Manufacturing In America: Are American Jobs Worth $30 Socks?

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Includes: AIRR, FIDU, FXR, IYJ, RGI, SIJ, UXI, VIS, XLI
by: Rodney Johnson

Summary

We must start the conversation about choosing to consume local products at a higher cost than we'd pay for foreign products.

Is it worth taking on a financial burden simply to keep dollars within our borders?

NAFTA is under fire, and good-paying, middle-class jobs are hard to find, sparking this necessary debate.

My younger daughter doesn't conform to, well, much of anything. As a very young girl, she insisted on doing her own hair. She liked pony tails - lots of them - but as a four or five-year-old, she didn't have much skill at getting them right. This meant that she often had 11 or 12 fountains of blonde hair sticking out all over her head. She was very proud.

Much to her dismay, in the sixth grade, we enrolled her in a private school that requires a uniform. The queen of individual expression met the tyranny of "The Man," but she wasn't about to be deterred. She found her outlet inside her shoes. Every day, she insisted on wearing rule-breaking colored socks, and they could not match.

Today, she is a senior at the same school, still wearing colored socks that don't vaguely resemble each other. I know she's breaking the rules. I know she's staging her one-woman protest. But she also might be doing something else - supporting manufacturing in America, one foot at a time. While that sounds like a noble effort, should she?

There's a woman in Ft. Payne, Ala., whose companies make the kind of socks my daughter wears. Her name is Gina Locklear, and her two companies, Zkano and Little River Sock Mill, make socks using only U.S. goods and labor. There's just one problem: The socks cost $13 to $30 per pair (Note: My daughter does not wear this brand).

The New York Times recently covered this in an article in which it dubbed Mrs. Locklear the "Sock Queen." Her family started producing typical athletic socks in Ft. Payne, AL, in the 1990s. Business was pretty good until overseas manufacturers undercut their prices. By the time of the financial crisis, the big box orders had evaporated.

Despite the industry's decline, Mrs. Locklear approached her parents in 2007, saying she wanted to make socks.

To be sure, she wasn't interested in athletic socks, or the tube socks you get in a six-pack at Walmart. She wanted to make specialty socks of many colors and patterns out of organic cotton and dye, all sourced in the U.S.

As she points out in the article, Mrs. Locklear isn't sure wearers can tell the cotton and dye are organic, or that the socks were made in the U.S., but these are certainly selling points. She targets millennials, because she believes they study labels and gravitate to a compelling origin story. Martha Stewart even selected Little River as a winner of the 2015 American Made Award.

That's great. If you like paying $30 for socks.

I don't make a habit of buying women's socks, so I did a quick search on Amazon. I found a set of four with different art motifs for $14.99, or roughly $3.75 per pair. I'm certain the socks I found are not made with U.S.-sourced, organically grown cotton and dye like Little River's, and I'm also certain from the use of English on their website that the producers are not American. But their socks get great reviews for fit and comfort.

Assuming the two socks are basically the same, how much more should we pay for items made in the U.S.?

The reason to do so is obvious - supporting the jobs of our neighbors as farmers, mill workers, etc. But what if we use the roughly $20 savings to buy other stuff, or save it for our future financial needs? This increases our personal standard of living, but doesn't do much for the textile worker who's having a tough time.

And is it really possible to be "All-American?" In the article, Mrs. Locklear noted that one of her machines is the latest thing in sock making, sort of the "Ferrari" of the business, and it is indeed made in Italy.

If her clients are supposed to buy socks at a higher price because they're made in the U.S. from U.S. resources, should she purchase only U.S. equipment?

What about foreign orders? Should she sell socks to customers overseas, or would that somehow trample (pun intended) on the sock-making industry in their country, violating some sort of domestic manufacturer's code?

The point isn't to step on Zkano or Little River Sock Mill.

Instead, it's to start a conversation about choosing to consume local products at a higher cost than we'd pay for foreign products, and whether it's worth taking on a financial burden simply to keep dollars within our borders.

It sounds good, but if everyone did it, then the world would lose the incredible value of specialized labor. Under that system, those who are best at making something produce more of it and trade with other nations, who also trade in their own specialty.

This can go to extremes, where countries use dramatic price differences in labor, fuel, or raw materials to gain a competitive advantage. But that still means consumers get cheaper goods.

In this political season, where the Trans-Pacific Partnership trade agreement is being batted around, the North American Free Trade Agreement is under fire, and good-paying, middle-class jobs are hard to find, it makes sense to ask these questions.

But the trade routes don't move in one direction. In 2015, the U.S. was the second-highest exporting country on the planet. The top goods were machinery, electronic equipment, aircraft, and vehicles. If everyone around the world purchased only local goods, a lot of Americans would lose their jobs.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.