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USA Marketplace: Mere Marketing or More?

Posted: March 27, 2014, 3:55 p.m. EDT


For some, "Made in the USA” is a mark of quality; for others, it represents safety, jobs or economic security.

By Brian Hutchins

To the U.S. Federal Trade Commission (FTC), the only government agency charged with policing product claims, "Made in the USA” means that a product meets its "all or virtually all” standard. That standard  means that "all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no—or negligible—foreign content,” according to the FTC.

"FTC states that it should contain only a de minimis, or negligible, amount of foreign content,” said Debora Eisen, senior regulatory counsel with the American Pet Products Association (APPA) in Greenwich, Conn. "Although there is no single bright line to establish when a product is or is not all or virtually all made in the United States, there are a number of factors that the commission will look to in making this determination.”

The FTC’s interest is strictly to prevent deception in the marketplace, and it only investigates potentially deceptive claims when someone, usually a competitor, files a complaint.

"We take it very seriously,” said Julia Solomon Ensor, a staff attorney with the FTC’s Bureau of Consumer Protection’s Division of Enforcement. Ensor and a number of other FTC lawyers plus two investigators handle the Made in the USA complaints as part of their job duties.

Made in USA
Jason Winter/Shutterstock

"We investigate each credible complaint,” she said. "The focus is to stop deceptive advertising.”

The majority of complaints come from competitors because they are best able to evaluate a product and know, for example, whether a certain component or ingredient was produced at all in the U.S., said Ensor.

Although the FTC was unable to specify how many complaints for deceptive Made in the USA claims it investigates or receives per year, Ensor said that nearly all complaints are settled through "informal counseling” with companies as the FTC educates them on appropriate, qualified claims.

"The vast majority want to do the right thing,” she said.

Typically, investigations end with a staff closing letter (see sidebar on page 45).

On rare occasions, the FTC must escalate an investigation. For example, late in 2013, E.K. Ekcessories Inc. of Logan, Utah, signed a consent decree in which it agreed, without admitting any past wrongdoing, to not claim products were made in the USA unless they actually were made in the USA. Although the E.K. case involved iPhone accessories that the FTC claimed were not made in the USA, the consent decree covers E.K.’s entire product line, which includes dog collars and leashes.

Prior to that consent decree, the most recent consent decree involving Made in the USA claims in any industry was reached in 2009.

Should a company violate terms of a consent decree, the FTC could then file suit against the company and seek fines.

Neither the FTC nor any other government agency approves or verifies these claims.

Made, Sourced, Packaged
For Art Bouskos, national sales manager of Cal Premium Treat, which recently opened a pet treat plant in Perris, Calif., to GFSI (Global Food Safety Initiative) standards, the standard means to use only American ingredients, except for noted exceptions, such as New Zealand lamb or French duck.

"Made in USA is a claim that lots of companies make, rightly so, but where are they sourced?” he said, adding that many people get confused by treats labeled "Packaged in the USA.” "My worry is where did they get the product, where did they get their source ingredients?”

By the FTC’s standard, of course, those products would be deceptive if more than a negligible percentage of the ingredients are being sourced from foreign countries.

"Wondercide products are made in the USA from production to fulfillment,” said Stephanie Boone, president of Wondercide LLC in Austin, Texas. "This means that we source our ingredients and all packaging from the USA, and that our manufacturing, production and order fulfillment is all done in the USA.”

Lance Reyniers, president of Python Products Inc. of Milwaukee, has been touting Python’s American-made product for 30 years. For Reyniers, made in America means quality, ingenuity and jobs. It is also important to Python’s customers.

"We continue to hear it,” Reyniers said. "We hear it more today from the stores, from the distributors who are hearing it from the stores and from the consumers who call us to say, ‘Thank you.’”

The origination of products is one of the top three questions Python receives at consumer shows, Reyniers said. He urges other companies to "take pride” and consider "how quality affects the animals—in our case—fish.” Because Python sources its components in the U.S., it is confident that its products are free of BPAs, arsenic and lead.

"When you bring in from China and assemble it here, that’s not made in the USA,” Reyniers said. "We don’t just have an office or warehouse bringing products over from overseas.”

"It has always been an intrinsic part of our culture that to be a great American company, we have to start here and stay here,” Boone said. "If we can do something cheaper or faster by sending it overseas, what are we giving up to gain profit? The answer is oftentimes quality and integrity. Those same attributes are important to our customers when they choose our products. Aside from that, people still believe in the American dream, and we are proof that it still exists. I think that really resonates with people on a personal level, and they prove it with their purchasing preferences.”

Linda Parks, president of Lixit Corp., also has noted increased interest in American-made products.

"[This trend] is growing with consumers and wholesalers,” she said. "We have a job problem in this country. If you can make the numbers work you should make in the USA as your first choice. When you buy a product that is 100 percent imported, who is paying into our Social Security system? This is a huge issue no one seems to talk about.”

Standing Ground, Staking Claim
So, is enough done to regulate and enforce Made in the USA claims?

"Not even close,” said Reyniers.

"Today, manufacturers use a variety of guidelines,” Parks said. "Federal government guidelines are very muted and not clearly addressed, and this confuses consumers. Guidelines should be clearly called out by the government and be consistent for each manufacturer. The final assembly of the product should be called out and the percentage of components and where they are made. This is a global economy.”

The global economy is a main reason that Cal Premium Treats sought GFSI status: to meet the strict standards mandated by certain countries, such as those in the European Union, Bouskos said.

The Made in the USA segment has been growing 15 percent per year, according to the trade press, because of the "China issue,” Bouskos said.

"China has helped us very much, thank you very much,” Bouskos said, alluding to various food safety and adulterated ingredients issues. Cal Premium’s product line includes jerky treats for pets. The company will be touting food safety issues and the cleanliness and biosecurity of its plant. For example, the facility will have separate processing areas for poultry, pork and beef, and employees have key cards that bar access to other areas of the plant to prevent cross contamination, according to Bouskos.

"For Zuke’s, Made in the USA means using the highest-quality ingredients, sourced in the USA whenever possible, and manufacturing our products in facilities in the USA that adhere to stringent quality controls,” said Chris Meiering, director of marketing at Zuke’s in Durango, Colo., which was recently purchased by Nestlé Purina PetCare Co. "We say whenever possible regarding sourcing because there are cases where sourcing proteins from safe, reputable countries such as New Zealand creates a better product. We use venison and rabbit from New Zealand because the product quality is extremely high. In the case of venison, chronic wasting disease is prevalent across the United States but has not been reported in New Zealand where animals are routinely tested for signs of the disease. Our products that contain venison indicate that the venison is from New Zealand. Meanwhile on the most recent version of our Mini Naturals Rabbit packaging, we indicate ‘Made in the USA with New Zealand Rabbit.’

"With the exception of our New Zealand-sourced proteins, we estimate that on average about 98 percent of our ingredients by weight are USA-sourced,” Meiering said. "We source a few trace ingredients overseas due to unavailability locally or because our testing has shown the foreign product to be of superior quality. With the support of Nestlé we hope to grow that percentage wherever possible. Partnering with an international company also allows a smaller brand like Zuke’s to more easily explore new sourcing options like GMO-free and organic-certified ingredients.”

Lonnie Schwimmer of Nootie LLC tells a similar story.

"All of our current products are made in the USA,” Schwimmer said. "That means that all of our products are manufactured here in the U.S. Our ingredients are purchased in the U.S. or are purchased from U.S. companies that source outside of the U.S. a few ingredients because there is no market here in this country for them.

"Many companies handle how they want to promote their products with their own rules for telling the truth,” Schwimmer added. "About 97 percent of all our ingredients are sourced here in the U.S.; however, there are certain ingredients where there is absolutely no market for them in the U.S. However, some of our competitors claim 100 percent U.S.-sourced ingredients.”

Manufacturer organizations, including the Pet Food Institute (PFI) and APPA, generally refer members to the FTC.

"It is the responsibility of each company making a Made in USA claim to ensure its products are in compliance with the current standard,” said Kurt Gallagher, director of communications and export development at PFI in Washington, D.C. However, "there are certification programs companies could consider utilizing,” he added, referring to some third-party, for-profit efforts to verify or certify Made in the USA claims.

One such organization is Made in USA Certified, which seems to be targeting the pet industry. For example, it is a sponsor of the NYC Re-tails & Sales Expo and recently organized a "Made in the USA” pet product endcap for 40 supermarkets of a large Midwest chain. Presumably these efforts are designed to provide value for the companies that sign up for the organization’s program. Made in USA Certified, in turn, needs to prove to its clients that consumers and buyers trust the "Made in USA Certified” label more than they trust generic "Made in the USA” labels.

Organized by the Long Island Pet Professionals (LIPP), NYC Re-tails & Sales Expo took place Feb. 19 in New York and was created to showcase American-made pet products.

"The event got a ton of interest since we first announced it in late November,” said Nancy Hassel, LIPP president. "We sold out of vendor spaces. Because of the tremendous response, we have already decided to do a second event later this year. Our event was an exclusive, and we only allowed 20 vendors to showcase their products. We wanted each vendor and each attending retailer to have plenty of time to learn about the products, learn about the importance of pet products made and sourced in the USA, and why they should carry more in their stores.”

More than 150 retailers planned to attend the invitation event. Some of those retailers are members of Hassel’s network.

"I spoke with a few of my members that own pet boutiques here on Long Island, and I was very impressed that 80 percent of inventory at Fetch Pet Care in Port Jefferson is made in the USA. And Barkfield Road in East Northport has 70 percent. Even Pet Supplies Plus, a much bigger store, now has Made in the USA sections in their stores.”

Participating vendors were screened, Hassel said.

"We asked many questions, researched the products prior to allowing them to be there, and we have even turned down a couple of pet food companies who ‘manufactured in the USA’ but could not answer the question, ‘Where are your ingredients sourced from?’” she said. "In the end, it is not about companies that make the Made in the USA claim for marketing and advertising purposes. It is about companies that make and source their products here, want to be in more and more stores across the country and be readily available to the savvy pet customer who reads labels, looks for high-quality products that they can feel safe about giving to their pets and good about supporting a local company who is employing people here.”

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