, as we have seen in the auto industry.
A third issue, which seems to be growing with our economic problems, is the issue of supporting American jobs. Many often point to globalization as an evil which has greatly increased corporate profits, at the expense of American jobs. As we know, manufacturing has been one of the hardest hit areas and is part of the backbone of the American middle class. As issues of national security and Patriotism increase, we often find ourselves choosing to buy American made products in an attempt to help save jobs while keeping profits within our borders.
Manufacturers face these issues in deciding where to produce goods and from where they source their supplies and components that go into their products. Some are limited by decreasing margins due to higher cost and increasing competition. Others are limited by the strict quality demands placed on them by the buyers in their industry. As these factors grow we wonder how much of a factor is “Made in America” in our decisions as buyers and manufacturers? Is the quality issue getting large enough to overcome cost, or, are shrinking margins enough to push manufacturing wherever it is least expensive? Is the quality of foreign made products improving enough to catch up the U.S.? Is the productivity of American manufacturers going to decrease prices in order to compete with foreign made products? What other factors may play a role in this tug of war?Posted by Francisco Pena. Sales Engineer, ProfitKey International