A network news series several years ago focused on how much of what we buy is made in China, but did not explain how to determine if or how to find items made in America. Even if we want to be patriotic about our purchases, sometimes the labeling can be confusing or downright concealing. This is similar to trying to understand if the “99% inert ingredients” labelled on most household products has stuff that is bad for us (it often does). Since Donald Trump has hammered the “Made in America” bell so much (although even he doesn’t walk the walk), it would be useful to estimate how feasible it really is to bring manufacturing home again.
I’m not sure I have the tools to make this estimate, but here’s what needs to be done. Pick a few items – sneakers, a screwdriver, flatware, etc., for example. Note how much they cost at Walmart and break down their costs – manufacturing labor, manufacturing time, overhead, cost of materials, shipping, taxes, etc., using applicable rates. In other words, what it costs to be made in China and shipped to Walmart. Next, make the same estimate, this time using U.S. rates while keeping all assumptions and infrastructure costs parallel (e.g., you can’t buy your shoelaces or your steel from China). How do the two estimates compare?
Let’s assume the two costs are a factor of 2 apart. (It will be nice if they are much closer; let’s know the reality.) If it is 2x and the jobs come back to the U.S. despite this, more people will have money to spend and can decide whether to buy the $40 or $20 sneakers. It would be nice to think we all would buy the more expensive American sneakers, just to be patriotic if nothing else. But many of us, even with our new jobs, will still be living near the edge and will need to make buying compromises to make ends meet. If the $20 sneakers win out, jobs will be lost again, and a new Trump will arise to tell us it’s unfair.
There are two lessons in this scenario that are realistic right now. First, make it easy to buy American for the products that are currently on the market. There are many domestic companies proudly surviving to make things we still buy, so let’s make those American-made products obvious on the market shelves. Second, rather than whine about jobs lost to China, be smarter about competition. Change the equation so the choice is not $40 vs $20 for the same sneaker, but instead is $40 for a clearly better sneaker. Globalization is here to stay, and America’s new challenge is not how big the wall needs to be, but how to compete effectively in this new world.