The purpose of this article is to investigate the notion that increasingly companies trying to promote products made in USA over imported products. Due to the increased influence by politicians and perception of segment of population, companies are looking in to bringing certain manufacturing plants back to USA. This study will focus on understanding motivations behind it and how feasible and practical the notion is and whether it makes any financial sense

1. A Detailed Study to Evaluate the Financial Impact of Demanding Made in USA Products 1
A Detailed Study to Evaluate the Financial Impact of Demanding Made in USA Products in a
Globalized Economy
Charm Rammandala
California Intercontinental University

2. A Detailed Study to Evaluate the Financial Impact of Demanding Made in USA Products 2
Abstract
The purpose of this study is to investigate the notion that increasingly companies trying to
promote products made in USA over imported products. Due to the increased influence by
politicians and perception of segment of population, companies are looking in to bringing certain
manufacturing plants back to USA. This study will focus on understanding motivations behind it
and how feasible and practical the notion is and whether it makes any financial sense

3. A Detailed Study to Evaluate the Financial Impact of Demanding Made in USA Products 3
A Detailed Study to Evaluate the Financial Impact of Demanding Made In USA Products in a
Globalized Economy
The broad classification of countries economic activities are divided in to three categories.
Those are agriculture, industry and service sector. It is well documented that up to 18th
century
all most all the countries were mostly depended on the output generated by the agricultural
industry within their own boarders. This is essentially due to the lack of advances in the
engineering, technology & transportation sectors. However late 18th
century and in the 19th
century this was changed in the USA Europe. By 1950 USA was the world number one country
in the manufacturing sector. This was largely due to the advances in the technology and the
importance given to the new innovations (Gaan 2015)
In 1980’s USA encouraged countries to open up their boarders and trade with each other.
This led to numerous bilateral and multilateral trade agreements with various countries. The idea
was to encourage companies to source products from another country if the opportunity cost is
higher to produce in home country. As a result, some of the manufacturing plants went overseas
and some came to USA. Examples are, low tech manufacturing industries such as apparel and
food processing were done offshore. This was due to low labour cost in countries like China and
Bangladesh. Automotive manufacturing plants were set up in USA by Japanese companies due
to the proximity to customer as well as to get the duty advantages (Ron 2008)
Above chart shows how the 3 prominent economic sectors changed over the last century and
a half. The agricultural sector had a continuous decline over the years in terms of the significant
revenue generator. Manufacturing sector became prominent till late 1960’s but service sector has
over taken all other economic activities and remain strong on the top.

4. A Detailed Study to Evaluate the Financial Impact of Demanding Made in USA Products 4
Graph 1 (Bureau of Labor Statistics)
Concept of Globalization
Industrialization and advances in the communication together development in faster and
safer transportation opened up new opportunities for companies to source products from overseas
in 1980’s. Essentially governments monitory and fiscal policies encouraged companies to look
for new business partners who would add value to the company. Economies of scale become the
new buzz word and it made total sense to collaborate with business partners around the world,
either to source products or be near to the customer (Akram 2011)
Barriers to international trade was considerably lowered through international agreements.
World Trade Organization was established to encourage to enforce the rules and regulations and
also to monitor the fair play. Countries signed significant trade treaties such as GATT, NAFTA
and EEA are few examples. The other notable measures countries including USA took to expand
globalization includes,

5. A Detailed Study to Evaluate the Financial Impact of Demanding Made in USA Products 5
 Elimination or reduced rates of Tariff
 Reduced transportation cost through containerization ocean shipping
 Reduction or elimination of capital control
 Reduction or elimination of subsidies for local businesses
As a result of the new open markets and attractiveness of staying close to resources or
market encouraged companies to move offshore. This inevitably had an impact on the domestic
business practices and pricing structure (Ron 2011).
Impact of Globalization
Impact of globalization was twofold. Namely, impact to the pricing structure and impact to
the local industry. Essentially one of the primary reason for globalization was to encourage
countries to produce excess quantities of the products they have expertise or resources. This
helps to those countries to generate more quantity with lower production cost. As a result,
partner countries could buy for a lesser price than it would cost to produce by themselves (Gaan
2015)
This economies of scale model helped consumers to buy consumer items for a lesser price.
Same time globalization had adverse effect on the companies who were trying to compete with
the overseas firms or domestic importing companies as inevitably local manufactures cost of
goods were considerably higher than the imported goods. This is due to the higher wages and
other related costs incurred by the local company.
Michael Porter explains that there are three strategies to stay in the market and to get ahead
the competition. Those are Differentiation strategy, focus strategy and price leadership strategy.

6. A Detailed Study to Evaluate the Financial Impact of Demanding Made in USA Products 6
As a result of globalization, companies who were competing with the price had to move to
countries where resources are cheaper so they could get them done in a lower cost than in the
home country. Companies who had more resources and their business model was to innovate
stayed behind in the home country as price wasn’t a primary concern for them. Due to the
innovative nature of the business, they could demand a higher price from the consumer which
would allow them to make the expected margins (Gaan 2015).
The firms which employed large number of employees had an adverse impact due to the
globalization. Countries such as USA had higher living standards and inevitably this demanded
higher pay and facilities. As a result, labour intensive industries such as apparel, steal,
manufacturing had to be re positioned in the so called cheap labour markets. This led to a higher
unemployment rates in the society. The companies which remained in the country needed highly
skilled labour and number of employees needed was considerably less than a labour intensive
company (Akram 2011).
Graph 2 (Bureau of Labor Statistics)

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Above chart shows labour employment fluctuation during the last decade. As it shows in
2010 the employment number hit the all-time low. This decreasing number created an intense
debate in the country about the impact of globalization to the economy and the employment
The movement of encouraging domestic products
As a result of two decades of continuous decline of manufacturing jobs in USA,
unemployment rate in some states have increased considerably. As below chart highlights even
though the revenue of manufacturing has increased every year, number of employment was
significantly low (Gaan 2015)
Graph 3 (Bureau of Labor Statistics)
This was mainly due to the type of manufacturing jobs retained in USA. Those are high tech
and innovative companies where unit price is considerably higher and margins are bigger. This
helped to earn higher revenues but declined the number of jobs required to achieve the output.

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Unemployment let to a new discussion in the society about the validity of globalization and
its true meaning to the nation. Politicians and civic groups increasingly voiced their
dissatisfaction about the effect of globalization. Some of the firms who were sensitive to
customer reactions decided to play in to the notion and introduce products made in USA.
Products are ranging from apparel which are made in USA to customer help desks which were
previously set up in offshore countries (Ocampo 2010)
It is important to note that companies who are proposing and in some cases who have
already started production locally still have to rely on the expensive labour cost and raw material
cost. This inevitably increase the cost of production. In order to stay competitive, margins are
considerably lowered. Initial stage patriotic consumers were willing to buy the products but over
time financial realities are surfaced. Due to the decreased disposable income of the consumer,
prices are a major deciding factor. Hence most consumers prefer low cost over products made in
America (Greenwald 2015)
Conclusion
USA was one of pioneer architect in creating and promoting globalization over the last three
decades. Through the creation of World Trade Organization and General Agreement on Trade
and Tariff as well as encouraging countries and firms to sign up to trade agreements, world trade
was promoted. However, this had an adverse impact on the employment numbers in the
manufacturing sector. Inevitable more labor intensive industries moved to offshore countries
where labour was cheaper and some companies moved to be closer to raw materials or market.
Recently firms have noted that consumers feel sympathy towards unemployed manufacturing
employees and developed a taste for home made goods. This led to a number of companies

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commencing production in USA and promote as patriotic company. However economic realities
are pushing consumers to choose imported cheaper products over the products made in USA

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References
Ocampo, J.A (2010) Rethinking global economics and social governance, Journal of
Globalization & Development. Retrieved from ProQuest virtual reference library http:/gale.
proquest.com (06/24/2016)
Ron, M (2008) World is not flat: putting Globalization in its place, Cambridge Journal of
Economy & Society. Retrieved from ProQuest virtual reference library http:/gale. proquest.com
(06/26/2016)
Akram, M, (2011) Globalization & its impact on USA economic development. International
Journal of Business management. Retrieved from ProQuest virtual reference library http:/gale.
proquest.com (06/25/2016)
Gaan, N, (2015) United States, Globalization and Manufacturing employment. International
Journal of Globalization and Development. Retrieved from ProQuest virtual reference library
http:/gale. proquest.com (06/23/2016)
Greenwald, B, (2010) Globalization and changing public perception. Journal of Business
Management. Retrieved from ProQuest virtual reference library http:/gale. proquest.com
(06/25/2016)