Location Location Location: Why Are Consumers Concerned About Where Your Manufacturing Takes Place?
You might think that the average consumer does not really think about where the products s/he purchases were produced or the steps that went into creating it. The truth is that consumers are becoming more and more savvy and more and more concerned with how and where their goods are produced. They are specifically thinking about who is manufacturing them and what are the conditions under which they are working. And, whether accurate or not, people make assumptions as to the answers to those questions based on the location of a manufacturing facility.
In recent surveys, 70% of Americans expressed a belief in the importance of buying American-made goods, and 30% of Brits are concerned about the points of origin of the products they purchase. A main reason behind these feelings is a growing concern with ethical and environmental issues related to manufacturing. Today’s consumers want to know that the goods they buy have been produced under safe working conditions, by workers earning fair pay, and in a way that leaves a limited carbon footprint.
Safe Working Conditions
News stories abound about sweatshops and unsafe working conditions at factories primarily in third world countries. Factories that focus on manufacturing clothing are one of the worst offenders resorting to child labor and very harsh conditions including excessively high or low temperatures, poor air quality, unsanitary facilities. To say nothing of the verbal and physical abuse that some workers are faced with on a daily basis.
While cheap labor translates to cheaper prices for consumers, the rise of the “conscious consumer” means that only 19% of Americans will purchase products that they suspect of being manufactured under poor conditions. And a whopping 64% will feel guilty about buying goods produced in a sweatshop or other unfortunate manufacturing scenarios.
Fair Pay
The standard of living is lower in third world countries, and therefore so is the expected salary of workers in most fields, including manufacturing. In some cases, wages that sound extremely low to westerners are actually more than fair given a local economy. But, in other cases, employers are taking advantage and paying the workers unfairly.
Similar to the issues relating to working conditions in manufacturing, consumers are becoming more aware of the wage gap and take that into consideration when making purchasing decisions.
Limited Carbon Footprint
Corporate social responsibility has become a buzzword and for good reason. Companies across industries including manufacturing are taking responsibility for the impact their business has on the environment. Whether this is coming from consumer demand or from business leaders’ own concern for the environment is somewhat irrelevant, but what matters is that consumers are looking to purchase from those companies that do emphasize sustainability and taking active steps to save the environment.
Some countries have greater regulations than others, and consumers will take notice of where a company chooses to do its manufacturing.
So Why Does Location Matter?
You might be asking yourself, if what consumers care about are things like working conditions, fair pay, and environmental sustainability, why does it matter where the manufacturing process takes place? Rather, it seems that consumers actually care about how products are manufactured.
This is true. But, as the saying goes, perception is reality. The mere fact that people believe that goods produced in the United States are by definition manufactured under better working conditions than those created in Bangladesh is enough to make some consumers think twice before purchasing something that they know was made in Bangladesh.
40% of Americans say that country of manufacturing origin is one of the primary factors that goes into a purchasing decision. With endless amounts of information at our fingertips on our smartphones, it is possible to find out within minutes exactly where a product comes from and it’s whole journey along the supply chain. As consumers continue to want to support companies whose values align with their own, they will seek out this information in order to make more informed purchasing decisions.
Before You Pick Up and Move Your Factory…
Don’t think that all consumers are becoming so socially-conscious that manufacturing location and perceived (or real) implications of that location is really actually going to be the be-all and end-all of purchasing decisions. At the end of the day, price is still the top driving factor and there are plenty of people who will take the feelings of guilt for purchasing something made under less than stellar conditions over paying a higher price.
It will be interesting to see if that ever changes with time.