I’ve been heavy on the “Made in America” beat lately, talking about some of the best American watches, covering Timex’s new American Documents collection, and asking presidential candidate Pete Buttigieg why he wears a Skagen.
But I wanted to take a step back and ask what it means to be “Made in the USA,” at least according to the U.S government, or more appropriately, the Federal Trade Commission (FTC), the agency tasked with promoting consumer protection.
Thanks to Shinola, we have a pretty clear idea of the threshold a watch must cross for a company to be able to label it “Made in the USA” or something similar. In June 2016, the FTC held that Shinola “overstated the extent to which certain Shinola-branded products … are ‘made’ or ‘built’ in the United States.” This forced Shinola to change its advertising and claims of origin on its products. Shinola had been using the slogan “Where American is made” on many of its products, and added a “Built in Detroit” designation to its watches for good measure. This wasn’t really a surprise, as a year early, the FTC had warned Shinola that its “Built in Detroit” slogan was misleading consumers given that critical watch parts came from overseas.
For apparel or accessories (including watches, as this case taught us) to bear the "Made in USA" designation, the products must originate in the United States or be only “one step removed” in the supply chain. According to the FTC, "Made in USA" means that "all or virtually all" of the product has been made in America. This is an extremely high bar: all significant parts, processing, and labor must be from the U.S — there should be only negligible foreign content.
What about “Swissness”?
It’s interesting to compare the stringent “Made in USA” standard to the “Swiss Made” standard. According to Swiss law, a watch may be considered Swiss if (i) its movement is Swiss and has been encased in Switzerland, (ii) final inspection takes place in Switzerland, (iii) and at least 60% of the manufacturing cost is generated in Switzerland. For a movement to be Swiss, as (i) requires, 60% of the manufacturing costs must be generated in Switzerland, as well as 50% of its value. This Swiss standard was actually heightened in 2013, when those 60% manufacturing cost requirements were bumped up from 50%. This change was to prevent manufacturers from tricking the system: sourcing movements and other key components from Asia and shipping them to Switzerland for assembly, where the manufacturer would incorporate more expensive components —e.g. the balance wheel, mainspring, jewels — to meet the old threshold of having 50% of manufacturing costs coming from Switzerland. In effect, these manufacturers were able to label their watches as “Swiss Made” even though only a few component parts and nominal “assembly” were being done in Switzerland.
In short, the United States has a higher threshold for labelling a product as “Made in the USA” than even the watch-loving Swiss, a country so obsessed with Swissness that you couldn’t be Swiss even if you dedicated your life to it.
Shinola Is Still Getting Away With It
Back to Shinola. According to the FTC’s findings, “all materials [Shinola] uses to make certain watches were imported, some belts contained 70 percent imported materials and overseas steal is used in certain bicycle parts.” While founder Tom Kartsotis says no deception was intended in connection with its promotional and marketing materials, his company still dropped the “Where American is Made” slogan. We should also point out that Tom Kartsotis founded Fossil in the 1980s before going on to launch Bedrock Manufcaturing in 2011, which is the Texas-based parent company of Shinola.
Shinola also said it would begin to redesign watch faces to add “Swiss and Imported Parts” below the controversial “Built in Detroit” (note this is similar to what Timex has done with its new American Documents collection, stamping the dial “Made in America,” and below that, “Swiss Mov’t”. That modified should keep them out of the FTC’s crosshairs.).
Well, Shinola seems to have figured out another way to test the FTC. Now, most of its watch faces simply say “Detroit” under Shinola or the watch name. Sure, it’s not a claim of origin like the old “Built in Detroit” was, but is the effect any different?
Take Shinola’s new Vinton collection. It’s powered by an “Argonite-715 quartz movement” which I’ll assume is just a Ronda 715 movement since Switzerland-based Ronda is Shinola’s manufacturing partner. But the front of the dial says only “Argonite-715” and Detroit under it. To a consumer, this might imply that the movement is from Detroit, which it most definitely is not. On the caseback, there’s another mention of Detroit at 6 o’clock, and just a passing mention of “Swiss and Imported Parts” around the edge of the caseback. Perhaps there is no overt “made in America” or “built in Detroit” like those that got Shinola in trouble with the FTC, but the implication is certainly still there. To take the “Runwell” and the “Guardian” as two more examples:
The Shinola Runwell is an automatic watch, powered by a Sellita SW 200-1 (a fine movement at the right price), and the Guardian another quartz powered watch. Notice how Shinola moved the “Detroit” from its favored 6 o’clock position to 12 o’clock, but just on the Runwell. It knows exactly what it’s doing: a “Detroit” under automatic might imply an automatic movement from Detroit, which would certainly raise flags with their friends over at the FTC. In fact, the FTC even says that a just references to a U.S. location or headquarters may imply a “Made in USA” claim and violate regulations if not true. Throughout its 11 years as a company, Shinola has learned exactly where the line is and has become adept at toeing that line.
Where that Leaves Us
Bringing watchmaking back to the United States is a huge, exciting opportunity, and I applaud each and every company making legitimate steps towards achieving that. American watchmaking has a storied history, highlighted by brands like Elgin, Hamilton, and even Timex, that all fell victim to the quartz crisis, either selling to foreign conglomerates or just winding down.
But, besides the few companies I highlighted here, no one should be making “unqualified made in USA” claims. However, the FTC does leave room for companies to make “qualified made in USA” claims. This allows the company to describe the extent, amount, or type of U.S.-based content or processing. That’s where most companies are now. That’s what Timex’s American Documents collection is.
Timex’s efforts are a step up from the “assembled in the United States” language that so many brands use. In most cases, this means sourcing a movement from Switzerland, other parts from the rest of the world (perhaps a leather strap from the U.S. for good measure), and throwing them all together in the United States so the brand can make some claim of being made in the USA. And I don’t have a problem with this, as long as brands are upfront about it. Unfortunately, some try to hide the ball: Shinola stamps nothing but “Detroit” on the dial, leaving the uninformed consumer clueless to the fact that these watches are nominally assembled in the United States but have no other connection to the city of Detroit.
Initially, I thought that the U.S.’s “all or virtually all” bar was too high a standard to set. For a complex, unique industry like watches, so few brands will ever be able to meet it that the moniker becomes almost meaningless. Why not have a lower bar like the “Swiss Made” standard and give companies a fighting change to achieve a true “made in USA” label, even if at some lowered threshold?
But, the FTC does do this by allowing companies to make qualified statements of origin. It forces companies to be specific about what is going on in the United States. Assembly? Processing? Where is the movement from? If companies are abiding by the actual law, it gives consumers more information. Look just at the dial of the Timex American Documents collection and you know exactly where every component of the watch is from. If only some companies would stop trying to play games with the law.