Volume 48, Issue 3- March 2013
Made in the USA: More than Just Words for the Federal Trade Commission
Over the past few decades an increasing number of U.S. manufacturers across all industries have moved production offshore, making the term “made in the USA” one in which many in this nation take pride. But what, exactly, does this mean—and what does the Federal Trade Commission (FTC) require when it comes to this term?
The FTC’s “Made in USA” Act was designed to give the agency “the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin.” The Act requires that in order for a product to be labeled or advertised as “Made in USA” that it be “all or virtually all” made in the U.S. According to the FTC, “all or virtually all” means that all significant parts and processing that go into the product are of U.S. origin and the product should contain no — or negligible — foreign content.
The FTC also reports that the product’s final assembly or processing also must take place in the U.S. “The Commission then considers other factors, including how much of the product’s total manufacturing costs can be assigned to U.S. parts and processing, and how far removed any foreign content is from the finished product,” reports the FTC. “In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a significant amount of the product’s overall processing. The same could be true for some foreign parts. In these cases, the foreign content (processing or parts) is more than negligible, and, as a result, unqualified claims are inappropriate.”
The Act applies to U.S. origin claims that appear on products and labeling, advertising and other promotional materials, along with electronic marketing. The FTC notes that claims can also be expressed or implied. For example, using U.S. symbols, such as the flag or references to the location of a company’s headquarters, could imply a claim of U.S. origin, according to the FTC.
The FTC also addresses the manufacturing process—and how far back manufacturers should look before making such claims.
“To determine the percentage of U.S. content, manufacturers and marketers should look back far enough in the manufacturing process to be reasonably sure that any significant foreign content has been included in their assessment of foreign costs,” according to FTC. “Foreign content incorporated early in the manufacturing process often will be less significant to consumers than content that is a direct part of the finished product or the parts or components produced by the immediate supplier.”
When it comes to raw materials used in a product, the FTC looks at “how much of the product’s cost the raw materials make up and how far removed from the finished product they are.”
FTC also notes that the act also addresses qualified claims (i.e. “a product is of 60 percent U.S. content.”
“A qualified ‘Made in USA’ claim describes the extent, amount or type of a product’s domestic content or processing; it indicates that the product isn’t entirely of domestic origin,” writes FTC.
Companies should stick to qualified ‘Made in USA’ claims “when a product includes U.S. content or processing but doesn’t meet the criteria for making an unqualified Made in USA claim,” according to FTC.
“Because even qualified claims may imply more domestic content than exists, manufacturers or marketers must exercise care when making these claims,” adds the FTC. “That is, avoid qualified claims unless the product has a significant amount of U.S. content or U.S. processing. A qualified Made in USA claim, like an unqualified claim, must be truthful and substantiated.”
The FTC is not the only organization honing in on the importance of legitimately stating “made in the USA.” This includes the program, Made in USA Certified®, the only registered “Made in USA Certified” Word Mark with the U.S. Patent and Trademark Office, according to the organization.
“When we say it’s ‘Made in USA,’ you can count on it,” says Julie Reiser, president and co-founder.
Any company bearing one of the USA-C™ seals has gone through a rigorous supply chain audit to ensure that the product and processes originate in the United States of America.
The designation is an independent certification system that applies proprietary audit criteria consistently across companies, and criteria are checked through the company’s supply chain. “The seal says the company has committed to American jobs and to the American economy,” says Reiser. “Displaying the seal gives consumers the option to visibly support products and services of the USA.”
The Earthwise Group LLC, a national network of locally owned, independent manufacturers of doors and windows, announced that the organization has recently been recognized as “Made in USA Certified.” The organization is the first and only door and window manufacturer to be Made in USA Certified, according to Earthwise.
Why did they do it? “Number one it’s the right thing to do,” says Mark Davis, executive director, the Earthwise Group. “We have to invest in the American economy, American worker and American jobs. If our economy is going to turn around we have to be more sensitive in investing, and that means ingesting in American products.”
Reiser agrees. “It says a lot about a company’s willingness to remain transparent. For companies it’s a powerful branding tool to distinguish among those who may be making false claims,” she says.