Federal Trade Commission Received Documents Jan 19 1996 B18354900117 Secretary National Consumers League 1701 K Street, NW, Suite 1200 Washington, DC 20006 (202) 835-3323 Fax (202) 835-0747 Office of the Secretary Federal Trade Commission Room 159 6th and Pennsylvania Ave., NW Washington, DC 20580 Comments of The National Consumers League on "Made in USA" FTC File No. P894219 January 19, 1996 Darlene S. Adkins Senior Program Associate 1701 K St., NW, #1200 Washington, DC 20006 (202) 835-3323 NATIONAL CONSUMERS LEAGUE'S FTC COMMENTS ON MADE IN USA The National Consumers League (NCL), a national, nonprofit membership organization representing consumers, supports the Federal Trade Commission's review of the identifier "Made in USA," and its integrity as a measurement of domestic content and labor. NCL's comments exclusively focus on consumer perception, definition, and activity in relation to the terms: Made in USA; Made in America; and Assembled in USA. Moreover, NCL expresses its interest in participating in the FTC's public workshop on this issue. Survey Methodology In December, 1995, NCL published its Made In The USA: What Does It Mean To You? survey in the NCL Bulletin, our quarterly newsletter. The NCL Bulletin is mailed to 4,997 NCL members, representing consumers throughout the United States. NCL's survey is not a random sample. The informal survey resulted in 115 responses, a return of 2.3 percent. Percentage calculations for each question are determined by the total number of responses received for the question. Non-answers to questions are not included in the percentage calculations, unless otherwise noted. A copy of the NCL survey form and the survey results are included in the attached appendices. NCL's comments herein reflect the findings and an analysis of the survey results as they relate to the issues and questions the Commission posed in the Federal Register, on October 18, 1995, page 53927. CONSUMER PERCEPTION FTC: When consumers see product advertisements or labels stating or implying that products are "Made in USA," "Made in America," or the equivalent, what amount of U.S. parts and labor do they assume are in the products? NCL's survey results concur with the Commission's 1991 consumer perception study which found that many consumers view "Made in USA" claims as representing that products possess high domestic content. NCL questioned: When you see a product advertisement or label stating "Made in USA," what amount of U.S. parts (i.e., components) do you assume is in the product (state a minimum percentage)? Forty-five percent of the respondents stated a minimum of 100 percent. Fifty-four percent stated a minimum ranging between 90 and 100 percent. Eighteen percent indicated 50 percent or lower as a minimum. NCL further questioned: When you see a product advertisement or label stating "Made in USA," what amount of U.S. labor (i.e., production) do you assume is in the product (state a minimum percentage)? Fifty-eight percent stated a minimum of 100 percent. Sixty-six percent of the respondents stated a minimum ranging between 90 and 100 percent. Fourteen percent of the respondents indicated 50 percent or lower as a minimum. Consumer perception regarding the minimum domestic content in a product identified as "Made in USA" varies from consumer personal opinion as to what should be the minimum domestic content when the "Made in USA" identifier is used. Consumer opinion on what should be the minimum percentage of U.S. contribution in components (i.e., parts) when "Made in USA" is utilized: 38 percent of those who responded to the question stated 100 percent; 47 percent stated 90 percent or above; 12 percent stated 50 percent or below. Consumer opinion on what should be the minimum percentage of U.S. contribution in labor (i.e., production) when "Made in USA" is utilized: 59 percent of the respondents stated a minimum of 100 percent; 70 percent stated a minimum ranging between 90 and 100 percent; 7 percent stated 50 percent or lower as a minimum for labor. A comparison of the overall percentages above indicates that consumer assumption regarding the minimum percentage of U.S. components (i.e., parts) in a product identified as "Made in USA," is slightly higher than what they consider, in their opinion, as a reasonable minimum percentage. In regard to domestic labor (i.e., production), consumer opinion on what the minimum U.S. labor should be for "Made in USA" identifiers is slightly higher than their assumption of present levels of U.S. labor in such products. In comparing the individual responses to these questions, NCL found that 74 percent of the respondents indicated the same minimum percentage regarding U.S. labor (i.e., production) content and 54 percent indicated the same minimum percentage regarding U.S. components (i.e., parts) content. To clarify, a majority of respondents indicated the same percentage when identifying what they assumed present levels of U.S. labor and U.S. components are in products identified as "Made in USA" and the minimum percentage they would personally set in U.S. labor and U.S. components for the "Made in USA" identifier to be used. There were some variations. The second most frequent response was a higher personal opinion of what the minimum percentage should be for "Made in USA," products in both U.S. labor and U.S. component content over what the respondent assumed is the minimum percentage in products currently carrying the "Made in USA" identifier. NCL's survey results do not support the assumption (by commenters to an earlier FTC request for comment) that with increased globalization of production, most consumers today do not assume that "Made in USA" products contain "all or virtually all" U.S. parts and labor. NCL firmly believes that a significant percentage of consumers perceive "Made in USA" as implying that products are 100 percent domestic in origin," and that a majority believe the domestic content to be substantial. FTC: How much, if at all, is consumer perception of Made in USA claims affected by the type of product, complexity of the product, or other factors? Consumer confidence in the reliability of the "Made in USA" label or product advertisement is fairly strong, with 22 percent reporting "very confident," and 51 percent reporting "somewhat confident." Consumers stated, however, that their level of confidence in the reliability of the "Made in USA" varies according to the complexity of the product (45 percent of respondents) and the type of product (63 percent). In conclusion, consumer assumptions regarding the domestic content (both U.S. labor and U.S. components) in "Made in USA" products leans toward high minimum percentages. However, significant diversity in consumer perception is noted, indicating ambiguity of definition in the minds of consumers regarding "Made in USA" claims. Consumer confidence in the use of the label is fairly high, although their confidence is affected by the complexity of the product and the type of product. However, survey respondents indicated overwhelmingly to retain the "Made in USA" identification (93 percent). CONSUMER DEFINITION Sixty-nine percent of respondents perceive a difference between the wording "Made in USA" and "Made in America." One identifiable difference is geographic, with respondents identifying varying interpretations on what areas in the Americas applies to the terms. "Made in USA," a majority of survey respondents defined as "50 states and the District of Columbia exclusively" (63 percent). The most popular definition of "Made in America," among survey respondents is that it "includes North, Central, and South America" (42 percent). In comparing the individual responses, 68 percent defined "Made in America" to include larger geographic territory than "Made in USA." FTC: What do consumers understand the phrase, "Assembled in USA" to mean? Consumers defined "Assembled in USA" as meaning the parts (components) are not from the U.S. (86 percent). Overwhelmingly, consumers defined "Assembled in USA" to mean the labor (production) was in the USA (90 percent). NCL questioned: When you see "Assembled in USA," do you think that the product has substantial foreign content? Eighty-four percent of the respondents said "yes." CONSUMER ACTIVITY NCL survey respondents stated that the "Made in USA" identification is "always meaningful" (46 percent); "frequently meaningful" (24 percent); and "sometimes meaningful" (22 percent). Respondents further indicated that all other considerations being equal between two products, if one is labelled or advertised as "Made in USA," they would be more likely to buy the one marked "Made in USA" (87 percent). If the seller expressly states or implies that the seller is superior or unique with respect to the domestic content of its product, consumers are generally more inclined to buy the product (55 percent). Twenty-five percent are less inclined and 19 percent have no opinion. It must be noted that the large percent of "no opinion" responses may be due to difficulty in understanding the question posed, as several respondents indicated in written comments. In conclusion, consumers rated the usefulness of the identifier, "Made in USA." Fifty-nine percent of the respondents indicated that "Made in USA" provides insufficient information. Thirty-three percent of the respondents indicated that "Made in USA" provides sufficient information. Many respondents submitted unsolicited comments in conjunction with this question. Commenters appended their answers of "provides sufficient information" with the following statements:  "if credible"  "I would like to believe and trust that this is true."  "Only if the components and labor are of the USA"  "If it is true. Now, I doubt it!"  "If true."  "If definition is known." Summary of Findings NCL's survey results can be summed up in an unsolicited comment by one survey respondent, "Made in the USA...I would like to believe it, but!!!" Consumers indicated an almost unanimous desire to see the identifer "Made in USA" retained, while expressing a strong opinion of it providing insufficient information to the consumer. A majority of respondents indicated that the "Made in USA" identifier is "frequently" or "always" meaningful when shopping, yet their confidence in the identifier is shaky, especially when considering the complexity and type of product. Consumer perception of the minimum level of U.S. parts and U.S. labor to qualify for the "Made in USA" identifier was diverse. Consumers perceived a wide range of minimum percentages, with most of them expressing high percentages for both U.S. labor and U.S. components. When questioned for their own opinion on what the minimum percentage of U.S. labor and U.S. components should be for a product to qualify for the "Made in USA" identifier, most consumers again chose high percentages for both U.S. labor and U.S. components. Confusion over terminology surfaced. Consumers indicated they perceived a difference between "Made in USA" and "Made in America." Responses indicated that one perceived difference is in geographic representation, as a variety of definitions were submitted. In most cases, respondents perceived "Made in USA" as including less territory than "Made in America." In regard to "Assembled in USA," a majority of consumer respondents said they do not think the components (parts) are from the U.S., yet they do think the labor (production) is U.S. They further confirm that "Assembled in USA" indicates to them that there is substantial foreign content in the product. Overall, NCL's survey results indicate that consumers although supporting the "Made in USA" identifier, are uncertain about its definition and application (i.e., truthfulness). Moreover, a majority of respondents find the identifier deficient in providing consumers with the information they need to make informed decisions in the marketplace. APPENDIX A NCL SURVEY MADE IN THE USA: WHAT DOES IT MEAN TO YOU? CONSUMER SURVEY "MADE IN THE USA: WHAT DOES IT MEAN TO YOU?" On October 17, the Federal Trade Commission (FTC) requested public comment regarding "Made in the USA" advertising claims. The National Consumers League (NCL) is preparing comments which focus on consumer perception of "Made in the USA" and other similar language. NCL has developed this consumer survey which will be part of our presentation to the FTC. To ensure NCL includes your comments, we must receive your completed survey no later than January 5, 1996. Please take a few minutes to complete and return the survey to NCL, ATTN: D. Adkins, 1701 K Street, NW, Suite 1200, Washington, DC 20006; fax (202) 835-0747. Thank you. 1. When you see a product advertisement or label stating "Made in the USA": a. What amount of U.S. parts (i.e., components) do you assume is in the product? State a minimum percentage. ________ percent ________ no opinion b. What amount of U.S. labor (i.e., production) do you assume is in the product? State a minimum percentage. ________ percent ________ no opinion 2. Rate your general confidence in the reliability of the "Made in the USA" label or product advertisement. ________ very confident ________ less confident ________ somewhat confident ________ not confident at all ________ no opinion 3. Does your level of confidence in the reliability of the "Made in the USA" label or advertisement vary according to: a. the complexity of the product (i.e., many components as compared to fewer components) ________ yes ________ no ________ no opinion b. the type of product (i.e., garments, cars, video equipment) ________ yes ________ no ________ no opinion 4. In your opinion, when "Made in the USA" is utilized, what should be the U.S. contribution in labor and content? State a minimum percentage. labor: ________ percent content: ________ percent no opinion _______________ 5. When you shop, the "Made in the USA" identification is: ________ always meaningful ________ frequently meaningful ________ sometimes meaningful ________ seldom meaningful ________ never meaningful 6. When you see "Made in the USA," do you assume the product was manufactured in compliance with U.S. labor laws. ________ yes ________ no ________ no opinion 7. When you see "Made in the USA," do you think: ________ USA means the 50 states and the District of Columbia ________ USA means all states and U.S. territories ________ no opinion 8. All other considerations being equal between two products, if one is labelled or advertised as "Made in the USA," would you be: ________ more likely to buy the one marked "Made in the USA" ________ less likely to buy the one marked "Made in the USA" ________ neither more nor less likely to buy the one marked "Made in the USA" 9. Rate the usefulness to you of the identifier: "Made in the USA." ________ provides sufficient information ________ provides insufficient information ________ no opinion 10. Do you think the "Made in the USA" identification should be retained or dropped? ________ retained ________ dropped ________ no opinion 11. Do you perceive a difference between the wording "Made in the USA" and "Made in America"? ________ yes ________ no ________ no opinion 12. When you see "Made in America," do you think it includes: ________ only the 50 states and District of Columbia in the USA ________ all 50 states in the USA and U.S. territories ________ North America ________ North, Central, or South America ________ no opinion 13. When you see "Assembled in the USA" on a label or advertisement, do you think it means: a. The content (parts) are from the U.S. ________ yes ________ no ________ no opinion If yes, what percentage at a minimum: _____ percentage b. The labor (production) was in the U.S. ________ yes ________ no ________ no opinion If yes, what percentage at a minimum: _____ percentage 14. When you see "Assembled in the USA" on a label or advertisement, do you think that the product has substantial foreign content? ________ yes ________ no ________ no opinion 15. If the seller expressly states or implies that the seller is superior or unique with respect to the domestic content of its product, are you more inclined to buy the product? ________ yes ________ no ________ no opinion APPENDIX B NCL SURVEY RESULTS MADE IN THE USA: WHAT DOES IT MEAN TO YOU? NATIONAL CONSUMERS LEAGUE'S MADE IN USA: WHAT IT MEANS TO ME CONSUMER SURVEY RESULTS 1. When you see a product advertisement or label stating "Made in the USA": a. What amount of U.S. parts (i.e., components) do you assume is in the product? State a minimum percentage. 100 percent 50 95 percent 4 90 percent 6 80 percent 5 75 percent 8 65 percent 1 60 percent 2 51 percent 11 50 percent 12 33 percent 1 10 percent 4 0 percent 3 no opinion 5 no answer 3 B-1 b. What amount of U.S. labor (i.e., production) do you assume is in the product? State a minimum percentage. 100 percent 64 95 percent 2 90 percent 7 80 percent 3 75 percent 5 60 percent 2 51 percent 8 50 percent 8 40 percent 2 25 percent 1 20 percent 1 10 percent 2 5 percent 1 0 percent 1 no opinion 4 no answer 4 B-2 2. Rate your general confidence in the reliability of the "Made in the USA" label or product advertisement. very confident 25 somewhat confident 59 less confident 19 not confident at all 9 no opinion 3 3. Does your level of confidence in the reliability of the "Made in the USA" label or advertisement vary according to: a. the complexity of the product (i.e., many components as compared to fewer components) yes 50 no 48 no opinion 13 no answer 4 b. the type of product (i.e., garments, cars, video equipment) yes 69 no 35 no opinion 5 no answer 6 B-3 4a. In your opinion, when "Made in the USA" is utilized, what should be the U.S. contribution in labor and content? State a minimum percentage. labor: 100 percent 67 95 percent 1 90 percent 11 85 percent 1 80 percent 8 75 percent 5 70 percent 2 60 percent 1 51 percent 8 50 percent 7 10 percent 1 no opinion 1 no answer 2 B-4 4b. In your opinion, when "Made in the USA" is utilized, what should be the U.S. contribution in labor and content? State a minimum percentage. content: 100 percent 26 95 percent 1 90 percent 5 80 percent 5 75 percent 8 70 percent 2 60 percent 2 51 percent 8 50 percent 7 0 percent 1 no opinion 3 no answer 47 B-5 5. When you shop, the "Made in the USA" identification is: always meaningful 52 frequently meaningful 27 sometimes meaningful 25 seldom meaningful 8 never meaningful 2 no answer 1 6. When you see "Made in the USA," do you assume the product was manufactured in compliance with U.S. labor laws. yes 89 no 24 no opinion 2 7. When you see "Made in the USA," do you think: USA means the 50 states and the District of Columbia 72 USA means all states and U.S. territories 41 no opinion 2 B-6 8. All other considerations being equal between two products, if one is labelled or advertised as "Made in the USA," would you be: more likely to buy the one marked "Made in the USA" 97 less likely to buy the one marked "Made in the USA" 1 neither more nor less likely to buy the one marked "Made in the USA" 14 no answer 3 9. Rate the usefulness to you of the identifier: "Made in the USA." provides sufficient information 38 provides insufficient information 67 no opinion 9 no answer 1 10. Do you think the "Made in the USA" identification should be retained 101 dropped 2 no opinion 6 no answer 6 B-7 11. Do you perceive a difference between the wording "Made in the USA" and "Made in America"? yes 78 no 33 no opinion 2 no answer 2 12. "Made in America," includes: only the 50 states & District of Columbia in the USA 24 all 50 states in the USA and U.S. territories 21 North America 17 North, Central, or South America 48 no opinion 5 B-8 13a. When you see "Assembled in the USA" on a label or advertisement, do you think it means: The content (parts) are from the U.S. yes 12 no 94 no opinion 3 no answer 6 If yes, what percentage at a minimum: 100 percent 6 95 percent 1 51 percent 1 no answer 4 13b. When you see "Assembled in the USA" on a label or advertisement, do you think it means: The labor (production) was in the U.S. yes 100 no 10 no opinion 1 no answer 4 If yes, what percentage at a minimum: 100 percent 43 90 percent 4 85 percent 2 80 percent 3 75 percent 6 51 percent 7 50 percent 7 25 percent 1 20 percent 2 10 percent 2 no answer 23 B-9 14. When you see "Assembled in the USA" on a label or advertisement, do you think that the product has substantial foreign content? yes 96 no 13 no opinion 5 no answer 1 15. If the seller expressly states or implies that the seller is superior or unique with respect to the domestic content of its product, are you more inclined to buy the product? yes 63 no 29 no opinion 22 no answer 1 B-10 APPENDIX THREE ADDITIONAL NCL SURVEY RESULTS MADE IN THE USA: WHAT DOES IT MEAN TO YOU? ADDITIONAL NCL SURVEY RESULTS MADE IN THE USA: WHAT DOES IT MEAN TO YOU? COMPARISON OF INDIVIDUAL RESPONSES TO SURVEY QUESTIONS 1 AND 4: Labor (production): The reported percentage is higher for question 1 than question 4 8 The reported percentage is lower for question 1 than question 4 19 The reported percentage is the same for both questions 1 and 4 76 Components (parts): The reported percentage is higher for question 1 than question 4 10 The reported percentage is lower for question 1 than question 4 17 The reported percentage is the same for both questions 1 and 4 32 C-1 COMPARISON OF INDIVIDUAL RESPONSES TO SURVEY QUESTIONS 7 AND 12: Defined land mass (geographic territory) for "Made in USA" is larger than "Made in America" 2 Defined land mass (geographic territory) for "Made in America" is larger than "Made in USA" 73 Defined land mass (geographic territory) same for "Made in USA" and "Made in America" 33 C-2