‘American’ Moment

Promo industry sales declined 3.6% in Q1 – the worst quarter in four years. And then promo industry sales declined -3.2% in Q2 – the first back-to-back quarterly sales declines since the pandemic. And yet …

“Our first quarter was unbelievable,” says Mary Dobsch, president of The Chest (asi/44830).

“We’re seeing very strong demand for our products,” remarks Lance Stier, CEO of Counselor Top 40 supplier NC Custom (asi/44900) and a Counselor Power 50 member.

“This year alone has been the best first quarter start probably in the last 10 to 15 years with the company and in Q2 we had record-breaking sales each month,” says Scott Thackston, director of marketing and product development for Caro-Line (asi/44020).

What do these suppliers have in common? They’re all exclusively or predominantly Made-in-USA manufacturers.

There have been many reasons cited by the current presidential administration for the implementation of tariffs, but perhaps the biggest was to boost American manufacturing.

And while the tariffs have caused widespread concern throughout the promo industry, it’s undeniable they’ve stoked incredible interest in American-made promo products – far beyond typical election-year bumps or the temporary buzz during the early days of the pandemic.

“We’ve seen a surge in interest in Made in USA, which is really unlike anything we’ve seen before,” Mitch Cahn, founder and president of Unionwear (asi/73775), said in an early May webinar hosted by ASI on “Tariff Impacts & U.S.-Made Momentum.”

ASI Research data backs it up. When surveyed in early April, 8 in 10 distributors said they anticipated purchasing more Made-in-USA products, including nearly a quarter (23%) who said they would buy “significantly more.”

For suppliers who manufacture domestically, it’s welcome attention for products they say are high-quality, readily available and already price-competitive even before the tariffs. “Some suppliers recognize now how important it is to have ready supply, control your inventory and meet your customers’ demands,” says Stan Dohan, executive vice president of Aakron Line (asi/30270), which offers 400 Made-in-USA products, representing nearly half its line. “It allows customers to select really good quality, fair-priced items that we can make on our own, and obviously augment with our decorating abilities.”

Over 90% of the products that Caro-Line offers across its three lines – bandanas, pet bandana triangles and a new line of blankets it launched last year – are manufactured in the U.S., and Thackston says the supplier’s proprietary imprinting machines allow it to fulfill price-competitive orders for hundreds of thousands of products with fast turnaround. He acknowledges that at those large quantities, some buyers just want “pennies on the dollar” and will go overseas. Still, doing so incurs significant shipping costs and requires exceptional lead time.

“If somebody can wait three or six months, then maybe we lose some of that business,” says Thackston, whose company manufactures in South and North Carolina. “But if they need something in three weeks or three days, then we always receive that business.”

While the tariffs have been designed to promote “re-shoring,” promo industry consensus is that American manufacturing can’t fulfill the majority of products for the $26.6 billion branded merch industry. Available trained labor and enough raw materials are serious bottlenecks. That doesn’t mean it’s impossible to start manufacturing in the U.S. – it’s just that the barriers are high.

“As much as it sounds great to bring jobs back to the States, the price points that we need to sell our goods at aren’t sustainable given the current manufacturing processes that we use,” said Randy Carr, CEO of Counselor Top 40 supplier World Emblem (asi/98264), in an appearance on ASI’s Promo Insiders podcast. World Emblem is opening a large factory in Houston that will include 50 reshored jobs from China, along with up to 100 new positions. “It can be done with AI, robotics and automation. The technology does exist, but it requires an enormous amount of capital, investment and time.”

Cahn said the “the labor pool and interest in working in manufacturing has dried up,” and accordingly, the Newark, NJ-based supplier is investing heavily in automation. For example, Unionwear purchased a machine that completely automates the process to manufacture canvas tote bags, doing the work of 44 sewing machine operators. (The company still employs 150 operators.)

That automation, costly as it may be, could represent the opportunity to reverse the decades-long movement of manufacturing moving overseas.

“I believe in two years, you’ll see a lot more automation,” Cahn said. “And when that happens, it’s going to make a lot of sense to manufacture domestically. It may even be less expensive than the cheapest country in Asia.”

The question is will the interest in Made-in-USA products sustain? It’s anyone’s guess where the tariffs settle, on which countries and for how long. Meanwhile, a series of major upcoming events – including the Los Angeles Olympics, World Cup and America’s 250th birthday – offer serious potential to carry the flag for U.S.-made products. For American manufacturers to win over customers, the time is now.