When I went to buy my first car in 1989, my father insisted I buy American. Although, at the time, driving a 1988 gray on gray Buick LeSabre to school made me decidedly uncool, my dad knew the importance of buying American. He was ahead of his time. A few years later, the shoe manufacturing company where my dad worked for almost two decades closed its doors due to overseas competition. He was laid off and more than three years passed before he was able to find another job.
In those days, you simply couldn’t make a shoe in the United States for what it cost to make the same shoe in China. Most American manufactured products suffered the same fate. For a while there, I’m pretty sure even our American flags came with a Made in China sticker.
While buying cheaper overseas products has been the norm for a while, there have been some serious concerns about the quality of Chinese products. For example, the construction of several welded components for the Bay Bridge Expansion project in San Francisco was outsourced to China. In addition to being a cheaper alternative, the United States simply didn’t have the infrastructure or the skilled workers needed to complete the job within a reasonable timeframe.
The Bay Bridge Expansion plan has suffered and continues to suffer today. The project has fallen months behind schedule and the pieces welded in China are not up to U.S. standards. According to a 2008 memo from the inspection firm hired to inspect the components, the firm reported that as many as 65% of the welded panel sections examined failed to meet the established code.
Between the quality issues and public opinion about buying American, the tide seems to be changing. According to a survey conducted late last year by The Boston Consulting Group (BCG), more than 80% of consumers are willing to pay more for a product labeled Made in USA versus its Chinese counterpart. One of the main reasons cited is a desire to keep jobs in the U.S.
But we’ve heard this many times before, right? Why should we think it’s really going to happen now?
The numbers tell the story. About 12 years ago, the hourly wage in a Chinese factory was only 3% of the hourly wage in a U.S. factory. How could the U.S. compete? Sure…I’m patriotic but could I really afford to buy American if the Chinese products were so much cheaper? However, times they are a-changing and inflation is a global animal. BCG is predicting that in a couple of years rising Chinese wages and other manufacturing expenditures will begin to level the playing field. Chinese products will only be about 10% cheaper to produce than their American counterparts. When you factor in shipping and other hidden costs, savings drop to nominal levels.
Top that with the fact that today’s American consumers are willing to pay 60% more for baby toys and 30% more for cell phones made in the U.S., and we see a trend starting to emerge. This shows a definite shift towards the U.S. dollar staying home and it’s not just the consumers taking note. According to BCG, big companies like Wal-Mart and Caterpillar are starting to source more within the United States.
Although “Buy American” has been around for a while, it has finally begun to take root and make a difference. Personally, I love my Toyota Camry and it has served me well since that LeSabre passed on to greasier pastures. However, I notice that we have started to unconsciously shift towards American products. Last year, my husband traded in his import for a Dodge Journey and I’ve been eyeballing the new Ford Mustang…in Ruby Red!