Why Not American-Made Goods?
When it comes to the title of this diary, “Why Not American Made Goods?”, the series of events that I am about to relate here and the response on the part of this one company indicate the kind of corporate mentality that we are up against if we want to try compete with foreign goods. As people read this…I’m not telling anyone anything that most of us don’t already know, but perhaps there is a door opportunity in this for small business owners that may not have considered.
I work for a retail-oriented business that has a very traditional image which appeals primarily to conservatives. Almost three years ago, right before the 2008 primaries, I began hearing a lot of our customers making comments that they wished the company would offer more American-made goods. Approximately 90% of the products we offer are made in China.
I have 18 years experience in various aspects of manufacturing operations. What I know from that experience is that, in many instances, it is not practical for manufacturing companies to consider non-traditional manufacturing methods. However, in spite of how things may seem, this does not apply in ALL cases. I’ve long since come to the conclusion that if that if American manufacturers were willing to take a non-traditional approach in manufacturing of goods in what ways it can, it is possible that we could become far more competitive with foreign goods than we are at the present time.
As an individual, I’m one of those people who is able to take a step outside the proverbial box and to come up with problem-solving ideas. Granted, most of the ideas I present follow the KISS method (Keep-It-Simple, Stupid), but they’ve often proven to be effective all the same. So when our customers started saying that they wanted more American-made goods, I put on my thinking cap and started wondering how this could be accomplished. Here’s what I came up with:
1) 1) Set aside an area of the retail store to be used as a Community Corner
2) 2) Offer local craftspeople the opportunity to present the items they make in the Community Corner area of the stores on a consignment basis.
There’s nothing complicated about the idea that I presented. I presented this concept in the context of doing a market test for the purpose of economic feasibility. At the time this idea was presented to the company in 2008, the economy was a bit shaky but very few people were considering the possibility that our unemployment rate would increase to the extent that is has over the past two years.
Here are some of the things that implementing this concept would have accomplished (and this is just a partial list):
1) 1) The items presented in the Community Corner could easily have been designated as “made in America” goods, meeting the expressed interest of our customer base.
2) 2) The items are made locally allowing the company more flexibility to operate on a just-in-time (JIT) basis for meeting demand of products. This would have reduced costs for the companies in many areas, such as raw material costs, packaging, international shipping, transportation to a centralized warehouse, inventory costs while products are stored in that warehouse, shipping costs to individual store locations, repetitive merchandise handling functions, etc.
3) 3) By allowing local independent manufacturers to offer products in the stores, it would build a bond of loyalty between the business and customers.
5) 4) It offers customers a wider variety of products.
6) 5) It would have generated a very positive PR “buzz” about the approach that the company was taking to consider offering American-made goods to their customers.
About JIT principles…when the general economy is strong, companies can afford to carry more inventory costs and emphasis on JIT principles can decrease. When the general economy is weak or uncertain, the emphasis on JIT principles becomes more focused. Inventory is then reduced, which prevents tying up capital into inventory costs. It allows companies to have greater flexibility and to respond more quickly to economic trends as they develop.
For this particular company, the idea stated above would have worked and worked well. It fits directly into the company’s image and would have been accepted very positively by the customer base of this company. But the company refused. They liked the idea but they refused it all the same. Why?
1) 1) The company owns the manufacturing facilities in China where the products are made and therefore the company has a vested financial interest in seeing those manufacturing facilities succeed.
2) 2) The company has an 18 month lead time involved in the development, design, and manufacturing processes with these Chinese facilities. The retail industry hasn’t gotten to a point where it applies JIT principles in the same manner that these principles are being used in the manufacturing industry.
3) 3) Product costs. American-made goods aren’t competitive in regards to product. It is cost mechanisms that corporate sales professionals have the responsibility to consider first.
4) 4) Inventory control. The principles of inventory control serve a very positive purpose. They are necessary in evaluating material costs, labor costs and sales projections. Unfortunately, in many cases the desire to “control” inventory prevents both manufacturing and retail businesses from being open-minded in considering other options.
As to the question of “why not American-made goods”, the story I’ve related demonstrates the general mentality of many corporations in nation. Our economy is based on supply-and-demand principles and until we can find a way to become competitive with foreign goods prices, this corporate mentality isn’t likely to change.
However, I have noticed during the past year that many of the small independent retail business owners in my own community are beginning to offer these kinds of opportunities to local craftspeople. These smaller businesses found themselves faced with inventory reductions in response to the economy. This left open retail floor space in many situations. By contracting either product or floor space on consignment basis with local craftspeople, it allowed the smaller, independent businesses to continue to offer product and to have the potential sales revenue without having to outlay capital for inventory purchases. It has also provided them with the unusual marketing opportunity of being able to present American-made products to the general public.
Perhaps this trend is occurring in other areas of our nation as well as my own “backyard”. If so, we can keep our eyes open for these vendors and try to patronize their businesses. By doing so, we will be encouraging the economic survival of our own nation in the process.
This is still, for the time being, a free country. We can be just as creative and innovative as we choose to be in finding solutions to the problems that we are facing. The “grassroots” movement that is being seen in politics can be applied to other areas of our society as well…maybe even in the manufacturing and retail sectors.