Made in the U.S.A.: The Benefits, Cost, and Reward of Manufacturing Locally

Most businesses nowadays manufacture and source their products in Asia, specifically China, where the cost of labor and materials is low. Almost all businesses, including designer brands, go East to create the products they sell to consumers in the West.

However, the air is changing. Consumers are becoming more aware of where their products are coming from and what are being done to keep the prices as cheap as possible. They now know that factory workers are overworked, underpaid, and, often, subjected to unsafe conditions.

Why Manufacture in the U.S.

There are benefits to manufacturing locally.

There are laws protecting American workers which ensures that they are being compensated properly, receive overtime pay, provided with proper personal protective equipment, are of legal age, and are exposed to a high quality work environment.

Moreover, if the factory is located within your state or even in another state, it is easier to make an on-site visit in case there is an issue or if the owner wants to check the quality of the product.

The Cost of Manufacturing Locally

Naturally, manufacturing locally would not be cheap. If you choose to build your own factory, you will have to acquire all the machinery needed to create a product. For example, a craft beer business that wants to scale up may need to invest in a small liquid-filling machine to produce more bottles a day. This type of equipment costs above a thousand dollars.

There is also the cost of the facility. You will need a lot of space to place all the machinery you need for manufacturing as well as for storage.

In short, it can be quite expensive for a fledgling business.

man working at a factory

There are many manufacturers across the United States. It does not have to be located within your state (although, that will surely help). The challenge is finding one that shares your vision.

Looking at directories, libraries, and referrals can get you all the contact information that you will need to find suppliers and manufacturers across the nation. Speak to as many companies as you can, and ask questions. After the initial meeting, you should know the minimum order quantity, how much it would cost, how much they charge for samples, payment terms, and turnaround time.

The samples will be needed to allow you to inspect the quality of the product before you start manufacturing at full-scale. You would not want to be hasty and order an entire first batch only to find that products were warped or flimsy.

You may negotiate for the price. Some manufacturers can offer samples at a discounted price or even for free.

The total turnaround time will determine your entire schedule. When you can launch a product to the market depends on how quickly the manufacturer can deliver the goods that you asked for.

Is It Worth It?

A lot of work, and more money, go into manufacturing a product locally. You might wonder if it is even worth it.

The answer is, yes. Consumers, specifically the younger generations, are looking for products that are “Made in the U.S.A.”

One survey conducted by Reuters in 2017 found that, for 70% of Americans, buying products that are produced in the country is “very important” or “somewhat important” to them.

Millennials are also more likely to buy product manufacturers in the U.S. because it is more ethical and eco-friendly. There is no assurance that workers, who created the products in factories in Asia, are treated fairly. Transporting a product across the world also creates a massive ecological footprint that contributes to the destruction of the planet.

Young consumers care about whether their purchases are ethical and eco-friendly.

Moreover, most people assume that local products have higher quality than those that were imported from other countries. They, therefore, treat a purchase as an investment that they can use for years to come.

How Much Consumers are Willing to Pay?

American consumers are willing to pay more for products that are locally-manufactured, but not as much.

The same 2017 survey by Reuters revealed that only 21% of consumers would pay upward of 10% more for a product that is made in the U.S. Meanwhile, 26% of consumers are willing to spend 5% more on locally-manufactured products. As much as 37% of consumers say that they would refuse to cough up more money for products that are American-made.

There are benefits to manufacturing locally, but there are disadvantages, too. You may have to spend more on manufacturing and price their products higher because of the costs of having that “Made in the U.S.A.” label. Whether you go domestic or international depends on what kind of brand you want to build.