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[19 comments]

Starbucks Joins 'Made in America' Movement

June 13, 2012

Granted, it's a small step from a manufacturing standpoint, but Starbucks is looking to do something big when it comes to putting Americans back to work. The company announced yesterday that it was introducing four new items manufactured in the U.S., as part of the Create Jobs for USA program.

With each purchase, Starbucks contributes a set amount to the program, which provides funds to support small businesses across the country. The program builds on the "Indivisible" theme, with the word appearing prominently on the collection, which includes:

  • Indivisible Mug $9.95/$2 donated to charity
  • Indivisible Coffee $14.95/$5 donated to charity
  • Indivisible Wristband $5/$5 donated to charity
  • Indivisible Tumbler $11.95/$2 donated to charity

"The Create Jobs for USA Fund is enabling Americans to unite in helping Americans get back to work, and the Indivisible collection provides several new ways for our customers to show their support," said Howard Schultz, chairman, president and CEO of Starbucks, in a statement.

[Image: Create Jobs for USA]

Starbucks will also offer for sale in its shops former Senator Bill Bradley's new book "We Can All Do Better." The book, which retails for $24.99, will be sold in Starbucks for $19.99. The publisher, Perseus Books Group, will make a $5 donation to the Create Jobs for USA Fund with each purchase.

One of the businesses helped by Starbucks was American Mug & Stein in East Liverpool, OH. According to Reuters, Starbucks' order for a 16-ounce ceramic mug made from materials sourced in the U.S. helped the company expand from 14 to 22 workers.

As the Reuters piece points out, American companies have sent many manufacturing jobs overseas. There are about 12 million current jobs in the sector, down from 20 million in 1980, based on statistics from the U.S. Department of Labor.

FINANCIALS:     [NASDAQ:SBUX] [ ]

Discussion Questions:

Discussion Questions: Are there compelling business reasons for retailers to procure more goods from American-made sources? Do you see more brands bringing their manufacturing back to the U.S. in the years to come?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How much stronger or weaker do you think the desire to buy 'Made in America' goods has become in the U.S. in the last two years?

Comments:

The compelling reasons are not economic, they are -- I have no other words than this -- ethical and practical. Retailers have chased low-cost sourcing for decades. It moved from shoes, to electronics, to clothes and now to bookkeeping, call centers and even x-ray technicians.

The result of all this low-cost sourcing is a structural unemployment rate that is probably between 10-15% when you factor in all the intangibles. This structural unemployment was masked in the early 2000s by the real estate boom. When that went bust, the rocks at the bottom of our economic lake became apparent.

I hope, but doubt more manufacturing will return to the US in the years to come. Instead, as a country, we will rail at those currently in power for not "fixing it." But until we fundamentally change our thought processes, our unemployment problem will remain unfixable. End of rant.

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Paula Rosenblum, Managing Partner, RSR Research

If by compelling you mean marketing and public relations benefits the answer is, "Yes." If, on the other hand you mean total lower supply chain costs in many cases that answer may change to, "No."

And, to be clear, Starbucks isn't moving to, "American-only," sourcing for all those mugs, water bottles and other caffeine-shwag. Whether or not there will be a mass re-shoring movement really depends on the economics of the global marketplace.

Companies may prefer to do the "right" thing, but profit is the default metric in business.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

I think this is a corporate responsibility message that will resonate. While we're at it, my personal wish would be for more customer service in-sourcing and less of those incredibly annoying automated phone greetings, press 1 for this, 2 for that...ugh...give me a person! I would reward such a company with my business.

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Joel Rubinson, President, Rubinson Partners, Inc.

Starbucks is using made in America as a marketing message. They probably could have sourced these products from foreign manufacturers for a lower price. Hopefully the products will sell well enough to generate interest from other companies to support American made products.

That said, I don't see a significant return of manufacturing to the US until the finished products can be priced competitively. With the economy still in the doldrums, and wages not growing, most consumers will opt for lower priced goods, which in many product categories, are produced overseas.

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Max Goldberg, President, Max Goldberg & Associates

My usual disclaimer: I am seriously addicted to Starbucks, and frequent one of their fine cafes an average of 2.3 times each day, and that's good news for my valued clients, too! Starbucks continues to be one of the most able marketers on the planet, and the "made in America" movement for Starbucks is another example of the company's passion for solid public relations and "doing the right thing." Nice move Starbucks! Now I feel ever more patriotic with every sip of my venti Latte.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

There's more to this story than what has been released so far. Look for more about an entrepreneur housewares company who led the charge to reinvigorate a once strong manufacturing area in Ohio. Starbucks is the wise partner with pockets who made it happen. I think the partnership between a nimble entrepreneur and a customer/benefactor who gets it is a winning formula for bringing manufacturing back to the US.

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Dan Raftery, President, Raftery Resource Network Inc.

This is terrific. And good PR for Starbucks too. I could see a trend with Made In America -- along with the "Imported From Detroit" ads. Works well in an election year, and with the Olympics too.

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Liz Crawford, VP, Strategy & Insights, Match Drive

This is a no-brainer. Robots are even cheaper to sustain than overseas workers. Factor in transportation costs and the uncertainties of a global supply chain and it is no wonder US manufacturing is experiencing a revival.

The only problem is that robots don't need most of the goods they manufacturer. Who is going to be buying all that output?

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Bill Bittner, Principal, BWH Consulting

A little background: an "innovation/trend watcher" web site a few years ago profiled a small independent coffee shop that set up jars for unique social causes. The results were successful with increase in sales, loyalty and bond between customers, the shop and social responsibility.

Starbucks is tapping into what they believe is their customer sentiments of "small businesses" and "made in America" to bring jobs and the US economy back.

To answer the question about brands bringing their manufacturing back to the US -- the late Steve Jobs said it best, "they are never coming back," because the iPhone and iPad are very well assembled and until Americans can accept a $5/hour wage in manufacturing....

Ed Dunn, Founder, (Stealth Operation)

Starbucks is to be commended in their efforts to build awareness of creating jobs in the U.S. In the process, they likely earn a reasonable profit for the coffee and Indivisible Collection that they are offering.

For example, coffee, like many agricultural commodities, has risen in price in the past 18 months. Depending upon the grade of bean that you are seeking, a pound of coffee is selling at retail for $8 to $14. The Indivisble Blend is selling for $14.95, with Starbucks serving as a conduit to funnel $5 to charity. In the process, the charity and Starbucks are winners -- Kenyan coffee beans sold at $9.95, places a profit in Starbucks ledgers.

As green coffee is more stable than roasted, the roasting process tends to take place close to where it will be consumed. This reduces the time that roasted coffee spends in distribution, giving the consumer a longer shelf life. The vast majority of coffee is roasted commercially on a large scale, but some coffee drinkers roast coffee at home in order to have more control over the freshness and flavor profile of the beans.

Charities benefit from profit, and this marketing play is a useful reminder to all about the dismal labor market.

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Roger Saunders, Managing Director, Prosper Business Development

The most compelling reason is to retain a market of customers that can buy them. This is especially compelling to Starbucks as they are not a necessity retailer.

Made in America depends on the U.S. dollar and its strength or weakness. It also is dependent on the consumer believing they are able to get the same quality or better if they are paying a slight premium.

It would be interesting to see an independent review of "Create Jobs for USA." It would be interesting to see its results, administrative costs, as well as the cost per job of each of their investments.

Made in USA certainly resonates. It makes good PR. The most successful take on this was done by Chrysler nearly two years ago when they launched "Imported from Detroit." Not a bad move by an Italian firm.

Starbucks itself creates good (though part time) wage jobs, a quality work environment, solid training, and a great stepping stone in building skills for their workers.

It's all good. How good? I'm just not sure. However, eight jobs is eight jobs. A whole lot of PR for eight jobs too! Few companies could get a fraction of the same PR for 100 times that job creation. That is the power of Starbucks.

'Scanner'

My customers like made in US brands. It's pretty hard to have them at the higher prices for US made goods, but there are some customers that have no confidence in China products for their pets -- whether it's food, toys, or other supplies.

Connie Kski, owner, Animal Fair Pet Shop

Doing the right thing may have some public relations value with your consumers.

If your primary consumers are in the US, there may be some total cost supply chain reasons to do manufacturing in the US. There are some Chinese companies moving manufacturing to the US because while wage rates are higher, real estate, energy, and transportation costs (to their US consumers) are lower.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

If the workers, investors, management, and YES, government all used their heads, we could kick butt again in this country. Having said that, I don't see all of these factors coming to a common goal of rebuilding our nation, because of self-interest, and the ridiculous agendas each of them have. Government is the biggest problem, but labor issues need to be worked out, before any big investors will break ground on new factories here again.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

From a public relations and corporate social responsibility standpoint, this is a great message. And it does feel good to see a "Made in America" approach. However, from a practical supply chain standpoint, I doubt that this will result in a real shift in behavior. As others have said, economics will really drive that type of change.

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Brian Numainville, Principal, The Retail Feedback Group

The hobbled economy has definitely helped generate interest in manufacturing, selling and buying more American-made products. But I don't foresee a sea change in offshoring, i.e., don't expect many of the already-offshored manufacturing jobs to wash up on U.S. shores.

That said, sourcing new American-made goods and selling them does offer benefits for consumers and merchants. For consumers, buying American brings with it a sense of taking charge of their small corner of the world, restoring control and helping be part of the solution. Consumers know that in a global economy it's nearly impossible to buy only American-made goods, but given the opportunity to do so -- and with minimal disruption to their daily lifestyles -- consumers will step up. For retailers, sourcing/selling American goods helps show that the brand does care about what's happening stateside, while also helping engage consumers.

Selling coffee, mugs and wristbands won't completely remedy our economic woes. Much larger efforts are needed to strengthen the U.S. economy and put out-of-work citizens back on the payrolls. And perhaps the biggest hurdle is the sweeping change in thinking that needs to occur among politicians, business leaders and consumers. Until then, in coffee shops nationwide, programs like Create Jobs for USA are proving they're more than just feel-good initiatives. They actually do some good.

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Tim Henderson, Editor/Writer, Independent

It will obviously take a lot more than Starbucks' effort to put more Americans back to work. But as a PR gesture, it is fine. Let's hope others follow. Who knows where this will lead? Given the choice, most people would "buy American" when practical. Just don't expect Walmart to join this effort.

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John Karolefski, Editor in Chief, CPGmatters.com

Way to go Paula. I read and reread your "rant" as you call it and could not have said it better.

The problems will not be fixed until the job market improves. The job market will not improve until we cease offshoring call centers and manufacturing at high levels. We can change Washington all we want; but until Washington changes itself we will be in this never-ending chasm.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

I don't think we need to go too far. Right now the economy is exploding and my clients constantly complain of a labor shortage. If you can't get a job in today's economy, no make-work job from "Create Jobs for USA Fund" is going to help. Your problems go far deeper. I just got back from Iceland where unemployment used to be zero and now its about 7%. So what do their unemployed do? Move to Norway. Not wait for some make-work charity to create a job for them.

David Livingston, Principal, DJL Research

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