Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

   
Resources - Tax Center - Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York
     
 

Made In The USA

 
 

Today consumers are looking for American-made products -- and businesses are paying attention. Many US manufacturers are once again making products in the US and they want their advertising and packaging to reflect it. Yet federal regulations mean a company has to do a lot more than simply put an American flag on a package to attract consumers.

"Made in the USA" can be a good sales pitch but it's one that many companies can't legally make unless they comply with strict Federal Trade Commission (FTC) standards. Basically, if a company wants to claim a product is American made, final assembly must take place here and the majority of total manufacturing costs must be spent on American parts and processing.

If a manufacturer crosses the line, the FTC may step in.

For example, in one recent complaint, the FTC alleged that a marketer of outdoor accessories "violated the Federal Trade Commission Act by making false and unsupported statements that its products were all or virtually all made in the United States."

The Utah-based company, E.K. Ekcessories, Inc., sells a variety of merchandise online through its website including items to use with iPhones, dog collars and outdoor products. According to the FTC, it claimed: "For 28 years E.K. Ekcessories has been producing superior quality made accessories in our 60,000 sq. ft. facility in Logan, Utah" and "Our source of pride and satisfaction abounds from a true 'Made in USA' product."

However, the FTC alleged, "the company imports many of its products and components" and distributed deceptive promotional materials about its products to third-party retailers such as Amazon and REI

The company recently settled the case, according to the FTC, by agreeing not to claim that any product is made in the USA unless all, or virtually all, of it is made here. The company is also prohibited from making misleading claims about a product's country of origin and providing deceptive promotional material.

The moral of the case for businesses, according to the FTC is two-fold:

1. Brush up on what it takes to comply with made-in-the-USA standards.

2. Since many consumers take made-in-the-USA claims seriously, companies that falsely represent their products as being manufactured here risk law enforcement action.

Laws require that automobiles, textiles, wool and fur products disclose where they were assembled. But there is no legislation forcing manufacturers of other products to reveal the amount of U.S. content their products contain.

The FTC allows qualified claims when a product is actually made in several countries. For example, a company can spell out clearly just how much of its product is made in the U.S.--or the percentage of the content that is American made. And manufacturers can use qualified phrases such as an appliance that is "assembled in the USA from imported parts," or a pillow that is "made in China, filled in the USA."

Implied Claims

Labeling standards are complex for manufacturers, as well as consumers. For example, a made-in-the-USA claim can be implied. For example, images of an American Flag or an outline of a U.S. map may convey domestic origin. The same may be true of a company ad in which a manager describes the "true American quality" of products that come from its factories.

The issue is important because of the growing appetite for products made in America. Many shoppers who want to buy American take into account factors including:

  • Safety and health. Many consumers stay away from products made in China after contaminants in toothpaste, pet food and other products caused illnesses and deaths in 2007 and 2008. Recently, the U.S. Food and Drug Administration announced that thousands of dogs got sick and 580 pets died after eating jerky pet treats mostly made in China.
  • The effect on U.S. jobs and the economy. In recent years, a multitude of websites have been created to inform consumers about domestically made products and encourage Americans to buy from each other. For example, madeintheusa.com states that "our patriotic spending will be a significant economic driver as your U.S.-made purchases help recycle American dollars." As part of its mission, usalovelist.com tells shoppers to ask stores for products made in the USA "and demand them from the companies you want to do business with."
  • Substandard labor practices. Many shoppers are looking for American-made products after tragedies highlighted horrible conditions overseas, including the 2013 factory collapse in Bangladesh that killed more than 1,100 people. They don't want their purchases to support the low wages, child exploitation and long hours that are a custom in some countries.
  • Environmental concerns. Americans are concerned about the negative environmental consequences of transporting goods from overseas, as well as lax environmental controls on some manufacturers abroad.
  • Patriotism. Some people feel strongly that supporting American businesses is the right thing to do. At last summer's London Olympics, Ralph Lauren was criticized when it was revealed that the U.S. team uniforms he designed were manufactured in China. Lauren has since agreed to make the uniforms for the 2014 Winter Games in the United States and has recently announced he is investing in an initiative to manufacture apparel in New York.

It's no easy task for consumers to buy American. Globalization has blurred the lines about where exactly goods are made. In some product lines, there is virtually nothing made here. And the cost of made-in-the-USA products might be higher

Even if you insist on buying products made by fellow citizens, it doesn't necessarily mean that scores of workers will suddenly get jobs. Today's American manufacturers are different from the assembly line factories of the past. They often involve cutting-edge technology, which means fewer workers with top-notch skills. But a growing number of people are voting with their wallets after carefully turning over products and looking for labels that read "made in the USA."

Contact Us

For additional information, please contact Boris Benic, CPA, at 516-248-7361, or click here to email Boris.

 

© 2013 Thomson Reuters/Tax & Accounting

 

 
 

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

 

Boris Benic and Associates LLP - Certified Public Accountants and Consultants - Garden City, Long Island, New York

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http://www.bizactions.com/img/Graphics/lores_NewYear2013-2014_kk.jpgA Dozen Products Made In The USA

1. Fiestaware has long been a collector's item and a 1950s icon. These Art-Deco inspired, colorful dishes and accessories have been made in the U.S. since 1871 by the West Virginia-based Homer Laughlin China Company.

2. Some New Balance sneakers continue to be manufactured in America long after other shoe companies moved overseas. According to the company, one out of every four pairs of shoes that New Balance sells in the U.S. is made or assembled here. It began manufacturing shoes in Boston in 1938 and has five factories in New England today employing 1,300 "skilled American workers."

3. Loggerhead Apparel is manufactured in South Carolina. Products include pima cotton polo shirts, tees and belts with a logo of a Loggerhead Sea Turtle, an endangered species. The company was launched in 2011 by a young couple who wanted to prove that apparel could be made locally with materials that come exclusively from the United States.

4. Nordic Ware bakeware has been made in Minneapolis, Minnesota, since 1946. The company, best known for its bundt pan, states that "Consumers can be confident that our products are made in the USA under fair labor practices and meet or surpass stringent US environmental standards."

5. Little Tikes has hundreds of American-made toys and pieces of furniture, including its Double Easel, Storybook Cottage Twin Bed and Cozy Coupe car. The company features the products prominently on its website.

6. Allen Edmonds men's shoes have been made in Wisconsin since 1922. The company notes on its website: "We certainly feel a sense of pride that comes with making our shoes in the same way and in the same place for nearly 100 years."

7. Tervis Tumblers makes all products in North Venice, Florida. The company's insulated drinking cups and other merchandise feature sports teams, hobbies, military logos and other designs. Tervis wears patriotism on its corporate sleeve. "If we could sing, we'd belt out in a stirring rendition of the Star Spangled Bannerright now," the company states on its website

8. Lenox operates a fine bone china factory in Kinston, N.C. According to the company, nine of the top Lenox patterns are produced at the 218,000-square-foot plant situated on 40 acres.

9. Liberty Tabletop. In 2011, a factory in central New York reopened to produce this brand of knives, forks, spoons, serving pieces and baby feeding utensils. The company advertises that it is the only flatware manufacturer left in the USA.

10. Anchor Hocking glassware has been made in the U.S. since 1905. According to the company, the majority of products are manufactured in Lancaster, Ohio with the rest being made at a Pennsylvania factory. More than 1,500 people are employed nationwide.

11. American Apparel employs more than 7,500 workers at factories in Los Angeles that make clothing for men, women and children. On its website, the company states it is "sweatshop free" and claims its employees "are the highest paid garments workers in the world."

12. Stihl outdoor power equipment is mostly manufactured in Virginia and includes chain saws, leaf blowers and lawn trimmers. On its website, Stihl notes that it's not just a domestic manufacturer. "We're the ones doing the exporting -- sending our products to over 90 countries around the world."