American Made Profile | June 14, 2015
The True Impact
Every once in awhile, a new idea comes around that makes so much sense it’s natural to wonder, “Why didn’t someone think of that before?” In this case, that someone is Anthony Comito, CEO of the Economic Information Exchange Company. And that something is the Economic Impact Rating — a new tool that is helping all of us better understand the impact our purchases make in our local economies.
It all started when Comito was considering what it means when a product claims to be “Made in America.”
“It wasn’t a ‘eureka’ moment, really,” Comito admits. “It was a lot of things piling up over time. I was reading some economics papers and they were saying supply chains were getting really complex, and that as a result it’s difficult to tell where something is really made — and where the incomes and economic growth are going.”
A prime example Comito points to is a phone that may cost $200 on the retail market. Even though that phone may be made (assembled) in China, the technology and the individual components may be made in other nations, then shipped to China for final assembly.
“In that case, just $5 out of the $200 may be going to China for the labor needed to assemble it. Behind those parts assembled in China are brand designers, software engineers and other manufacturers in Europe who may be getting the majority of the economic impact, even though the final wholegood says, ‘Made in China.’”
As a result, Comito considered whether “Made in America” was still a good measure of a product’s economic impact. “The FTC is in charge of the ‘Made in America’ claim. But they don’t actively reach out and make people substantiate their claim that their products are truly made in America. And nothing really happens to call a company into question until a whistleblower steps up.”
Comito followed the path of those who have created many useful tools. He saw a need, realized a solution didn’t yet exist. Then decided to build that solution himself.
ENTER THE ECONOMIC IMPACT RATING.
Appearing on select products, the Economic Impact Rating uses an iconic five-star system to measure the impact that product has on the local economy — with five stars meaning that almost all of the ingredients or parts of the product was sourced through a local area.
As Comito explains, the rating considers a number of key factors, including such items as labor, raw materials, overhead and logistics, inputs, taxes and more.
“The rating is based on accounting principles. So, as a result, it can be used in practically every industry,” Comito says.
HELPING COMPANIES SEAL THE DEAL ON SUCCESS.
The Economic Impact Rating also has a real impact on the organizations that sign up to have the seal included on their packaging.
“We work very closing with the organizations we rate. We operate similarly to the way organic and gluten-free certifications are handled,” Comito says. “We audit individual companies and offer them a report that measures the impact their product has on their local economy. And if they feel their rating is marketable, they can license it to use on their product. And we follow up periodically to update the rating to measure any changes in their processes that would cause a change in their ratings.”
One example of corporate success Comito gives is in his home state of New Hampshire.
“We’ve been working with a local granola manufacturer. We did our audit, then sat down with her and went through everything. Bottom line was she wasn’t going to get an awesome rating.” The reason? The granola company was sourcing the majority of her ingredients from suppliers outside New Hampshire.
“We helped her source more local ingredients. As a result, she brought $30,000 of purchases back into the state for ingredients that actually were cheaper than what she had been using. She improved her rating. And that represented a significant impact that she was having on the local economy, based on her own purchase decisions.”
The idea that has grown out of a need is catching on, with more and more organizations signing up to have their products evaluated, and more and more consumers finding the value—and impact—of their purchases.
"After Consumer Reports came out years ago, companies found profit by offering better and better quality products. Consumers using that new information caused companies to compete on quality." Comito says. “My hope is that by doing this, companies will not just compete based on quality, but that they will also compete based on impact.”
You can learn more about the Economic Information Exchange Company and the Economic Impact Rating at www.economicimpactrating.com
Credits // Author: Dave Danielson