I was recently asked by a client to offer my opinion on why "made in America" just might be short-sighted. Here is my opinion:
The concept of “made in America” seems like a good idea in principle, but may be a bit short-sighted or misguided. And it is certainly short-sighted relative to Quest Marketing Corporation. Many well-known economists and scholars agree. Best-selling author of The World is Flat, Thomas Friedman, agrees. The US Chamber of Commerce agrees and now, so does my eleven year-old grand-daughter, Eve.
Eve recently saw a bumper sticker that said “Buy Made in America” and asked me what that meant. I said, “Well, honey, some people think that we should only buy things that are made here in America”, and she asked, “Why?” I said, “I guess they think that since a lot of people are out of work here, (9% at last count) that if we only buy things that are made in America, more jobs will exist here and that will be a good thing.” She asked, “So we shouldn’t buy things that were made in China, India, Japan or France?” (She really wants to go to Paris some day!) , and I said, “That’s what some people think, but they are wrong.” She replied, “My dad says that a lot of jobs have gone to other countries”, and I said “Some have, but a lot of jobs have been created here too, since we sell things to just about every country in the world. So it works both ways.” She looked puzzled and said, “I don’t understand, Pappy.”
I said, “For a long time, since people have been able to travel from one place to another, they have traded with each other. Just like you might trade your cookies at lunch for your friend’s chips, people have traded furs for horses or wagons, guns for gold, spices for minerals, or whatever. And today, we trade with other countries all over the world. My car, and your dad’s, were made in Japan, and so was your flat screen TV. The wheat and corn people eat in Russia probably came from America, and most of the cars people drive in Mexico came from America too. The banana you had for breakfast grew in Brazil, the knife we used to cut the banana came from Germany and your sneakers were made in China. And all of the jobs people are in to make all of those things are all over the world. It’s what they call a global economy.” And she said, “What’s a global economy?”
“After World War II, in the 1940’s, which you are learning about in your History class, millions of soldiers came home, started families, bought houses, made cars, built roads, bridges, and railroads, started companies and there were lots of jobs to do. In the 1950’s, when I was born, that continued and we also helped Germany and Japan rebuild their countries. In the 1960’s we got into space exploration and early computers and more jobs were created. In the 1970’s, China opened up a bit and started trading with the rest of the world and we also had a war in Vietnam that was a sad time, but it created even more jobs. In the 1980’s and 1990’s, American companies figured out how to do lots of work with fewer people by automating and using more machines to do work. And since you were born, in 2000, we have continued that, all the while trading with just about every other country in the world. Some jobs have gone away, some have moved to other countries, but many jobs have been created too. When I was your age, nobody worked for Comcast, Verizon Wireless, Apple Computer, Google or Facebook because we didn’t have cable TV, cell phones or lap top computers that connected to the internet.” “What?” said my grand-daughter. “I get the global economy stuff, but you didn’t have cable TV or cell phones or lap tops? What did you do?” I said, “Well, life was just different then. And we didn’t really think much about a global economy or doing business all around the world.”
A few years ago, Thomas Friedman wrote a book about that global economy titled, The World Is Flat: A Brief History of the Twenty-First Century. It is an international bestselling book that analyzes globalization, in the early 21st century. The title is a metaphor for viewing the world as a level playing field in terms of commerce, where all competitors have an equal opportunity. As the cover illustration indicates,
the title also alludes to the perceptual shift required for countries, companies and individuals to remain competitive in a global market where historical and geographical divisions are becoming increasingly irrelevant.
In the book, Friedman recounts a journey to India , when he realized globalization had changed core economic concepts. In his opinion, this flattening is a product of a convergence of the personal computer with the rise of work flow software. Friedman recounts many examples of companies based in India and China that, by providing labor from typists and call center operators to accountants and computer programmers, have become integral parts of complex global supply chains for companies such as Dell, AOL, and Microsoft.
Friedman defines ten "flatteners" that he sees as leveling the global playing field:
#1: Collapse of the Berlin Wall on 11/9/89: Friedman refers to this as "When the walls came down, and the windows came up." The event not only symbolized the end of the Cold War, it allowed people from the other side of the wall to join the economic mainstream.
#2: Netscape On 8/9/95 Netscape went public at the price of $28. Netscape and the Web broadened the audience for the Internet from its roots as a communications medium used primarily by "early adopters and geeks" to something that made the Internet accessible to everyone.
#3: Workflow software: Friedman's catch-all for the standards and technologies that allowed work to flow. It is the ability of machines to talk to other machines with no humans involved. As Friedman said, "people can (now) work with other people on more stuff than ever before."
#4: Uploading: Communities uploading and collaborating on online projects through open source software, blogs, Wikipedia (and Twitter and Facebook).
#5: Outsourcing: Friedman argues that outsourcing has allowed companies to split service and manufacturing activities into components which can be subcontracted and performed in the most efficient, cost-effective way. This process became easier during the introduction of the World Wide Web.
#6: Off-shoring: The internal relocation of a company's manufacturing or other processes to a foreign land to take advantage of less costly operations. China's entrance in the World Trade Organization allowed for greater competition. Now countries such as Malaysia, Mexico, and Brazil must compete against China and each other to have businesses off-shored to them.
#7: Supply-chaining: Friedman compares the modern retail supply chain to a river, and points to Wal-Mart as the best example of a company using technology to streamline item sales, distribution, and shipping.
#8: In-sourcing: Where a company's employees perform services, beyond shipping, for another company. For example, UPS repairs Toshiba computers on behalf of Toshiba. The work is done at the UPS hub, by UPS employees.
#9: In-forming: The growth of search engines like Google is tremendous, which Friedman states is "now processing over one billion searches per day, up from 150 million just three years ago."
#10: "The Steroids": Cell phones, iPods, personal digital assistants, instant messaging, and Voice over Internet Protocol, can be done at high speed with total ease anywhere, anytime by anyone.
After the fall of the Berlin Wall, countries that had followed the Soviet economic model, including India, China, Russia, and the nations of Eastern Europe, Latin America, and Central Asia, began to open up their economies to the world. When these new players converged with the rest of the globalized marketplace, they added new brain power to the whole playing field, enhanced horizontal collaboration across the globe and became the most important force shaping politics and economics in the early 21st century. Thomas Friedman believes that to meet the demands of a flattening world, the United States work force should keep updating its skills. Making the work force more adaptable will keep it more employable.
In the last few years, the world economy has not only become “flat” as Friedman defined it, but “flat”, as in not growing. In the US, in 2009, an economic stimulus package was passed by Congress. This has met with mixed reviews, depending on your political persuasion. Some have said it hurts that “buy made in America” concept. Others disagree.
In a NY Times Article on “Protectionism in the Obama Stimulus Package: Disaster Lessons from the 1930’s” dated February 11, 2009, Burton Folsom Jr., a professor of history and management at Hillsdale College and a senior historian at the Foundation for Economic Education writes:
“Slap a tariff on China and save American jobs,” the protectionists say. The collapsing export market after 1930 helped to set off a decline in American industry. This tempting line of reasoning is flawed for two reasons.
First, if Americans pay more for, say, American-made shoes or shirts, then they have less to spend for other things they might need — they are simply subsidizing inefficient local producers. And those American manufacturers, who are protected from foreign competitors, have little incentive to innovate and cut prices.
Second, if we refuse to buy China’s imports, China will refuse to buy our exports, including our first-rate computers and iPods. Our export market collapses. We saw this happen during the Great Depression when Congress passed, and President Herbert Hoover signed, the Smoot-Hawley Tariff in 1930. That tariff, the highest in United States history, foisted high import duties on more than 3,000 foreign items. The Europeans immediately retaliated, and this deepened the Depression throughout the world. When we refused to buy Swiss watches, for example, the Swiss refused to buy American wheat and Chevrolets.
The collapsing export market after 1930 helped to set off a decline in American industry. United States automakers sold more than five million cars and trucks in 1929, but only about 1.8 million in 1933. Other causes (including tax increases under both Hoover and Franklin D. Roosevelt) also made the Great Depression worse, but the Smoot-Hawley Tariff was a significant reason the Depression was as severe as it was — 25 percent unemployment at its worst.
Free trade benefits buyers and sellers. Tariffs benefit certain sellers at the expense of all buyers.
In that same NY Times article, Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics writes:
The buy-American proposal in the stimulus package makes no sense; not for United States employment, and certainly not for spurring recovery from the world’s worst downturn since the Great Depression. The positive impact of the provision would be trivial; fewer than 9,000 American jobs and only a few billion dollars of American imports.
But the negative impact, coming as it does from the United States, would be a disaster. Essentially this measure says to the world: “Go ahead and put on new protection, just so long as you obey the letter of your commitments in the World Trade Organization.”
Supporters of the buy-American provision correctly state that other countries already impose higher barriers on their industrial imports than the United States does; that’s certainly true for Argentina, Brazil, China, India, Indonesia and South Africa. But world recovery will be long delayed if countries decide that “leveling up” to the highest barriers is the right way to go.
The US Chamber of Commerce has also weighed in on this notion of buying “made in America”. As an introduction: The U.S. Chamber of Commerce is the world’s largest business federation, representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.
In a hearing of the U.S. House of Representatives Committee on Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade, on March 16, 2011 titled, “Made in America: Increasing Jobs through Exports and Trade”, the US Chamber of Commerce said:
(We) believe that global interdependence provides an opportunity, not a threat. In addition to the U.S. Chamber of Commerce’s 115 American Chambers of Commerce abroad, an increasing number of members are engaged in the export and import of both goods and services and have ongoing investment activities. The Chamber favors strengthened international competitiveness and opposes artificial U.S. and foreign barriers to international business. Positions on national issues are developed by a cross section of Chamber members serving on committees, subcommittees, and task forces. More than 1,000 business people participate in this process.
No priority facing our nation is more important than putting Americans back to work. Nearly 9% of the U.S. workforce is unemployed; a figure that doubles when those who have stopped looking for jobs and the millions of part-time workers who want to work full time are included. As a nation, the biggest policy challenge we face is to create the 20 million jobs needed in this decade to replace the jobs lost in the current recession and to meet the needs of America’s growing workforce. World trade will play a vital role in reaching this job-creation goal.
The bottom line is simple: If America fails to look abroad, our workers and businesses will miss out on huge opportunities.
So, best-selling authors, noted scholars and even the US Chamber of Commerce agree that this notion of “made in America” might be short-sighted. And, of course, now, so does my grand-daughter! But that’s not the whole story when it comes to Quest Marketing Corporation.
We believe that we have the world’s best, highest quality forged steel knives and offer them at a very competitive and value-based price. We looked all over the world to find the best steel and the best crafters to make our products. We also looked at characteristics like balance, heft, sharpness, durability, aesthetics, size, color and more. We considered form and function, feel and performance. And out of all this research and development, Quest Cutlery was born.
In our research, we found that some of the best steel in this “flat” world comes from Germany and have therefore partnered with a renowned steel manufacturer in Solingen, Germany. We also found that some of this “flat” world’s best crafters are located in Asia and have contracted with the best cutlery factory in Asia to manufacture only the finest quality Quest Cutlery.
Supporting the fact that German steel is of the highest quality, The One World Trade Center, which was formerly named Freedom Tower, is currently under construction on Ground Zero in the very heart of New York, the place where the World Trade Center was destroyed on September 11, 2001.
The corners of the skyscraper’s facade will be edged with stainless steel made in Germany. ThyssenKrupp Nirosta, Krefeld, produced the material using a customized rolling and heat-treatment process. A Cologne based partner company fabricated this high-quality material into complex facade elements for the corners of the building; some 250 tons in total. And supporting the high quality of Asian craftsmanship, the lower floors of the new skyscraper will be surrounded with blast-resistant glass from China!
So, again, best-selling authors, noted scholars, the US Chamber of Commerce, and even the architects of the new One World Trade Center agree that this notion of “made in America” might be short-sighted. But there’s more to the story of Quest Marketing Corporation.
To maintain the highest quality, we produce our products globally, but we are creating jobs in America; thousands now, and hundreds of thousands soon. We are creating jobs in sales and marketing, distribution, design, administration, management, leadership and more. And we are proud to do it!
