Be careful what you call yourself.
The Federal Trade Commission (FTC) has struck again, this time forcing Shinola Detroit to switch marketing gears and drop its “Where American is Made” moniker.
The leather goods company, known for its luxury bikes and timepieces, has come under fire in the past for importing parts for watches labeled “Built in Detroit.”
Following a recent FTC review of certain Shinola products, the commission said the company’s marketing materials “overstated the extent” to which the goods were “made” or “built” in the United States.
“As we have discussed, unqualified ‘Made in USA’ or ‘Built in USA’ claims likely suggest to consumers that products are ‘all or virtually all’ made in the United States,” FTC lawyers wrote in a letter sent to Bedrock Manufacturing Co., Shinola’s parent company.
“In this case, the company sources significant inputs to many of its products overseas. For example, 100 percent of the cost of materials used to make certain watches is attributable to imported materials. Similarly, more than 70 percent of the cost of the materials used to make certain belts is attributable to imported materials such as decorative buckles. Additionally, Bedrock sources the steel used to make certain bicycle forks overseas,” the letter continued.
In response, Bedrock implemented a remedial action plan to avoid deceiving customers, which included “transitioning away from the company’s ‘Where American is Made’ slogan,” among other changes. While the FTC decided it wouldn’t pursue enforcement action this time, it noted a cause for concern “that Bedrock may make deceptive U.S.-origin claims in the future” and warned that it would continue to monitor the company’s advertising closely.
In an interview with Sourcing Journal earlier this year, Shinola president Jacques Panis said the company had never claimed to manufacture everything in the U.S. “For watches to be considered ‘Made in the USA,’ virtually all parts would have to be manufactured in the U.S. and unfortunately the supply chain does not exist, at scale, in the USA today,” he said.
Tom Kartsotis, founder of Shinola and Bedrock, echoed these comments in an open letter to the FTC on Friday.
“Shinola has always tried to be a company that brings jobs to America by training individuals here to handle as much of the manufacturing process as possible, while at the same time, attempting to remain competitive on a global scale. We believe that our mission is, and our marketing implies, that we are a job creation vehicle and not a ‘Made in America’ play,” he wrote, criticizing the “unattainable” guidelines set forth by the government and pointing out that a car isn’t held to the same standards as a watch.
“The inconsistency of the policies and laws, as well as the subjective nature of some of the process, renders it difficult to navigate as a U.S. company and compete against other companies, U.S. or foreign, who benefit from the overall lower costs in off shore production,” he continued. “Until a change in policy clarifies for the consumer what it truly means to be Made in the USA, Shinola will always strive to do as much as it can in America with the benefit of an American workforce.”
In addition to dropping “Where American is Made” from its marketing materials, Shinola will tweak its “Built in Detroit” signature to include “using Swiss and imported parts.”