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Bye Bye, ‘Buy American’ Policy

March 10, 2021
Biden’s approach, like others’ before him, fails to stir any sort or loyalty, excitement or commitment.

Most people who were born in America before, say, 1990, are familiar with the scene — or at least the meme — from Close Encounters of the Third Kind, where Richard Dreyfuss finds significance in the mashed potatoes he has shaped on his dinner plate. “This means something,” he tells his worried family. “This is important.”

I was reminded of it when I saw that President Biden had signed an executive order on “Made in America Laws.” While some executive orders actually mean something, others are just a pile of mashed potatoes. This one struck me as the latter — all fluff. Ponderously written, clear-as-mud fluff, but fluff, nonetheless. The chances of it “moving the needle” on American jobs are about as great as finding that same needle in a large haystack.

As a longtime manufacturer, I’m all for making products in America. Not only am I for it, I’ve also done it for more than 20 years. I’ve even written about the advantages of doing so in this very publication. But this latest government decree is nothing more than presidential ruffles and flourishes. It’s the latest in a series of attempts going back to the Great Depression to force government entities to “Buy American.” First there was The Buy American Act of 1933. Later came the Prescribing Uniform Procedures for Certain Determinations under the Buy-American Act of 1954 — a real page-turner from the sound of it — followed by the Surface Transportation Assistance Act of 1982. In 2017, former President Trump signed the Buy American and Hire American executive order, but for all Trump’s campaign rhetoric, the order had virtually no impact on what the federal government spent domestically versus overseas.

Biden says his order further tightens the definition of what constitutes American-made products. This time it will be different, he says.

Excuse me while I stifle a yawn.

As founder and CEO of Big Ass Fans, I spent 20 years manufacturing big fans, medium-size fans, small fans and lights. We made elegant fans, shop fans, even one-of-a-kind fans with original art. We were sticklers for quality, and sourcing and manufacturing close to home were the only way we could guarantee that our products met our standards. (I sold the company three years ago, so you can rest assured, that’s not just marketing mumbo-jumbo.) But my experience over those two decades tells me that this latest executive order will be as ineffective as all the others in boosting the number of American manufacturing jobs. For one thing, it applies only to federal government purchases; it’s just too limited in scope to have any serious impact. It’s nothing but a bone to unions, and a middle finger to Canadian steel and aluminum producers. It does nothing to address the real obstacles to manufacturing in America, obstacles that are important — unlike the order.

First of all, anyone who’s spent any time in manufacturing knows that America lacks the infrastructure to support modern manufacturing needs. Many items simply can’t be manufactured entirely in the United States, because they rely on components — chips and processors —that are exclusively made offshore, and will continue to be, no matter how many executive orders are signed.

But the bigger hurdle to American manufacturing jobs is the seemingly intransigent belief that purchasing decisions should be based on price alone, and with it, the complementary mindset that the goal of the manufacturer is to squeeze every available cent out of a product’s cost. I can’t tell you how many resumes I saw over the years that boasted about the number of pennies shaved. Those job candidates were talking to the wrong guy.

If your only consideration is cost, you’re always going to manufacture your products someplace other than America. And you’re always going to be tightening the screws on suppliers. But your business will ultimately pay a hefty price for those paltry savings, because quality will suffer, your suppliers will resent you, and customers will desert you.

If I had my way, federal entities would always see the benefits of working with American manufacturers, first and foremost because of quality. It might cost a little more, but it’s not like they can’t afford to pay. National loyalty should of course factor into it, too. Manufacturing in the United States employs Americans and creates jobs from the bottom to the top. Business owners should value that, and it shouldn’t require government intervention for this to occur to them. People love to talk about it, but very few seem willing to put their money where their mouth is.

What the government could do to really help encourage buying American is to create a unique grade that identifies exactly how much of a product is really “Made in America.” The right mark would help consumers see just how little actually is. It would also explain why those products that are made here cost more. But that would have to be driven by something outside of the government and big corporations, because the government has had decades to accomplish this with no success. Something that would be embraced by consumers, as they’ve embraced the Energy Star program for appliances, and it would help expose once and for all what drives people’s purchasing decisions.

At Big Ass Fans, I spent a lot of time preaching the gospel of quality — that it’s more important to have pride in your product than in your profit, but if you do things right, you can have both — and we did. A few years ago, I founded an investment firm to partner with founders who have great ideas. Not surprisingly, we now spend a lot of time helping our partner companies solve the kinds of problems that routinely result from overseas manufacturing: costly delays, shoddy workmanship and concerns about intellectual property. We tell our partners that quality is worth paying extra for, and that the best route to take is through American suppliers and manufacturers — at the fan company, our manufacturing facility was across the street and our suppliers within a half-day’s drive — because it’s the only way to build a quality brand and customer loyalty. But it can be a hard sell.

Manufacturing is complex, and it’s challenging — and very rewarding, if it’s done right. In my perfect world, consumers would value quality, longevity and good jobs for their neighbors. Manufacturers would value contributing to the community and making products they proudly stood behind. And it wouldn’t require government intervention to make them toe the line. But it’s a far from perfect world, and try as I might, I can’t seem to change it. I can, however, say with certainty that no executive order is going to bring manufacturing jobs back to America. No matter how densely it’s written, it’s still just a mound of mashed potatoes that doesn’t mean much of anything.

Carey Smith started fan-and-light maker Big Ass Fans in 1999 and sold it for $500 million in 2017. Today he runs Unorthodox Ventures, an investment firm focused on helping small companies with big potential.

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