Why Buy Made in USA? / Part 3

Why buy Made in USA? The American consumer goods industry is worth approximately $2 trillion dollars, and is divided into two segments: durables, and nondurables (U.S. Census, 2012). Nondurable goods are different from durable goods, in that they typically need to be replaced or consumed within a three year period, while durable goods are items that do not need to be replaced often like appliances, or cars (U.S. Census, 2012). In 2011, the typical American spent about $13,588 a year on nondurable items, which include popular household expenditures such as food, beverages, gas, clothing, prescription and nonprescription drugs, personal care products, and housekeeping supplies (U.S. Department of Labor, 2014). According to the last U.S. Census report, these items comprise a large portion of the consumer goods category, noting that American manufacturers shipped nearly $1.75 trillion dollars worth of nondurable merchandise in 2010 alone (U.S. Census, 2012). However, despite the aforementioned demand for consumer goods, only 11.5 million Americans were still manufacturing these products as of 2010 (U.S. Census, 2012). Of this group, approximately 4.5 million were employed by manufacturers of nondurable consumer goods, down over 30 percent from the previous decade (U.S. Census, 2012).

The United States became an industrial powerhouse following World War II (Dunn, 2012; Hart, 2012). For several decades following the war, many countries struggled to catch up and rebuild, while Americans enjoyed the perks of a healthy manufacturing base and virtually no immediate global competition (Hart, 2012). However by the 1980s, new countries began to emerge as players in the manufacturing sector, a trade deficit began to accrue at home, and America’s manufacturing industry began to recede as Americans consumed more and exported less (Baily & Bosworth, 2014; Hart, 2012). Fewer manufacturing jobs were added throughout the 1990s as companies moved manufacturing abroad, practicing what is now recognized as globalization (Hart, 2012). These early adopters of outsourcing pioneered the way for other organizations to follow suit, which led to what Hart (2012) describes as a “herd mentality” that had an unprecedented number of American companies moving production abroad, afraid that they would miss out on the bigger profit margins that their competitors were earning (p. 26). Despite this trend, the USA maintained its top spot as the world’s largest manufacturer until 2010, at which time it was determined that China had officially surpassed the United States, and that there were even fewer people working in the manufacturing sector than in 1950 (Baily & Bosworth, 2014; Dunn, 2012). Although the USA is still considered a world leader in terms of manufacturing output, it is no longer known as a manufacturing hub for many industries like, textiles, tools, furniture, apparel and car parts, among others (The Plight of American Manufacturing, 2009).

Though America exported approximately $2.3 trillion dollars in various goods and services in 2014, it was still not enough to close the annual trade gap and improve the overall trade balance (Sparshott, 2015). In fact, the consumer goods category appeared to be in the most trouble in 2014, as imports of consumer products reached an all-time high, while exports of American-made consumer goods fell (Sparshott, 2015). This trend is not unusual, as Baily and Bosworth (2014) argue that when not accounting for computers or electronics, the percentage of GDP exported in this category has been declining since 1987.

As previously discussed, the manufacturing industry in America has been deteriorating for quite some time, with the number of new jobs added to this sector tapering off in the 1980s, significantly declining in the 1990s, and plummeting after the year 2000 (Baily & Bosworth, 2014; Hart, 2012). This trend can be partially attributed to significant advances in technology and productivity over the last thirty years, however the primary reason for this rapid demise was the mass exodus of American companies that moved production overseas between 2000-2011 (Baily & Bosworth, 2014). It has been reported that about one-third of all American manufacturing jobs were completely eliminated in this time frame, leaving many unemployed in what is now known as The Great Recession (Baily & Bosworth, 2014; Ezell, 2012; Hart, 2012). At the peak of this economic meltdown, domestic manufacturing jobs were being eliminated so rapidly, that some estimate nearly 150,000 jobs were lost each month in 2008 alone (Hart, 2012).