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The trend of outsourcing to overseas suppliers and contractors may be losing some of its luster. Many businesses are returning to U.S. manufacturers — also known as reshoring — to obtain goods faster and at lower costs than foreign suppliers can offer. What’s more, “Made in the U.S.A.” tags can win over domestic customers who want to feel good about their purchases.
In order to claim a product is “Made in the U.S.A.,” you must comply with strict regulations set forth by the Federal Trade Commission (FTC). These rules require that final assembly take place on U.S. soil and the majority of total manufacturing costs be spent on U.S. parts and processing. Complex labeling standards may also apply if an American flag or map is used on packaging to imply the country of origin.
A company can make a qualified claim when a product is made in several countries. For example, it may specify the percentage of a product’s domestic content or label a product as “Assembled in the U.S.A.” instead.
Compliance with these rules is essential. False claims are likely to attract an FTC investigation, which could lead to enforcement actions and negative publicity. Violators also may need to modify packaging to comply with the FTC regulations, which can be costly.
The “Made in the U.S.A.” resurgence is a welcome boon to domestic manufacturing. You can prepare by investing staff, inventory and equipment to meet increasing demand for domestic-made products. But first, you may need to remind your customers about the benefits of using domestic manufacturers, including:
Whether you sell to businesses or consumers, you might consider implementing a marketing campaign that positions your products as American-made. This may include new advertising programs and repackaging with the “Made in the U.S.A.” label.
As manufacturers and distributors budget for 2017, they should consider whether the reshoring trend will attract more business, both domestically and abroad. Proactive businesses will position themselves as all-American and have extra capacity to meet increasing customer demand for U.S. manufactured products.
For more insight and advisory on how to prepare your business to bring back manufacturing domestically, contact our manufacturing CPAs today.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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