‘Made in America’ faces a long bumpy ride
A ‘Made in USA’ tag on the box won’t give you free pass, says Keechle
Ruston, Louisiana, April 17: Mini motorcycle and go-kart maker Monster Moto made a big bet on U.S. manufacturing by moving assembly to this Louisiana town in 2016 from China.
But it will be a long ride before it can stamp its products “Made in USA.”
The loss of nearly one out four U.S. factories in the last two decades means parts for its bike frames and engines must be purchased in China, where the manufacturing supply chain moved years ago.
“There’s just no way to source parts in America right now,” said Monster Moto CEO Alex Keechle during a tour of the company's assembly plant. "But by planting the flag here, we believe suppliers will follow.”
Monster Moto’s experience is an example of the obstacles American companies face as they, along with President Donald Trump, try to rebuild American manufacturing.
US automakers and their suppliers, for example, have already invested billions in plants abroad and would face an expensive and time-consuming transition to buy thousands of American-made parts if President Trump’s proposed “border tax” on imported goods were to become law.
When companies reshore assembly to US soil – in Monster Moto’s case that took two years to find a location and negotiate support from local and state officials – they are betting their demand will create a local supply chain that currently does not exist.
For now, finding US-based suppliers “remains one of the top challenges across our supplier base,” said Cindi Marsiglio, Wal-Mart Stores Inc’s vice president for US manufacturing and sourcing.
Wal-Mart partnered with Monster Moto and several other US companies in a drive to increase spending on American-made goods by $250 billion by 2023 in response to consumer demand for US-made goods. Their experience has shown Americans’ patriotic shopping habits have limits, namely when it comes to price.
Take Monster Moto's bikes, which sell for between $249 to $749. Keechle, the CEO, says he can’t raise those prices for fear his price sensitive prospective customers will turn to less expensive rivals made in China. “Consumers won’t give you a free pass just because you put ‘Made in USA’ on the box,” Keechle says. “You have to remain price competitive.”
Keeping a sharp eye on labor costs in their factory is one thing these US manufactures can control.
They see replacing primarily lower-skilled workers on the assembly line with robots on US factory floors as the only way to produce here in a financially viable, cost-competitive way. It’s a trend that runs against the narrative candidate Mr Trump used to win the US Presidency.