Made in the USA questions answered

"Our customers are willing to pay more for products that are 'Made in the USA.' "

A Boston Consulting Group survey found that 80% of consumers said they would pay more for a Made-in-USA product than a product marked "Made in China." But does the industry see that happening in the trenches?

The short answer: maybe. "This greatly depends on the retail channel, demographic and target market," said David Tyler, director of marketing for Jore Corp., the Montana-based domestic manufacturer of power tool accessories. "If the cost of differential for USA goods is less than 20% than the import, USA products are viable in the marketplace."

The chart below shows the variation at the extreme ends of the issue. Made-in-USA manufacturers are more likely (16.7%) to agree strongly with the pay-more proposition than either U.S./ Global manufacturers (7.1%) or retailer/distributors (8.1%)

Indianapolis-based The Farnsworth Group has studied the question. The research company found that the behavior of homeowners and contractors often contradicts their confessed loyalty and preference to USA-made products.

"There is no question that the American consumer would certainly like to 'buy American,' if all things were equal," said Grant Farnsworth. "But the price-value trade-off remains as the primary factor of the selection process. The products have to provide the value the consumer is seeking."

"We are seeing more of our competitors promote their products as 'Made in the USA.' "

The case for domestic manufacturing continues to evolve. And one consideration putting wind in the sails of Made-in-USA products is support and service.

"Domestic manufacturing and distribution means we can react much more quickly to order-level increases by avoiding lengthy delays in the supply chain," said Scott Kirkendall, VP retail sales for Milwaukee-based Broan-NuTone, where 70% of U.S. sales come from U.S. facilities.

"We can eliminate the need for elevated safety stock inventory. We can minimize the impact of foreign currency fluctuations. And most importantly, we can reinforce customer confidence that we will deliver on our promises without excuses or interruptions."

Hence, the field's appeal extends beyond branding and marketing.

Meanwhile, some manufacturers are sensitive to competitors who seem to stretch their Made-in-USA credentials.

"Our major competitors are all overseas," said Jennifer Hanke of Oshkosh Designs, a Wisconsin-based maker of decorative flooring. "These competitors also promote that they have East Coast locations, which are basically their warehouses. So, the fact that they are sure to note that there is a U.S. location shows the significance [of Made-in-USA promotion]," she said.

"The Federal Trade Commission's Made-in-USA standard is clear and easy to follow."

The Federal Trade Commission (FTC) requires that a product advertised as Made in USA be "all or virtually all" made in the United States Is that clear? A good portion of the home improvement industry — 48% — doesn't think so.

[Note: A 44-page document called "Complying with the Made in USA standard" exists on the website of the FTC's Bureau of Consumer Protection.]

"We don't believe that there is clarity as to what constitutes 'Made in USA,' " said John Dwyer, VP sales and marketing for domestic manufacturer Johnson Level & Tool. "We see plenty of products in the marketplace with key components made outside the U.S. making the Made-in-USA claim. In the end, it only dilutes the importance of country of origin."

Another manufacturing company executive, who asked to remain anonymous, said the rules are, indeed, ambiguous. And running afoul of them could derail the marketing efforts of his small company. "One attorney told us, 'It's written so ambiguously that I'd have to refer you to another attorney to give you a better answer.' "

At Highwood USA, a manufacturer of Adirondack chairs and porch swings, spokeswoman Dominique de Bruin believes the rules are actually fairly clear. "However, that does not seem to prevent misuse of the 'Made in USA' label," she said.

"Our company intends to more aggressively promote the fact that our products are Made in the USA."

Across the home channel, the clear majority of companies say they are going to promote Made in USA more aggressively. (See chart)

Scott Kirkendall, VP retail for Broan-NuTone, pointed to statistics from Perception Research Services International, which reported that 80% of shoppers look for a Made-in-USA label, and 76% indicate they are more likely to buy a product with this label. He also pointed to a Unity Marketing report that showed the U.S. was ranked first by respondents in perceived manufacturing quality of luxury goods.

"It is essential that we are in alignment with the growing sentiment of both our customers and consumers who have a heightened awareness of the availability of Made-in-USA products," Kirkendall said.

At Melville, N.Y.-based Leviton, chief operating officer Daryoush Larizadeh said the company for years has supported the resurgence of manufacturing in the United States. As a result, nearly half of the company's electrical products are made in the USA. The company intends to get the word out in 2013.

"With U.S. consumers becoming decidedly more conscious about homegrown products, Leviton is embracing internal initiatives to better tell our Made-in-the-USA Story," said Larizadeh. The company intends to educate consumers, retailers and trade professionals "through a targeted messaging strategy, including packaging, signage and advertising that spans all the channels where Leviton has a presence."

At Ames True Temper, whose core products are long-handled tools and wheelbarrows, the "True American" line of axes, shovels and other tools will flex its USA marketing muscle in 2013, according to Karen Richwine, director of brand marketing.

"We will increase focus on this line by growing the breadth of the offering, as well as through displays, specials, promotions and social media," she said.

For some companies, the domestic marketing strategy drills down to the state level.

"Over the past year, we have aggressively began promoting that we are not only made in the USA, but also Wisconsin-based," said Jennifer Henke of Oshkosh Designs. "This is one of our larger marketing initiatives for 2013."

At Johnson Level & Tool, the company does not intend to make country of origin a big push — even though 80% of unit sales come from Made-in-USA product. VP John Dwyer explained: "In the tool business, end users care about durability, accuracy, past experience and value," he said. "If the product does not meet the criteria, then the country of origin will not move the decision-maker to purchase the product."

"Retailers can do a better job promoting Made-in-USA products."

So far, two of the biggest Made-in-USA stories of 2013 involve retailers. Walmart announced a $50 billion buy-American pledge, which will run over the course of the next 10 years. And closer to home improvement, 84 Lumber launched a "We Build American" initiative, aimed at encouraging builders and consumers to consider constructing homes with materials sourced in the United States.

An extreme case of retail promotion can be found in Hartville Hardware, where the Do it Best retailer built a show home inside the 305,000-sq.-ft. destination store, just to show what can be done if contractors and homeowners (see story, page 14) embrace USA-made products.

Still, the industry perception is that retailers can do more. And it's not just manufacturers who think so. More than 85% of retailers or distributors say they either strongly agree or agree with the statement: "Retailers can do a better job promoting Made-in-USA products."

At Peru, Ill.-based domestic manufacturer Maze Nails, president Roelif Love-land said many lumberyards, chain stores and other outlets can do more. "Let the consumer vote with their hard-earned dollars," he said. "But at least give the domestic products a chance."

Mark Yoder, national sales manager for Channellock, predicts sales rewards for those retailers who step up Made in USA.

"We've committed a large portion of our marketing program to our 'Fiercely Made in Meadville, Pa.,' campaign, which brings together our associates with the people who use our pliers," he said.

"We feel that for those retailers who are ready to commit time and resources to featuring U.S.-made products, a world of opportunity awaits."