Manufacturing in the United States is an industry that has a rich history of uniting us as a country. The “can do” spirit that embodies domestic production showcases our national pride, ingenuity, and resourcefulness. U.S. manufacturing is challenging for many reasons, but most importantly because it’s fraught with federal, state, and local regulations. Great care and expense is taken to assure employees are cared for, production processes aren’t harmful to the environment, and the products are safe for consumers. After all of this, you still need to be competitive in your respective marketplace.
As one of these U.S. manufacturers, Lifetime Products is a quintessentially American company. Started nearly 30 years ago in a Utah garage by a dad that wanted to make a better home basketball hoop, Lifetime now sells and distributes basketball hoops, sheds, kayaks, paddleboards, and plastic tables and chairs to national and global retailers in over 80 countries. As the majority of our product line is produced domestically, we feel it’s important to be able to celebrate by labeling each U.S.-made product with a flag and the statement “Made in the U.S.A.” Unfortunately, it’s not that easy.
Currently, there are two preeminent standards in the market. The Federal Trade Commission’s standard, which was established in the mid-1990s, states that a product can be labeled with “Made in the U.S.A.” if “all or virtually all” of the components are of U.S. origin. The FTC standard allows for manufacturers to source “de minimus” component parts that may not be available in the U.S. or are cost prohibitive. In our case, the basketball net is an example of a component not available here. The FTC standard, or something very similar, is used in 49 states and around the world.
The other preeminent standard comes from a California law that was passed in 1961. Under this standard, for a product to carry the “Made in the U.S.A.” label, it has to be of 100 percent U.S. origin. This outdated standard is not in line with the 21st century global business environment where domestic sourcing of small components can be difficult or impossible. The difference between compliance and noncompliance could be less than 1 percent of the value of the product. A single bolt on a 747 or, in our case, a rivet on a chair could leave a manufacturer open to a class action lawsuit.
The collision between these two standards has created confusion in the marketplace. Many manufacturers do not know or understand that you can be federally compliant and still be in conflict with California law. Manufacturers are left with few choices if they sell to accounts that could potentially distribute in California.
Many manufacturers are abandoning the mark altogether, others try to change their mark to include a qualifying statement like “Made in the U.S.A. with U.S. and Imported Parts,” and others are trying to segregate inventory being shipped to California. Abandoning the mark altogether takes away one of the few market benefits that domestic manufacturers get from keeping manufacturing here. Qualifying the mark only adds ambiguity to an already confusing situation. Segregating inventory is nearly impossible and is almost always cost-prohibitive, especially for manufacturers that supply national and global retail chains who often redistribute inventory across state lines without any notice to the supplier.
Another crushing effect of this confusion in the marketplace has been a rash of class action lawsuits brought against unsuspecting manufacturers that were relying on federal law to set the standard. The resulting lawsuits have cost Lifetime and other U.S. manufacturers millions of dollars in legal fees over small component parts that, again, are “federally compliant.”
Lifetime is working together with the Made in U.S.A. Foundation and a broad coalition of companies from all over the country on passing federal legislation to make “Made in the U.S.A.” labeling of U.S.-manufactured products standard throughout the U.S. by granting the FTC exclusive and preemptive authority for the claim. This doesn’t create any additional bureaucracy or regulation; it simply allows the FTC to do its current job with respect to interstate commerce, which is expressly granted to the federal government in the Constitution.
Passing this legislation will help remove the ambiguity in the marketplace, remove the incentive to punish U.S. manufacturers in California who are “federally compliant,” and help us truly celebrate Made in the U.S.A.
Reach Clint Morris at + 1 (801) 721-4420, cmorris@lifetime.com
