Made Here, the Insourcing Trend

Kelly Kovack follows the trend of a return to U.S.-based manufacturing.

by Kelly Kovack

Brands have been following the drumbeat of globalization for years, being driven to manufacture overseas because of cheap labor costs and fear of being less competitive, but the tide is turning. For companies that are manufacturing tangible goods “Made in the USA” is resonating with consumers and is no longer an unaffordable luxury.

Simply put, outsourcing manufacturing to China is not as cheap as it used to be, making domestic suppliers a more attractive and viable option. As the labor equation has balanced, small to mid-size businesses are taking a hard look at the downsides of extending their supply chains to the other side of the planet. Insourcing allows for the reduction of extremely long supply chain and inventory pipelines, providing flexibility and speed to market. On-hand inventory requirements are reduced, and it affords more safeguards on intellectual property. U.S. manufacturing may never return to its heyday of previous generations, but for many brands, the desire for faster-turns on production and more control of the supply chain balances the slightly higher labor costs enough to make manufacturing in the U.S. a viable option again.

While the financial and operational benefits are compelling, insourcing also provides branding opportunities that can be leveraged through marketing. There is a growing trend among consumers, in a world dominated by globalization and mass production—a desire for all things local and products with a sense of place rather then those that feel global and commoditized. Conscious consumers are demanding transparency in the supply chain and are becoming increasing interested in purchasing goods made in the USA, because they associate them with American jobs and higher quality.

So, what does “Made in the USA” mean? The perception by consumers can be sustainability, informed pride, localism, heritage, quality or authenticity. For businesses it can mean a smaller carbon footprint resulting in a more eco-friendly business, tighter control on quality, speed-to-market that can provide a competitive edge, purchase influence at point of sale and stronger export positioning.

The country of origin differentiates U.S. goods from the competition. Studies show that country of origin may have an impact on consumers’ preference for goods made in their own country. A survey by FIND/SVP found “83% of respondents said they would buy “Made in America” products as their first choice if given the option between goods made in the U.S. and those made abroad.”

In 2010, the patent and trademark office approved registration status for the Made in USA brand certification mark, which is a symbol that is a non-mandatory enhancer and identifier for goods grown or made in the United States. Originated by Marcie Gabor, a principal at Conrad Phillips Vutech, the certification mark is backed by certification guidelines based on the Federal Trade Commission’s regulations and complying with Made in USA origin claims. While currently under-utilized, this mark joins the ranks of more widely used symbols like Certified Organic, Certified Gluten-Free and Rainforest Alliance Certified which are all widely used by business to differentiate products to consumers that want to make principle-based purchases. Consumers will be able to easily identify goods that have the USA as the country of origin. Hopefully, this mark will prevent any potential “flag washing” while providing a branding opportunity to leverage this trend for businesses that meet the accreditation standard.

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About the author: As an advisor and creative strategist, Kelly Kovack has advised an eclectic array of clients ranging from multibillion dollar brands like Old Navy and Mattel to notable independents like Zirh and 21 Drops. Kovack has also developed brands of her own such as her recent venture, the award-winning fragrance brand, Odin, co-founded in collaboration with the New York fashion brand. She is a partner at Brand Growth Management and a principal at Maker.