Reposted from Manufacturing and Technology News-this article features a company called Underwater Kinetics, a CPA Company Member

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Country-Of-Origin Labels Could Change Consumer Behavior And Revive U.S. Manufacturing

Richard McCormack  |  Manufacturing and Technology News  |  March 16, 2012

A successful manufacturing entrepreneur from San Diego has proposed a means to reinvigorate U.S. manufacturing that has not yet been tried and holds promise.

Alan Uke, founder of Underwater Kinetics, a company that manufactures high intensity lighting and other products, wants the government to require a detailed country-of-origin label on every product sold in America. The label would include sourcing information on all of the product’s parts and components along with the trade balance the U.S. maintains with each of those countries.

“I am trying to start a movement of American consumers” who do not currently have the information they need to determine if they want to buy a product that is made in a certain country, says Uke.

Having that information would allow consumers to make informed decisions as to whether they want their incomes to go to countries that have weak environmental laws, that exploit workers and that cheat in international trade. Included on the label would be the headquarter location of the company. If consumers had knowledge of companies that have located their headquarters in places like Bermuda and the Cayman Islands to avoid paying taxes, “it might stop U.S. companies from locating headquarters someplace else,” says Uke.

The labels would be similar to those that have been successfully implemented in the U.S. food industry, describing such things as fat content, calories and nutritional values. Those labels have changed consumer behavior, forced producers to change ingredients, and motivated retailers to stock items that are demanded by customers.

Uke is convinced that only the American consumer, whose spending represents 70 percent of the economy, will change the international trade dynamic in favor of U.S. manufacturing. The top-down approach of the U.S. government trying to force foreign countries to comply with trade laws or institute tariffs hasn’t worked and it won’t work.

Knowledgeable consumers demanding products made in the United States or in countries that have employ ethical business practices could motivate companies to change their sourcing practices.

A change in thinking among economists is also required, Uke argues. Most economists argue that low price is the deciding factor in consumer decisions. Ute thinks differently. In most buying decisions, consumers weigh a variety or factors before buying, such as quality and prestige. People are not buying German cars because they cost less. The only people buying solely on cost are those living at a subsistence level, says Ute. Most people buy based on preferences, and the origin of the product should be a consideration, as it is in many countries, such as South Korea, Japan, China and Germany.

“We need a home-team preference,” says Uke. If a consumer knows that an essential electronic component in a finished product is made in Japan, which has higher quality standards, as opposed to China, they will have the information they need to buy the higher quality good.

The country-of-origin label should be used in a manner in which consumers understand that it is okay to buy products from countries with which the United States has either a balanced or positive trade position. A foreign country that has a balanced trade account with the United States is helping the U.S. economy by buying its goods and keeping Americans employed in export-related jobs. “Foreign countries are not all the same,” says Uke.

Consumers would be able “to influence the actions in other countries” in order to achieve a more balanced trade portfolio. They would also be pressured to improve their working conditions and environment practices if Americans believe they are purchasing products from countries that have no such protections and are therefore gaining an unfair advantage. “By buying the lowest priced goods, we are encouraging all of the bad things companies are doing” to workers and the environment says Uke. “Only by getting people involved can we drastically change the race to the bottom. Lowest cost is not in the world’s best interest.”

The label should also be used on commodities like sugar, so that consumers will know not to buy from countries that do not pay workers a livable wage.

Would Americans buy Christmas ornaments from a country that doesn’t believe in Christmas, such as China, if they had the option to buy from a country that does, like Poland? Let Americans decide by giving them the information, says Uke. If they want cheap, so be it, but they should know that cheap comes with a steep economic price.

U.S. companies should not fight the proposal on the basis that it is impossible or too expensive to determine the source of their products and components. Uke’s company sells dozens of products for many industries, and it has no difficulty in determining exactly the origin of all of its components. There are enterprise resource planning programs that automatically calculate the foreign content of goods.

Uke believes retailers will get on board with the label idea because if they don’t, and the United States does not start to produce more of what it is consumes, the country will continue down the path toward poverty and retailers will not have any customers.

Uke has a book outlining his proposal, “Buying America Back, A Real-Deal Blueprint for Restoring American Prosperity,” published by SelectBooks of New York. Former Commerce Secretary Carlos Gutierrez provides a testimonial on the front cover: “Alan Uke provides simple, breakthrough ways to empower the American people to actually impact our trade deficit.”