Red, White and Gray
IN A PERFECT WORLD, everyone’s doing exactly what they’re supposed to do. The i’s are dotted, the t’s are crossed, the list is checked and double-checked, and it’s all on the up-and-up. But, as it became evident with recent headlines on product compliance, these things aren’t always best left to chance.
Offshore manufacturers face this challenge every day. Imported products can be offered at lower prices, sure, but due diligence must constantly be undertaken to weed out potentially dangerous items and labor practices.
The aforementioned headline-grabbing compliance issues have given way to a certain amount of consumer mistrust, yet, “That’s not to say all the products coming from China are dangerous or unsafe in any way, because … most are not,” noted George Gaida, promotional products division manager at LarLu and Display-Tec, both based in Winona, Minn. “It’s just a matter of confidence.”
The promotional products industry is trying hard to “cure” an import process that has revealed itself to be not-entirely healthy. In the interim, four simple words have become a panacea for distributors: “made in the USA.”
However, as with any product label, a certain element of transparency is required. Though domestic manufacturing existed long before the words “lead poisoning” or “recession” were ever uttered, negotiating the gray areas of USA-made product labeling requires an equal amount of information and care as anything brought in from overseas.
READING THE LABEL
When responding to the question, “How much of your line is made in the USA,” Dan Finn, president of Cincinnati-based Finn Graphics, answered in two parts. “100 percent of our manufacturing and imprinting is done within our facility. Raw materials are also purchased entirely within the USA,” he said.
The distinction between material origin and the actual production process is extremely important when considering domestically manufactured goods. The Federal Trade Commission (FTC) details “all or virtually all” of a product must be made in the states for it to be labeled as such. This seemingly implies that everything, even the raw materials, would be grown, processed, handled and assembled right here on American soil.
Unfortunately, the “virtually all” nomenclature is vague at best, and thus, products can easily be mislabeled.
According to a March 2008 Consumer Reports primer entitled, “Made in the USA? The Truth Behind the Labels,” there are a lot of cooks in the regulatory kitchen, so to speak, including the FTC, the Food and Drug Administration, and U.S. Customs and Border Protection. “The federal agencies (there are at least five) that oversee and enforce the rules on what’s ‘made in the USA’ don’t always see eye-to-eye,” it read.
Because of the delightful subtleties of the English language, and the fact that labeling confusion can arise in various places along the item’s production cycle, here are a few salient points to remember, culled from the FTC’s report, “Complying with the Made in the USA Standard,” as well as information from Consumer Reports.
• The FTC does not approve or deny claims of domestic manufacturing. A company is expected to police itself.
• The “all or virtually all” wording takes into account three main criteria: how much of an item’s total manufacturing cost is allocated to domestic-made parts, how far removed imported content is from the final product, and that the final assembly or processing of an item has taken place in the U.S.
• A made-in-the-USA claim can be expressed or implied. An expressed claim means a product carries the “made in the USA” label sans equivocation and must comply with the “all or virtually all” standard as defined by the FTC. An implied claim doesn’t have to do with a label, so much as the marketing materials associated with it. If wording such as “true American quality” exists, or American flags are printed all over an item’s packaging, it might be considered disingenuous if the product is not made here.
• A made-in-the-USA claim can also be qualified or unqualified. Unqualified means an expressed claim has been made, it meets the “all or virtually all” standards and does not need further modification. A qualified claim includes labels such as “assembled in the USA from foreign parts” or “30 percent U.S. content,” as opposed to the catchall “made in the USA.”
• According to Consumer Reports, “Marketers can land in hot water with the Federal Trade Commission if they use vague, stand-alone terms such as ‘created in the U.S.’ to describe, say, a product invented in Seattle and made in Bangladesh, because consumers are likely to interpret ‘created’ as all-inclusive.”
CHECKS AND BALANCES
Terminology aside, the main thing to remember is to be as clear as possible to avoid misleading the end-user.
Gaida was quick to note that although 90 percent of LarLu’s products are made in the U.S. (and are marketed and labeled as such), Display-Tec’s line of promotional clocks are assembled in the U.S. with some foreign components. It could be argued that, since the imprint is a promotional product’s essential element (as considered by this industry), and the clock is merely the vehicle for the imprint, it could pass muster for a qualified “made in the USA” label. Yet, “[It] is something that I’m not comfortable putting on our Display-Tec catalog pages because the key part of the clock is … imported,” he explained.
Once they iron out labeling protocol, of course, suppliers that keep their entire product lines on this side of the pond are in a good place right now. “‘Made in America’ marketing messages seem to be growing again,” Finn noted, pointing to rising unemployment, the poor economy and national press on quality and safety concerns with imports as the main reasons for this occurrence.
Though domestic manufacturing might cost a little more—or a lot more, depending on the type of product—the fact that suppliers can have their hands in every step of the production process is a built-in guarantee. “It has a lot to do with control of our products,” Gaida said. “It’s a lot easier for us in Minnesota to make a trip to a component manufacturer … it’s a quick trip, it’s relatively inexpensive,” he added.
Finn agreed: “Every day, all day, I work with the people producing our products.” In an industry that prides itself on building and maintaining relationships, it’s impossible to put a price on that kind of face time.