Chances are that the phrase "Made in America" had a far different meaning for your parents. The "Made in America" label at one time exuded pride. It represented the toils of the American laborer that went into producing a product, and it gave the purchaser a sense of patriotism knowing they were purchasing a good manufactured within the United States.
However, today's economy is fully global, and from the smallest U.S. businesses to the most valuable corporations in the world, outsourcing manufacturing and services to foreign businesses has become fairly commonplace.
Why companies outsource
Why would U.S. companies risk losing the trust of American consumers to outsource part or all of their production? First, it has to do with costs. Popular outsourcing destinations such as China and India offer a substantially cheaper labor force, which can save a company money and allow it to keep the price of its goods and services relatively low.
Furthermore, outsourcing in China, Southeast Asia, or India opens up new markets for U.S. businesses. It can also improve supply chain management if parts are being purchased or sold in overseas markets. Finally, it allows overseas contractors to offer their perspectives, which domestic businesses may not otherwise have access to.
Nonetheless, some Americans take the "made in America" ideal seriously, and outsourcing can cost America jobs. While most U.S. companies have gotten away with outsourcing some or all of their business without too much backlash at home, producing products in overseas markets can still elicit a negative reaction from American consumers.
Made in America? Not exactly
With this in mind, here are five popular consumer products in America that you may not realize are actually produced (at least predominantly) in overseas markets.
Denim maker Levi Strauss is actually one of the most patriotic brands in America, according to the annual rankings from New York-based Brand Keys. The rags-to-riches story of its founder, as well as the durability of the brand, are hallmarks that have established the privately held business as an icon of America.
However, truth be told, there are very few factories left in America that produce Levi's. As of September 2014, there were more than 500 factories around the globe producing accessories for Levi's, including just nine within the United States. Remember, this is a premium denim brand with a relatively high price point, so keeping manufacturing costs low is important to keeping its final prices from getting out of hand. Thus far it appears the move overseas hasn't hurt the appeal of the Levi's brand.
iPhones & iPads
OK, so this one may not come as a huge surprise, but two of Apple's (NASDAQ:AAPL) extremely popular products -- its iPhone and iPad -- both come out of China (although the Philippines will soon be making iPhones, too). The obvious reason to manufacture these products in overseas markets is to keep costs down. Monthly labor costs in China are around 10%-20% of what a full-time worker in the U.S. would make at the federal minimum wage. Given Apple's penchant for introducing as many new gadgets as possible in its phones and tablets, keeping manufacturing costs down is imperative.
However, it's about more than just costs. China's greenhouse emissions laws are considerably more relaxed than those of the U.S., and as iFixIt.org pointed out in 2013, China is also home to a vast majority of rare-earth metals, which are used in the production of Apple's core mobile products. In this instance, Apple is making its supply chain more efficient by keeping production based in China, where rare-earth mines are located.
Of course, all design aspects of the iPhone and iPad come directly from Cupertino, California. There's no outsourcing of innovation on Apple's part.
Based on Apple's No. 1 brand value ranking worldwide, according to BrandZ, I don't believe its outsourcing is harming its reputation much.
Gerber baby food
Most of us have seen Gerber commercials -- or may even have the Gerber baby's face emblazoned in our minds from walking down the aisles in the grocery store. Once an American company based in Michigan, Gerber is now owned by Swiss company Nestle (NASDAQOTH:NSRGY). Although it retains some American factories -- for its infant formulas, for example -- the majority of Gerber baby food is produced outside the confines of the United States.
Although the company isn't as forthcoming as Levi Strauss with its factory list, Nestle lists Poland, Venezuela, and Mexico as affiliated country websites that consumers can visit on its corporate page, implying that these are likely some of the manufacturing locations outside the United States. Like the others companies listed here, Gerber doesn't appear to be suffering from its ex-U.S. production: It claims U.S. baby food market share of 71% as of 2013.
Major league baseballs
There may be no sport more American than baseball. Known as America's pastime, baseball began in the 19th century and continues today, with data from ESPN showing that approximately 73,760,000 people were in attendance in MLB ballparks in the 2015 season.
Here's the real kicker: The baseballs being used in MLB games from Rawlings aren't American-made -- and they haven't been for decades.
Rawlings, which is one of many components of Jarden (NYSE:JAH), produces rawhide baseballs in Costa Rica. Whereas global expansion is on the minds of Apple, Nestle, and even Levi's, Rawlings made the move specifically to keep its costs down and its profits up decades before outsourcing was even considered an issue in the United States. As of 2010, the typical worker hand-stitching baseballs in Costa Rica earned around $1.60 per hour, compared to the $7.25 federal minimum wage in the United States.
American Girl & Barbie
These are the toys that many children have loved for generations, but Mattel (NASDAQ:MAT)-owned Barbie dolls and American Girl dolls aren't made in America. Instead, as has been a mainstay in Mattel's production line for more than a decade, they are predominantly manufactured in China, along with many other Mattel toys.
Mattel's use of Chinese labor was a way of reducing costs and facilitating quick access to supply chain products that were also coming from China. In other words, this outsourcing was an attempt to make Mattel's supply chain as efficient as possible. Unfortunately for Mattel, this company actually has faced backlash for using outsourced labor.
In 2007, Mattel wound up recalling about 19 million toys, 18.2 million of which had small but powerful magnets that could be harmful to children if swallowed, along with about a half-million toys that were covered in potentially harmful lead paint. Mattel also wound up apologizing to China for enforcing weak safety standards that allowed dangerous materials to be put on toy-store shelves.
Not surprisingly, sales of Barbie, and even American Girl, have struggled in recent years. While outsourcing isn't the only issue here, Mattel's image was obviously not helped by these problems less than a decade ago.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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