BUSINESS
How One Company’s Approach Could Be the Model for Driving Economic Stability
Over the past several years, there’s been a resurgence in Americans shopping for US products. In a 2020 survey by the Reshoring Institute, almost 70 percent of Americans say they prefer to purchase goods that are US made. And more than 83 percent say that they would pay up to 20 percent more for products that are made domestically. While the major driving force behind this is the perception that American-made products are higher quality, there’s a very real benefit to aligning dollars with companies that spend a significant amount in the US market – economic stability and growth.
According to economist Will Jenson, “the more you can source locally, the higher the impact you have. Conversely, when you spend beyond your borders, there’s a multiplying effect in diminishing returns – a leakage in benefit to the US.”
Bolstering the US economy is one of the reasons that Plexus Worldwide, a health and wellness company, has made it a goal to spend as much as viable in the US. In 2020, the company’s expenditures were 96 percent US-based.
“When we started focusing on where our dollars were going, it was driven by a commitment to the US – its people, its values and what it stands for,” says Robinson. “It was extremely gratifying to see that our efforts had significant economic impact.”
To measure these results, Plexus partnered with The Seidman Research Institute, the consultancy arm of the W.P. Carey School of Business at Arizona State University.
ASU looked at three critical variables – 1) gross domestic product (GDP), which represents the dollar value of all goods and services produced for final demand; 2) employment, which includes both wage and salary workers, and the self-employed; and 3) labor Income, which is comprised of all forms of employment income, including employee compensation (wages and benefits) and proprietor income. Seidman also factored in the impact of spending by state and local governments of tax revenues generated directly and indirectly by Plexus Worldwide’s operations.
According to Dennis L. Hoffman, the Director of Seidman, the results were impressive, with an economic impact of approximately 1.1 billion dollars in the United States. “You can see by the data that Plexus makes a significant contribution to the overall economy of the United States,” says Hoffman. “Region by region, the study showed that Plexus Worldwide stimulates local economies throughout the country and in its backyard of Maricopa County.”
The numbers make a compelling argument for spending domestically. But it’s at the granular level that we can see the human impact. During the apex of the coronavirus pandemic, Plexus Worldwide continued to work with its local partners.
“We weren’t as negatively affected financially by the pandemic as many companies,” says Robinson. “It allowed us the space to continue to support our long-standing partners and do our part to help mitigate the economic downturn.”
One of those companies, Phoenix Formulations, notes that Plexus Worldwide was one of the reasons that the company has both flourished during the partnership and remained economically stable during COVID-19.
“Plexus Worldwide has always been a collaborative customer, helping Phoenix Formulations continually improve our product and grow our business over the past 5 years,” says Kirk Neal, Divisional President and Founder of INW’s Division at Phoenix Formulations. “This ongoing production and development are directly responsible for 57 full time employees at our Phoenix location. It is through a partnership like this that, in the face of the unimaginable challenges of 2020, we provided a growing workplace supporting economic stability and success for many Maricopa County families. That we can partner with a neighbor in the Valley and, together, exponentially contribute to the economic and physical well-being of our shared community is a rare and special bonus.”
Individual companies like Plexus Worldwide making a commitment to substantial allocation of spend towards the US begs the question – “what would happen if all US companies took this approach?”
Jenson notes that it’s a lofty goal and one where the benefits increase with each step up in commitment. “If a large portion of companies focused on increasing the US spend by 5%, we’re going to see a lift in GDP that’s exciting,” says Jenson. “But bring that percentage to 15% and there will be substantial measurable impact that is far-reaching.”
And while not every company can achieve a 96% US spend like Plexus Worldwide, there’s an opportunity for every corporation in America to look at how their expenditures are allocated and determine where offshore could be brought back to the States.
It’s more important now that ever. Twenty months into COVID-19 pandemic has changed the US economy.
“Inflation is at 5%, which under normal circumstances would be challenging but not insurmountable,” says Jenson. “When you factor in the fallout from the past year and half, it’s a massive issue. It takes a while for employers to come up with the money to make cost of living adjustments to meet inflation under normal circumstances. Now? Companies are doing their best to stay afloat and long-term adjustments aren’t in the game plan, meaning we’re going to see people lagging behind in cost of living for the foreseeable future.”
If companies started to re-allocate their dollars where possible towards home, that could ameliorate the situation.
“Every company is different and it’s not possible to have a singular approach to expenditures,” says Robinson. “But we each need to contribute to the overall well-being of the economy. I’m honored that Plexus Worldwide can serve as an example and inspiration of how to give back to the US.”