Has "Made in the USA" lost its luster?

Our exclusive survey indicates distributors want to protect U.S. jobs by selling hand and power tools made in the U.S., but customers are influenced by other factors.

by Rich Vurva

Despite their best efforts to sell hand and power tools made in the U.S., distributor salespeople may be fighting a losing battle. According to a recent survey conducted by Progressive Distributor magazine, where a tool is manufactured is less important to customers than issues such as tool quality, availability and durability. When asked which factors have the greatest influence on their customers’ purchase decision, “Made in the USA” finished dead last on the list.  Less than 30 percent of the survey respondents said the issue was either important or extremely important to their customers (See Figure 1).

Nearly 400 distributor salespeople and executives participated in the online survey conducted in early 2005. The survey also revealed that only 41 percent of customers prefer to buy tools made in the U.S. and an even smaller number (32 percent) are willing to pay more for U.S.-made tools than for an imported tool.

“Where products are made seems to be less important than it was years ago. Not too many of our customers are specific about asking for made-in-the-USA. They request by manufacturer,” said survey respondent Michael Feeley of E&R Industrial Sales in Boothwyn, Pa.

Often, customers don’t care where a product is made.

“Only on very seldom occasions do I have a customer ask me if a tool is manufactured in the U.S.,” said Kirk Hallmark, an inside salesman for Fastenal from Port Arthur, Texas.

More than three-quarters of the respondents said they try to promote and sell U.S.-made tools whenever possible, but ultimately, 83 percent said they get their customers what they want, regardless of where it’s made. Compounding their difficulty in selling U.S.-made products, distributors said a majority of their customers don’t know where the tools they buy are manufactured (Figure 2).

“Some customers may not care where a product is made, but I do. We need to promote manufacturing in this country,” said Daniel S. Schade, branch manager for Catching Fluid Power in Bolingbrook, Ill.

True to the Red, White and Blue
Some customer segments still prefer to buy products made in the U.S. For example, unionized employees and older workers tend to care more about a product’s point of origin than non-union employees and younger workers, distributors said. Union members (77 percent) and customers over age 40 (71 percent) top the list of customers who say buying products made in the U.S. is important to them. Where a product is manufactured is least important to customers between the ages of 20 and 30 (7 percent) and non-union workers  (17 percent).

“The majority of our tool business is in the unionized iron mines. They say they want tools made in America with steel produced in the U.S.,” said Al Anderson of Champion Inc. in Iron Mountain, Mich.

Although they’re in the minority, some customers will change brands rather than buy an imported product.

“Most of my customers prefer American-made goods. I almost lost my job because I fought not to change to a manufacturer that was changing from U.S.-made to an import line. But my customers backed me and U.S.-made,” said Manny Lema of U.S. Bearings and Drives in Santa Clara, Calif.

Some salespeople tell customers where a product is manufactured to get them to consider buying a different brand.

“We have had a couple of key customers change brands just because a product is no longer U.S.-made,” said Jim LeMond, senior merchandising manager for P&I Supply in Evansville, Ind.

Paul Anderson, president of Bates Abrasives in Burlington, Wash., said it’s still possible for salespeople to convince some customers to buy American.

“Even though foreign-made products are cheaper and easier to sell, if you sell up and promote Made-in-the-USA, you can be successful. Having stock on hand really helps since sometimes deliveries can be suspect with foreign brands and plants,” Anderson said.

Quality gap closing
The gap in quality between tools made in the U.S. and imported products has greatly narrowed, according to distributors who took part in our survey. Less than half of the respondents believe U.S.-made tools are superior in quality to foreign tools (Figure 3).

“You can get garbage tools or quality tools here or overseas. Often, the lower quality tools are available and at a good price, but not at a good value,” said Tim Pritchard, customer service manager for Zemarc Corp., a fluid power distributor in Los Angeles.

Brian Showler, account manager for Charles Jones Industrial in Nanticoke, Ontario, said imported products are much improved. “In general, the quality of offshore products is improving and the quality advantage that U.S.-manufactured products enjoys is lessening with time,” he said.

“The age where import means cheap or inferior has been superceded where respect is given to high-quality imported tools with names that reflect quality. In many cases, the imported tool is preferred, especially among the under 30 years of age,” said Bob Hillebrand of OES Corp. in Indianapolis.

Customers also see little difference between the quality of U.S.-made products and many imported brands, said Brian Sanford, president of Sanford’s Upstate Sales Co. in Clay, N.Y.

“If everything is equal, I do believe customers prefer U.S. brands. Product coming from Asia is now better quality and price than in the past. When bringing up the “Made in USA” issue with customers, they just say, ‘Products coming from offshore are pretty good these days.’ I guess I would have to agree, even though I recommend U.S.-made whenever I get the chance.”

Other distributors remain convinced that most U.S. products are superior to imported brands.

“Price is important to customers when purchasing tools, but not at the expense of quality. If you have customers who purchase tools to use on a daily basis to make a living, most will prefer to buy a U.S.-made product because the quality is superior,” said Beau Bowman, salesman with Turner Supply in Birmingham, Ala.

“Before becoming a sales manager for a large MRO products distributor, I managed a manufacturing facility for 20 years. I know from hands-on experience, from both sides of the fence, U.S.-made products seem to last longer and are far more durable than imports,” said David H. Wolfe Jr., general manager of Industrial Supply Corp. in Waynesboro, Va.

The distributor’s dilemma
Many distributors voiced frustration about the issue of promoting U.S.-made products. They want to sell brands produced by U.S. manufacturers because it keeps jobs in the U.S., but customers also demand low-priced products produced offshore.

“I would prefer to sell U.S. products any day of the week. We are from a small town with small town values. I believe my customers would prefer U.S. products too. It seems to be rare when we sell a product that is made in the U.S.A. I hope we start making more products instead of less,” said Dale Miner, a purchasing agent for Hulbert’s Tri-Lake Supply in Saranac Lake, N.Y.

Patrick Lapysys of Valley Tool Repair in Sacramento, Calif., believes marketplace realities force distributors to sell imports.

“People want a good product for a fair price. Today’s tools made overseas are cheaper. Because of pressure from the Big Box stores we must sell cheaper to make more profit and hit earnings projections. The quality is lower, the user takes what he can get and the life cycle of tools is shorter. What are we to do?” Lapysys said.

Some salespeople seem resigned to the notion that global competition has changed the way everyone does business today.

“I think people prefer made in the USA. But they are also aware we are a global economy. Quality and reputation are probably the most important factor,” said John W. Woodruff, vice president of Woodruff Company in Rochester, Minn.

“I believe that a lot of us would like to see more products U.S.-made that are affordable, but it’s hard to do that with other countries not paying a living wage,” said Krista Appleton, inside salesperson with Deco Tools in Lee’s Summit, Mo.

Home grown vs. import
As more U.S. companies transfer production offshore, it’s getting harder to know which tools are truly U.S. made. Like their customers, distributors also often can’t tell where a product is manufactured. They said tool manufacturers compound the confusion by saying their tools are assembled in the U.S., but manufactured elsewhere.

“Customers are the most concerned with tools that say ‘Assembled in.” You have no idea what that means. Was it just placed in the display carton in that country and is that statement just used to hide where the tool really comes from?” asks Ben Strobel of Western Fasteners & Supply in Seattle.

Jeff Gelfer, president of Gold Seal Sales Co., in Richmond, British Columbia, said many customers prefer to buy tools made in the U.S., and are surprised when they learn their preferred brand is actually manufactured overseas. What ultimately concerns them most is product quality.

“We always point out to our customers that the quality is more important than the name. Usually, better quality may cost more up front, but will result in a cost savings due to less breakdowns and lost time. It pays to invest in better quality products,” he said.

One salesperson refuses to support brands that moved production outside the U.S. and actively promotes other U.S.-made products.

“It has become pretty common knowledge that a certain Yellow Brand of tools has shut down all U.S. manufacturing locations and is currently producing all of its tools offshore. I will not entertain the notion of handling products from a corporation that does not want anything from the U.S. except their dollars,” said Thomas W. Anderson, outside district manager for Mike’s Building Supply in Homen, Wis.

In the end, most distributors recognized the realities of competing in a global economy. They support the idea of selling U.S.-made products, but know their primary job is to help their customers compete more effectively by providing them with the highest quality tools at the best price.

This article appeared in the May/June 2005 issue of Progressive Distributor. Copyright 2005.

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