Making it in the USA

President Obama’s stimulus package contains a "Buy American" amendment that extends the military's domestic requirement for uniforms into Homeland Security uniforms for the first time, and it also added a domestic preference for the manufactured goods used in stimulus infrastructure projects.  President Obama's mandate to increase union membership nationwide will add millions of end users of "union made" products, and it will also create a second potential customer for promo gear at every company whose employees join unions. If the Employee Free Choice Act passes, the demand for union‐made promotional goods will increase further.

  

In addition to these changes, the "Sweatfree" grassroots movement to end government purchase of sweatshop‐made apparel is likely to be the biggest boon to domestic manufacturing this year. Pennsylvania passed the first law, and ten other states are likely to pass similar laws by this summer, prohibiting purchases from factories that engage in labor practices which violate basic human rights, including child labor, employee abuse, and lethal conditions.  These conditions are typical in manufacturing facilities outside the United States and countries with labor costs higher thanthe US.  In the short term, only domestic manufacturers will qualify to make police and fire uniforms, or even state university logo gear. In the long term, as factories overseas are brought into compliance with these laws, they will no longer be able to undercut domestic labor costs by violating human rights in the workplace.

  

  

Attitudes have shifted toward favoring domestic gear as well.  Presidential election years always provide a boost to domestic wearables sales, and last year was no exception.  In 2008 all the official and even a lot of "unofficial" campaign and inauguration merchandise was made domestically, since the items had collectible value, and a Made in USA label served as a de facto certificate of authenticity for many vendors.  This wave carried past the inauguration with momentum helped by awareness‐raising by the Obama administration and politicians and pundits from across the political spectrum.  First, the banking and auto industry crises highlighted the dangers of an economy that lacks a strong manufacturing base. Second, President Obama made labor standards and sweatshops a major issue in his candidacy.  Both of these factors are making companies think twice about the damage they might do by purchasing goods made abroad in orde to save money.

 

 

This shift in attitude became critical because the premium being paid for domestic goods has been shrinking for the last several years, due to the steadily declining dollar, making domestic goods relatively less expensive, inflation in China, and the slow acceptance of human rights in Chinese workplaces driving up wages (from prison labor to subsistence level).  Shipping costs have subsided, but piracy and the slowdown in global trade in general, coupled with fear of another spike in oil prices, have led domestic companies to rethink relying on overseas shipping for all merchandise.  The global slowdown has shuttered many factories in China, enabling the remaining factories to raise prices and dictate more stringent terms.

 

The shrinking spread between import and domestic pricing has highlighted many of the benefits of purchasing domestically made goods. Local manufacturers can deliver goods more quickly, and will customize goods in much smaller quantities. Sampling and product development can be done quickly without language problems, exorbitant shipping costs, and import/export nightmares.  Goods can be delivered as ready if needed, instead of waiting for an entire order to be completed.  American decorators can print and embroider cut parts, which can cost less than half as much as finished goods, while offering a larger print area and much better registration quality.  

  

All of this has worked in favor of flexible domestic manufacturers, who could change products and markets in response to changes in supply and demand.  For less flexible manufacturers, the recession presented an insurmountable challenge, and many domestic manufacturers have filed for bankruptcy.  At a time of increasing demand for domestic goods, the companies that survive will have an opportunity to grow and prosper.

 

This is no short term trend.  Attitudes towards "Made in USA" ebb and flow, and our economy will rebound.  But the era of cheap imports fueled by US domination of the economies of third world countries is over for now.  It is these cheap imports that made domestic goods look expensive, when in fact the cost of a USA made T-shirt or cap has not even kept pace with inflation since manufacturing started moving overseas in the 1980s.  The standard of living in the third world can only get better, human rights historically have only moved forward over time, and our national debt will keep the value of the dollar down for generations.  As the relative pricing of imported and domestic goods converge, the advantages of buying domestically will look more and more attractive.