Does "Made in the USA" Mean Anything Anymore?

As the owner of a US manufacturing company, I'm facing a number of challenges as the US economy wades through the mud of the current economic recession. Fortunately, we've been able to avoid layoffs and have a great group of workers who are doing their part until things get a little better.

During my trip to Asia last week, I read some interesting stats about the China economy. While exports were down 25% in the 3rd quarter, domestic retail sales were up over 30%. This resulted in a 8% annualized growth rate for the Chinese economy in Q3. How can a country lose 25% of its export business and still grow at 8%? I believe it has to do, in part, with the mere fact that Chinese consumers are buying more Chinese-made products. They are supporting their own domestic production and keeping their money in their country.

As an economist by degree, I've studied efficient markets, Supply and Demand, price elasticities, and on and on. I'm not a big supporter of tariffs or trade barriers. But in today's economy, there are a number of things working against the US manufacturer. One big issue is the US consumer's (and ultimately, the US retailer's ) push for lower-cost goods. Based on things such as increasing gov't regulations on emissions, pending health care reforms, and increasing corporate taxes, US manufacturers are continuing to move production to countries outside of the US. And we wonder why unemployment is increasing? Come on! There are only so many banks, restaurants and wind farms we can build and work at...then what? When's the last time you made a conscience effort to pay a little more to get better-quality, US-made goods? Well, you probably didn't get the chance because retailers are deciding for you what works best. They need higher profits (that includes lowering costs) because we all complain if our stock portfolios or 401-K's lose money. But by purchasing lower-cost goods from Asia, that means there is less demand for goods made here. Throw in $3/day labor in Asia and lower manufacturing costs (more labor mean less high-cost equipment) and overhead costs. I'm concerned that this vicious cycle is only going to continue.

Now I'm not trying to rewrite the laws of economics, but I want you to think about one little part - if you quit buying the goods we make here, what are people here going to do for a job? You can only reinvent yourself so far. We all can't be the next Bill Gates and come up with the next Windows. But even companies that do continue to push the limits of technology to make new things American's want go to Asia for low cost production (check your Ipod label if you don't believe me.) Can it continue without us continuing to suffer with a weak economy? I don't think so.