Is 'made in the USA' really the most sustainable way to manufacture?

When Victor Lytvinenko taught English in Switzerland, he nearly came to blows with his host grandmother over her new purchase of a Swiss Army kitchen knife. The woman defended her $450 investment as an exquisite tool and future heirloom, telling Lytvinenko that Americans will buy twenty $20 knives and never own a good one. He responded that the outlandish cost of the knife equaled his monthly wage.

Long after he left Switzerland, the quality versus quantity argument still resonated with Lytvinenko and even became the premise of the Raleigh Denim Workshop, a boutique he co-founded in 2007 with his wife, Sarah Yarborough. Luxury retailers, including Saks, Nordstrom's and Barneys New York, stock the workshop's distinctively bright and well-made clothing and jeans, priced from $175 to $425. The denim is produced at Cone Denim Mills in nearby Greensboro.

In the Raleigh factory, jean smiths sew from traditional machines, one salvaged from a century-old North Carolina mill. "This ensures lasting stitches," says Lytvinenko, who designs his products with pen and paper, not computers. "I feel passionately about making the very best jeans," he adds.

A growing industry

The move to re-shore US manufacturing faces significant hurdles. In January, the Institute for Supply Management, a nonprofit tracking the health of the US manufacturing sector, reported that its primary measure, the Purchasing Managers Index, had fallen from the previous month. Yet the 254,941 US manufacturers (according to the last census) show promising signs of growth. In 2012, General Electric brought its refrigerator and water heater production back from China to a Louisville, Kentucky, plant. that same year, Caterpillar opened a new Texas facility to make hydraulic excavators. This February, the Walmart Foundation pledged $10bn to support domestic manufacturers and announced plans to buy $250bn worth of American-made products in the next decade.

These examples point to a larger trend: a 2012 Boston Consulting Group survey found that 37% of manufacturers with sales above $1bn were planning to bring operations back to US shores. Citing a closing wage gap, inefficient supply chains and lower US energy prices, the report found the cost-benefit of offshore manufacturing was narrowing.

Defining 'sustainably made'

But is domestic manufacturing more sustainable? Experts think so. Greg Bertelsen, director of energy and resource policy at the National Association of Manufacturers, says many of the association's 12,000 members consistently cite sustainable manufacturing goals – such as their desire to reduce their environmental footprint, to create a safe and healthy workplace and to treat their community well – as priorities. "US manufacturers are the world's most energy efficient," he says. "US fertilizer, pulp and paper, and chemical manufacturers produce less waste and fewer emissions."

The International Energy Agency tracked that in 2010, US greenhouse gas emission intensity was 31% below the worldwide average. The agency projected that by 2035, worldwide energy-related emissions will rise by 20% and US emissions will remain flat.

Marc Onetto, a manufacturing consultant and retired senior vice president of Amazon.com worldwide operations and customer service, says domestic manufacturing is more sustainable because it is more profitable and minimizes over production, the worst form of waste. "Lean manufacturing helps by reducing waste in the most expensive cost categories in developed nations: labor, energy and land usage," he says.

In his experience, lean manufacturing usually shows that companies waste up to 90% of costs in poor processes (i.e. redundant physical actions or information actions such as data mapping or sending an email) and rework processes like correcting defects detected at the end of production or once products are in the marketplace. Once poor processes, transportation costs and other expenses related to the offshore supply chains has been factored in, onshore production becomes competitive – and, because of less shipping, more environmentally sustainable, Onetto says. The toy industry illustrates. Despite the forecasts of retailers and marketers, companies don't learn what children really want until Black Friday. "By then, popular toys sell out, as the factory is too remote to restart production. Retailers discount unpopular toys at terrible waste."

By trying to keep productions closer to home, companies can become more innovative. For their organic jeans, the Raleigh Denim Workshop worked with the Cotton of the Carolinas project, enlisting the help of elderly North Carolina farmers, who grew up farming without chemicals, to produce organic, locally-sourced cotton. This thicker cotton is unbleached, and has yellow flecks underlying the indigo blue.

Carol Hee, director of The University of North Carolina at Chapel Hill's sustainable enterprise center, questioned however, the social aspects of sustainable manufacturing and says marketers and consumers should carefully assess whether a company is authentically sustainable. Social responsibility extends to a company's treatment of its employees, job applicants and retirees, its community and suppliers.

"We can't make a blanket statement that employees are treated better here," Hee says. She points to Apple's problems with its treatment of suppliers as an example of the difficulty in proving a company's sustainability.

More domestic manufacturing ahead?

Demand for USA-made goods seems lasting; BCG anticipates between 2.5m and 5m new manufacturing jobs – and related service jobs – in the US by 2020. Walmart alone has 40 different departments working with suppliers to encourage US-based manufacturing. As for Raleigh Denim, Lytvinenko says that it is profitable, even when paying its workers based on an hourly, versus per-item, basis. The company produces 2,000 jeans monthly with a new flagship store in New York City.

"We've become quicker at our craft while maintaining our quality. We aspire to make the best jeans in the country and our market is growing," Lytvinenko adds.

D G McCullough is a writer, PR specialist and owner of Hanging Rock Media in Cary, North Carolina.