Made in America vs. Assembled in America – Defining Terms!

Made in America

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When a product proudly proclaims it is “Made in the USA” on its packaging, a lot of consumers feel confident and happy about the decision of choosing it. Products made in America are helping keep jobs in the country, minimizing their carbon footprint and proclaiming their national pride.

While this label is fairly clear, a second claim, “Assembled in America,” is a bit vaguer.

What exactly is the difference between these two labels?

A Breakdown of the Claim “Made in USA”

When a product has a label stating “Made in USA,” it means its manufacturing has complied with several rules set by the Federal Trade Commission (FTC).

First, any labels reading “Manufactured in USA” or “Produced in USA” are considered unqualified U.S. origin claims. Anyone who visits the FTC’s website will see the description of “all or virtually all” delineating the parts of a product and where they have to come from to make a product “American.”

The moniker “All or virtually all” means that all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no or negligible foreign content.

The parts of a product have to be American in majority. This includes the parts used to hold a product together, including thread used to sew it or industrial strength adhesive used to hold the soles onto shoes.

Also, the product must be manufactured entirely or almost entirely within the U.S. So if 90 percent of a pair of shoes is made in the United States and the final touches are added in Mexico, they can still be labeled as made in the USA. Because any details added to the final design wouldn’t significantly change the product or are less than 18 percent of the final product, the labeling doesn’t change.

To check if your product can qualify as “Made in the USA,” visit the FTC’s website and peruse the commission’s rules and regulations.

A Closer Look at “Manufactured in USA

When a product uses a resource from another country but makes a product domestically, it can have what is known as a qualified U.S. origin claim. This means that a product must disclose some information about the foreign parts but doesn’t necessarily have to say where exactly they come from.

For example, if a furniture company uses teak wood from Indonesia to make a bedroom set, they may want to say where their wood came from as a selling point. However, if a company doesn’t feel the disclosure will help sales, they may decide to label a breakdown of percentages. A label may read 75 percent U.S. content to clarify that the majority of the product is American without claiming to be entirely domestic.

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In the case of “Manufactured in USA,” the FTC still requires that the product have its final transformation into a finished product on American soil. The commission describes it as “significantly transformed” in the U.S., but the label still needs to explain that the product is not entirely American.

It may say “Manufactured in USA with Foreign Parts” or “Made in USA” but include some assembly in Vietnam. So long as the final stage of production took place in the U.S., these labels are all permitted under the FTC.

Assembled in the USA

The vaguest of all the claims, “Assembled in the USA” only denotes a final stage of manufacturing and does not require a company to explain where its parts come from. As the company doesn’t claim to make its entire product domestically, it can refer to simply “foreign parts” on its labeling.

The FTC requires any label claiming assemblage in the USA to be backed up by a final stage of transformation within U.S. borders. Even when no other part of the product has been created in the country, if the last stages of assembly or completion are done in an American factory or studio, it can still qualify.

The creators can decide if the “Assembled in the USA” label is a good idea or to leave it off entirely. If the label does nothing to enhance sales, the company may choose to say nothing about where the product was finished. The FTC does not require it be announced on the packaging.

Manufacturing In and Out of the USA: Automobiles

One industry that understands how the word American can change the buyer’s response is the automobile industry. The claim of American Made or even partially manufactured in America can convince an unsure shopper to go for it.

The way cars are made now is partially domestic but also foreign to make the cars more affordable. Many car companies and manufacturing centers feel this is a cost-effective collaboration, but the current administration would like to see that change. They want to see 85 percent of auto production done purely domestically.

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There are pros and cons to this move. Some of the process, such as model creation for each car, will likely continue in Mexico. Experts claim that even if the government is able to mandate the 85 percent auto production goal, this won’t necessarily mean that companies will return to the U.S. for their first stages. Mexican companies can simply pay a new tax, (about 2.5 percent), to comply with any new rules and help car companies meet the standards.

Car companies like Dodge and Ford, both of whom proudly proclaim their American heritage, take advantage of the nuances of the Made in America label. According to Time Magazine, 83 percent of Dodge’s cars are produced domestically while Ford scores even worse, coming in at 64 percent. At the moment, only Tesla cars are being entirely made in the USA while many others rely on foreign expertise. Chrysler currently uses American labor for only 33 percent of its production.

As the labeling process in the USA is shaded in nuance and can be confusing, it is up to consumers to research the products they buy to know where their goods come from. At the moment, foreign trade agreements are under negotiation and are expected to stay that way until sometime in March 2018. While the idea of producing more goods in the U.S. is an excellent idea that many Americans can get behind, the details of taxes, tariffs and long-standing agreements can make such changes very complicated.

Only time will tell if America will see a renaissance of Made in America products and handmade goods filling the shelves. While the idea is a romantic one filled with national pride, it would mean turning away from companies and factories that have long worked with the country.

Just as the automobile industry has changed and evolved over the years, the ideals of American production have as well.

Made in America article and permission to publish here provided by Casey Heigl at hotmelt.com. Originally written for Supply Chain Game Changer and published on January 16, 2019.

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