In the early 2000s many corporations took advantage of what appeared to be a financial benefit of moving manufacturing overseas. The novel idea offered much higher profits for shareholders with all the money saved on lower overhead and fewer pensions to pay out. Also, with fewer employees, the corporations could even slim up their management, HR and accounting team, which translated to even more profits! However, nobody expected the domino effect that would transpire not longer after the old, empty factory floors started collecting dust.
Think about it for a minute. A large factory with upwards of 1,000 workers usually have a few lunch diners right across the street, not to mention a gas station and convenience store that’s mostly supported by the factory’s employees that visit it daily. When a large factory shuts it’s doors, so will a few companies or vendors that were supporting. We saw examples of this in the documentary “Roger & Me,” where Michael Moore showed how the town of Flint, Michigan, was decimated after General Motors moved their factories away. In 1989 the movie could have seemed absurd to some people, whereas today it could be considered prophetic.
What does the domino effect look like? It’s when you have a large number of sizable factories shutting their doors and putting hundreds of thousands of people out of work. You can expect another large number of people out of work because their previous job supported those factories. Now you have an even greater number of people without work who need to collect unemployment from the government. Now the government is overwhelmed and sitting on a budget crisis and they need to collect more taxes. Businesses then have to deal with a bigger tax burden and are unable to hire people as quickly as they would like. Not to mention the fact that people simply have less expendable income now to buy their products.
In 2012, Inc. Magazine published a survey that concluded “85 percent of consumers in the U.S. and 82 percent in China believe American-made products have higher quality.” American consumers see value in a product Made in the USA and potentially may be willing to pay more for it. There is also the emotional connection between someone in America buying an American Made product since they feel that they’re actively supporting someone’s job. Entrepreneurs and smaller businesses are starting to realize this and are coming up with some creative ideas.
American Apparel came out of the womb kicking and screaming “Made in USA.” Many consumers pay premium prices for their basic blank t-shirts simply because they are made in Los Angeles rather than Indonesia. Flint and Tinder came into the scene in 2011 and became wildly successful almost overnight with their Made in the USA men’s underwear. Another emerging business, HarborWare, an online retailer of boating products, recently decided they were dumping much of their foreign products and switching to 80 percent American Made by the end of 2013. The best source for American Made companies can be found at American Made Matters, an organization of companies that retain at least half of their manufacturing on U.S. soil.
There is definitely a growing interest for American Made products stirring in consumers, whether it’s because they want to help put food on someone’s table or they simply want a higher quality item. As more emerging businesses build their foundations as American Made companies, they may get to capitalize on this potentially huge demand in the coming years and perhaps some of the larger corporations will begin moving their factories back home. With this growing market we could expect to see more people employed, lower taxes as a result and a much stronger economy.