OPINION – Made in U.S.A. bias is slipping away

I’m feeling guilty. Not sure if the reasoning is legitimate or even worth mulling over, but the guilt is definitely there.
Last week, I gave my visiting brother-in-law a motorcycle sport jacket. Nice quality jacket with a breathable, removable liner and sleeve vents. But here’s what’s eating me: I don’t know where it was made. And worse yet, I’m not sure I even care what country it came from.
This rush of guilt all came about as I considered a topic that several vendors at the recent Tucker Rocky sales show in Grapevine, Texas, discussed — the rising cost of natural resources, especially aluminum.
“It’s killing us,” said Tim Landry, executive sales manager for Oxlite Manufacturing, one of the biggest makers of ramps.
He’s not alone.
Aluminum prices skyrocketed in May to their highest level since 1987. Prices hit $3,310 per metric ton on May 11, but have since plunged more than 25 percent at the time of publication. Even with the decrease, it’s well above the $1,600 cost per metric ton that manufacturers saw just two years ago.
Which makes you wonder: Manufacturers can’t always pass along the price increases in natural resources to consumers, or they’ll lose business. So what can they do?
“What they’ll do is find production facilities that can manufacture something, as long as the quality is equal or better, at a lower cost, “ said Emil Gomez, CEO and owner of EMGO International Ltd., Mableton, Ga., “which means then that they don’t have to pass along the full pop to their buyers, because that would scare the hell out of a buyer.”
Where will these lower-cost production facilities be? Probably outside of the United States. Should that matter? “You bet” should be the first thing that comes out of your mouth and mine. Manufacturing means jobs and decent wages and in the full circle of our economy, disposable income to spend at powersports dealerships.
That brings me back to my guilt, which isn’t waning like the price of aluminum. If I didn’t check the country of origin on the jacket, then how many other consumers are doing the same? Probably quite a few, according to a survey by Synovate Global Omnibus Group, a worldwide polling firm.
Synovate conducted a survey on how consumers felt about the quality of products made in and outside of their home country. Many of the results were telling, including this one: Only one in eight U.S. consumers thought highly of products made in China. That’s the headline news. What’s perhaps more relevant to this industry is that nearly 40 percent of consumers were neutral on Chinese products, meaning they didn’t have a strong feeling either way. To fully understand just how important that statistic is, consider this thought by Mike Sherman, Synovate’s executive director of consumer insights in Asia Pacific, “In the ‘60s, perceptions of Japan were the same as they are for China now.”
Today, 41 percent of U.S. consumers think highly of Japanese product. Total that number with the “neutral crowd” and nearly eight out of 10 Americans have no second thoughts about buying Japanese product.
So how many years until the same can be said for Chinese product? Certainly not tomorrow or the next day, but that time seems to be coming. That’s good news on one hand — manufacturers can seemingly go outside their country without a public backlash — and bad news on the other — there goes more disposable income and ultimately less business for U.S. powersports companies and dealers.
“There are very few industries that have been able to survive the onslaught of foreign manufacturing,” EMGO’s Gomez said. “There are not that many items that are made here.”
And it’s worse than you might think. Even the most patriotic symbol of our country, the American flag, is mostly made overseas. A California storeowner recently told the Sacramento Bee that just a few flag manufacturers operate in the United States and their products cost up to twice the price of comparable Chinese imports.
Sound familiar?
“You’ve had people move from the North to the South (in the United States) because they can make stuff in the South for less cost than they can up North,” Gomez said. “After the South, where do you go? You have to leave the country.”
Of course, not every manufacturer has chosen that route, a decision we should be thankful for. But these sharp increases in natural resource costs coupled with the dramatic difference in labor costs have to be making U.S. manufacturers think twice. That’s one of the reasons why we took a closer look at the different issues associated with outsourcing manufacturing to China. (See the cover for the second of our two-part series.)
The series on China uncovered plenty of risks and rewards — the potential for profit thanks to cheap labor is almost as enthralling as the statements made by the U.S. government on the very real possibilities of having company secrets stolen by Chinese manufacturers. Obviously, the decision to shift production overseas or stay in the United States wouldn’t be an easy one. But something’s got to give.
Manufacturers such as DG Performance Specialties, Inc., Anaheim, Calif., and Oxlite have already raised prices because of the increasing natural resources costs. But that can’t continue forever.
As Bill Carter, Tucker Rocky’s vice president of marketing, pointed out, “We don’t have the luxury like some other industries do of just passing” the cost increases onto the customer. Manufacturers have to be creative, meaning looking at how they produce and ultimately, where they produce.
And when that happens, they’ll have to consider the fact that the American public, especially the younger crowd, is more open to buying products made halfway around the world.
Or, in some of our cases, doesn’t care enough to even consider the country of origin. At least until their guilt catches up to them, and they call their brother-in-law and ask where a certain jacket was made.
“China,” they learn, before being asked, “Why do you want to know?” psb