What Does 'Made in USA' Mean for Drilling Products?
What does it mean when we say, “Made in the USA”? The answer depends on the definitions offered by various government programs and legal experts, and on our perception. As I understand, in order to label a product as “made in the USA,” the Department of Commerce requires that it be manufactured here with U.S.-sourced raw materials. All, or virtually all, made here.
For example, my wife, Randy, used to sell electrical supplies for federal and state projects. If the specs for a given project said all products must be made in the USA, it meant down to the minute detail. In one project I heard about, goods were ordered to spec, delivered to the jobsite and installed. Later, project managers found a switch box had one small component made in Mexico. Everything had to come out and get replaced.
Many exporters utilize the services of the Import/Export Bank. They have a program where they will provide financial backup if you offer a foreign company payment terms like net 30 days for the U.S.-made products you sell to them. If you do not get paid, the bank will pay you less a small fee. Here, 50% U.S. made appears to be OK.
Back before NAFTA, there were duty free zones in Mexico near the U.S. border. At the time, I knew of a tricone bit manufacturer that would manufacture the completed bit sections in Mexico, and then ship them to Texas to be welded together and threaded. They used the “Made in the USA” tag, even though the bulk of the work was done in Mexico.
So, is a product made in the USA if the steel to make it was imported? What if the steel was made here in the U.S., but in a foreign-owned steel mill? This came up recently in the use of American-made steel in a certain pipeline. What if a portion of that steel came from a U.S. mill that is a wholly owned subsidiary of a Russian steel conglomerate? Should it count?
I think of all the manufacturing done here in the U.S. How much is U.S. owned? What percentage of publicly traded U.S.-based companies is foreign owned? About 25% on average. In the water well, mining and construction industries, U.S. companies like Ingersoll Rand, Driltech and Mission have become Atlas Copco (now Epiroc) and Sandvik.
Some of my neighbors work in the local Epiroc plant in Fort Loudon, Pennsylvania. Hard working Americans working in a factory located right here in America. Seven miles down the road in Mercersburg, there is a smaller manufacturer making hammer and bits. It employs Americans and is located in America, but owned by Americans. Is one more “made in America” than the other?
Which is more American made: that Ford F250 made in Canada, or my 20-year-old Toyota Tundra made in Tennessee? Did the Mack trucks manufactured in Hagerstown, Maryland, become un-American when they were bought out by Volvo?
Should we be angry that our manufacturing was sold to a foreign-based corporation, or should we be pleased they are building here instead of there? One benefit of manufacturing in the U.S. is that process is subject to strong laws that protect consumers. Here, we tend to do business on the concept that products must be made to suit the application. In some countries, business is buyer beware: “But you did not request heat-treated steel …”
I had a customer ask me where my drill rods were made. I said Minneapolis, thinking he was trying to figure out who my source was or thinking about picking up the pipe at the factory. Sometimes we source our tubes’ bodies on the open market from reliable pipe yards. We know and could show that physical properties of the tubes meet spec, even if we do not always know the mill. We knew these pipe yards primarily handled U.S. steel products, but when I told him that, it was not good enough. He stomped off to buy from a competitor who manufactures tubes in a Russian-owned steel mill right here in Pennsylvania. I had to chuckle on that one. Would you be angered if you bought drill pipe thinking it was U.S. made, and found the tubes were manufactured by a Russian-owned steel mill? Did some of your money end up in Russia? Do you care?
Maybe a U.S. company imports some of its raw materials. Perhaps that raw material is not available here in the U.S., or maybe it is better priced from overseas and the factory needs that lower price to compete. I thought of that when Phoenix Steel closed. We lost our last manufacturer of seamless large-diameter, heavy wall tubes. Should U.S. manufacturers that need those tubes not import them? What option do they have?
Today’s political atmosphere being so toxic, the argument from some is that we do not live in a global marketplace. As drillers, our market is local. But that is only geographically speaking. Maybe that homeowner works for one of the U.S.-based subsidiaries of a foreign-owned company. Here in Franklin County, Pennsylvania, that well you drill could be for a person employed by Epiroc, Volvo or one of their U.S.-based suppliers and support companies. Maybe that homeowner works at the local grocery partially sustained by the employees of that foreign-owned factory.
“Made in the USA” is not so clear. It has gotten muddy as the marketplace has grown more global. Many traditionally U.S.-owned drill rig companies have become foreign owned. On mine sites or road construction projects, we see names like Komatsu or Hitachi on heavy equipment. (Just like people in other countries might see the names Caterpillar or Terex.) Those Komatsu loaders might have engines manufactured in conjunction with Cummins. I do a lot of export work. Most of it involves drill pipe to run on rig models manufactured here in America.
So, what is my point? Well, I am not sure. Is there a “made in America” hierarchy? I think there is, as we all form our own opinions. Should we base purchasing decisions on product origins? Yes, if all else is equal. But should we sacrifice quality, functionality and/or price for an item that sports the “Made in the USA” label? Probably not. I think it unfair if U.S. companies rely on our desire to buy American to gain our business, instead of earning that business through product quality and reliability.
We live in a global market. Within our borders, we have manufacturing that employs Americans to produce products sold worldwide. There are varying degrees of raw materials and component sourcing. There are varying degrees of factory ownership. There is importation of products. It is complicated. It goes beyond brand names. Maybe we should concentrate on functionality and quality.
If we chose the best product for us and it is not “Made in the USA,” that is not our fault. It is the fault of U.S. manufacturers not putting their best into competition. Globalization is a good thing. We should embrace it.