Join the conversation:

"Made in America" impossible for many tech startups

"Made in America" impossible for many tech startups

Posted by PanamericanWorld on March 29, 2017

"We will follow two simple rules: buy American and hire American," the nation's 45th President said during his inauguration speech. President Donald Trump swept into office pledging to get American factories up and running again.

The Federal Trade Commission requires that any product advertised as 'Made in the USA' or 'American Made' be "all or virtually all" made in the U.S. This means that all significant parts and processing that go into the product must be of U.S. origin, with "no — or negligible — foreign content," according to the FTC rules.

Many entrepreneurs dream of manufacturing their product in America. But for technology start-ups, producing a high-tech device in the U.S. without any foreign content is harder than it appears.

CNBC talked to three startups that found it impossible to build products 100 percent the U.S. – even though two of them, URB-E and Lumiwave, are using the 'American Made' label.

When the founders of URB-E, or Urban Electric, were coming up with their foldable electric vehicle design in a garage, they decided they wanted to manufacture the product in America. The company is based in Pasadena, California, and some of the top aerospace companies are in the region. That's exactly what they needed for the lightweight, aircraft-grade aluminum that makes up the foldable frame.

Like any start-up, they started knocking on doors.

"A big challenge for us was manufacturing in California," said URB-E CEO and co-founder Peter Lee. "Not every fabricator was receptive to the idea. A lot of them were looking for large quantity orders that were very simple as a plug and play."

URB-E needed partners that would work through their growing pains, and it finally found eight fabricators who were willing to take on the task. It was also able to source the high-quality aluminum from U.S. companies, and started a seven-person assembly line out of its downtown Pasadena headquarters. It started making the vehicles in 2015.

But many important components that make a vehicle a vehicle — the battery, the seat, the wheels, the handle grips and the motor — are all made in China. URB-E was not able to find vendors in the U.S. who were willing to take on the project.

"We have talked to many companies that have produced motor-type products to see if they could adjust their product to fit our needs," Lee said, "and all of them could not do it."

They also could not find a company in the U.S. that produced the lithium batteries that they needed for the electric vehicle so they purchase URB-E's Panasonic cells from China. Lee said that Tesla was the only U.S. company he knew of that would soon be producing batteries for electric vehicles, in its gigafactory in Nevada.

"If Elon Musk said 'hey, we have some capacity to build URB-E batteries,' we would be there in a second," Lee said.

URB-E partnered with aerospace companies in California to make the light-weight and durable aluminum body of the vehicle.

Jeniece Pettitt | CNBC
URB-E partnered with aerospace companies in California to make the light-weight and durable aluminum body of the vehicle.
Link To Full Article: 

Facebook comments



Monthly newsletter featuring articles hand picked by our country managers from the best content across PanamericanWorld.



Monthly newsletter featuring articles hand picked by our country managers from the best content across the Caribbean Region on PanamericanWorld.

PANAMERICANWORLD COUNTRIES