The Last Word | A Return to American Made
By Greg Owens
Steel is in short supply in the U.S. and prices are surging, which drives up costs and squeezes profits. U.S. steel prices are 68% higher than the global market price and almost double China’s. The price gap is so wide that even with a 25% tariff, it’d be cheaper to import than buy from domestic mills.
For many of us the past year has been a trying, if not traumatic, experience on a personal and professional level. In the true spirit of our country, we’ve rallied and gotten through perhaps the most difficult time we’ve ever lived through. Now that we’re getting back to normal it’s important we remain focused on lessons learned during the pandemic.
It seems like ages, but we remember trying to buy masks, toilet paper, and other basics at the start of the pandemic only to find them in short supply. Here in New York there were daily press conferences discussing the shortage of these basic supplies, as well as critical items, like ventilators, that medical staff needed to attend to those who had fallen ill. In the case of supply, we discovered something hugely important that we should never forget: our dependence on China (and other nations) for critical manufactured goods was shut off and we had no domestic suppliers to turn to in a crisis. While discontent has long simmered about China’s decimation of American manufacturing, the coronavirus made it clear that the U.S. is dangerously dependent on China for much-needed goods.
This stark realization sent shock waves through the nation as our politicians and medical community struggled to cope with the crisis. More than a year after the initial shutdown, supply chain issues are still front page news. From chips for our automobile factories to medical supplies, shortages are abundant and affect our economic recovery. Many of our friends and one-time industry colleagues have suffered from supply disruptions. They’ve reached out to us to see if we know anyone in the industry who can help them find new sources of flatware, dinnerware, etc.
So pronounced is the situation that there’s actually broad-based bipartisan support to recognize the issue and cooperate on a pragmatic solution. From the recently-passed U.S. Innovation and Competition Act (also known as the China bill) which authorizes $110 billion for basic and advanced technology research to key elements of the infrastructure bill, Washington has prioritized the return of key strategic production and technology so that we’re never again caught in the dire situation we faced last year.
The main issue here is the same as it has been for decades. The race to the bottom – finding the cheapest possible source of supply – has concentrated the flatware industry in China and Vietnam, which now accounts for 90% of flatware production sold to the United States. With the lessons of the pandemic and a deteriorating political situation, particularly with China, where will the supply come from in two to five years?
In order to develop a domestic source of flatware supply, or any source outside China, the first issue that needs to be addressed is subsidized stainless steel. The truth is that it’s cheaper to buy a box of flatware FOB Long Beach than it is to buy the steel to make it with here in the U.S. Steel prices in other countries, like Mexico, are also much higher than the subsidized prices in China, and the Chinese don’t offer those low prices on exported steel. So even Mexico struggles to compete in the race to the bottom.
Despite these challenges before, during, and now after the pandemic, Sherrill Manufacturing continues to grow revenue. The reason is that consumers have awoken to many of the same supply issues that purchasing managers in our industry face. Political, environ- mental, and human rights concerns have made the Chinese brand toxic. Further, a growing number of Americans want to buy American, and those in our industry offering Made in the USA products are reaping the benefits of this trend which is stronger than ever. About half of U.S. consumers said they agree or strongly agree that American retailers should cut back on sourcing from China; two-fifths said the pandemic has made them less willing to buy products made in China. (That percentage surges to three-fifths for consumers older than 60.) And nearly 80% are willing to pay higher prices to companies that close their Chinese factories.
While our industry finds its supply chain footing there’s one thing that we can take to the bank. Now that the masks have come off, let us not forget to focus on doing our part to support manufacturing companies and their heroic employees who worked through the pandemic, in many cases shifting production to PPE, stepping up their game to keep us safe and supplied during the crisis. Both in store and online, let’s make sure we insist on supporting American manufacturing. Hopefully this message will resonate with those running procurement in companies across our industry and they too will focus on returning the tabletop supply chain to the U.S. Those who do will surely win in the long run.
Greg Owens is the co-founder and CEO of Sherrill Manufacturing/Liberty Tabletop. Owens is also co-chair of the Coalition for a Prosperous America’s (CPA) Buy American Committee. www.libertytabletop.com
This article originally appeared in Tableware Today’s bi-monthly publication.