Earlier this year, HODINKEE published an article concerning the questionable advertising tactics of a portion of the American watchmaking industry. Entitled “Smoke And Mirrors In The American Watchmaking Industry,” the article looked into what exactly “Made in USA” means, according to the Federal Trade Commission(FTC). This week the FTC got involved, and suffice it to say, at least some of the smoke has cleared.
The FTC published a closing letter on their web site, detailing their findings with respect to one American watch company’s marketing, and even what is printed on their dials and bezels. The FTC said: “As 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.” The company in question is Kansas City’s Niall Luxury; the letter is from the FTC’s Bureau of Consumer Protection, Department of Enforcement’s staff attorney Julia Ensor.
The FTC continued: “In this case, though the cost of a Swiss movement may be small relative to Niall’s overall U.S. manufacturing costs, without a movement, a watch cannot tell time. Therefore, movements are essential to the function of a watch. Accordingly, to avoid deceiving consumers, Niall implemented a remedial action plan to qualify its representations.”
I asked Ensor if the rest of the American watchmaking industry should look to this closing letter for guidance.
“Yes,” she said. “The letter is intended to provide guidance to (the) industry regarding FTC staff’s latest thinking about U.S.origin claims for watches. It is my hope that industry participants will review the letter, and adopt changes to marketing materials as necessary to ensure that their claims accurately convey information about their U.S. manufacturing functions without deceiving consumers.”
I also asked Ensor about city specific claims, as the published closing letter doesn’t mention anything regarding terms like “Built in Detroit” or “Made in NYC.”
“Again, I speak only for myself and not for the Commission,” she said, “but my informal feedback to a company seeking to make a city-specific U.S.-origin claim would be that – without consumer perception evidence showing otherwise – it seems likely that consumers would interpret such a claim the same way they would interpret any other unqualified U.S.-origin claim (like ‘Made in USA’ or ‘Made in America’). Therefore, the same ‘all or virtually all’ standard set forth in the FTC’s Enforcement Policy Statement on U.S.-Origin Claims would apply.”
Niall’s response to this FTC inquiry is a breath of fresh air. There are no longer any potentially misleading marketing messages on their website, or social media. In addition, Niall has published a transparency report, detailing the breakdown of everything that goes into their watches. Niall is doing it right, and it would be great to see other American brands follow suit without the FTC needing to get involved.
Michael Wilson, co-founder and CEO at Niall said in a blog post: “‘American-made,’ ‘USA Made,’ and ‘Made In America,’ have been loose terms in our industry for quite some time. We’ve all had a different interpretation of what these phrases mean and have built our products and marketing according to our own interpretation of the standards. While many of us in the industry like to compare ourselves to the Swiss or Germans, American laws are very different and we, as Americans, must respect that.”
I asked Jordan Ficklin, executive director at the American Watchmakers-Clockmakers Institute, how he thinks this FTC guidance will affect the American watchmaking industry going forward.
“The FTC guidance confirms what I think we all knew already which is that the Made in the USA label is among the strongest in the world,” Ficklin said. “It’s great for America but it presents a marketing challenge for the American watchmaking brands, especially those who want to compete overseas. There is a huge demand for American made products and while there are many companies making great headway in this area, none of them today will be able to claim ‘Made in the USA.’ The brands will need to be completely transparent in their claims and I hope the consumer rewards them for that. I think it is wonderful that we have companies who make their entire case in the U.S. I think it is wonderful that we have companies who assemble watches in the U.S. We don’t want these brands to get discouraged by this ruling. We want them to push forward creating horological products right here in the U.S.A. AWCI supports the return of an American watchmaking and clockmaking industry. We want to work with the brands to understand the FTC guidelines and to develop truthful marketing campaigns that will help them promote their products and grow the industry.”
The qualifications to call a product “USA Made” are very different from “Swiss Made” as the FTC’s guidance shows. It will be interesting to see what comes of this guidance in the future, and if the FTC chooses to investigate any other American watch companies. Hopefully this clarification of what Made in USA means for American watches will help in leveling the playing field, and ultimately in creating a more honest and collaborative American watchmaking industry.