The Advantages of Manufacturing Pet Products in North America

Michel Schnaas
General Manager, The Gralen Company

The pet industry has experienced remarkable growth in recent years, with an increasing number of pet owners seeking high-quality and innovative products for their furry companions. As the demand for pet products continues to rise, manufacturers face important decisions regarding production locations. Following a 2007 scandal related to dog food made in China that was found by the FDA to contain contaminants in vegetable proteins, demand shifted to products that were made in the USA, primarily. Over time, that demand has allowed for a broader sourcing to include Canada and Mexico. A demand for “Made in USA” products is shifting to “Made in North America”. There are many advantages to manufacturing pet products in North America. Here are just a few:

Proximity to Consumer Market
It is estimated that 66% of US households own a pet. That is 89.9 million homes. These pet owners spent an estimated $136.8 billion in 2022 on their pets and are forecasted to spend $143.6 billion in 2023. One of the key advantages of manufacturing pet products in North America is the proximity to this vast consumer market. North America boasts a substantial population of pet owners who are willing to spend money on their pets' well-being. By setting up manufacturing facilities in this region, businesses can significantly reduce transportation costs and delivery times, ultimately meeting consumer demand more effectively. Manufacturers can leverage this proximity to tailor their products to the unique preferences and needs of the North American market.

Trade Agreements and Tariff Benefits
Another significant advantage of manufacturing pet products in North America lies in the numerous trade agreements and tariff benefits available. The United States-Mexico-Canada Agreement (USMCA) enhances the trade relationships between these countries, promoting economic cooperation and reducing trade barriers. This agreement fosters a favorable business environment, ensuring stability, predictability, and fair competition. Manufacturers can capitalize on reduced tariffs and streamlined customs procedures, resulting in cost savings and increased competitiveness.

Skilled Workforce and Manufacturing Expertise
North America boasts a skilled workforce and a rich manufacturing heritage. The region has a history of excellence in various industries, including automotive, aerospace, and electronics. The knowledge and experience gained from these sectors provide a solid foundation for pet product manufacturing. Skilled laborers offer a diverse range of expertise, from research and development to production and quality control. Manufacturers can tap into this talent pool to develop innovative products, improve manufacturing processes, and ensure superior quality.

Cost Efficiency and Operational Flexibility
Manufacturing pet products in North America offers cost efficiency and operational flexibility. While the region may have slightly higher labor costs compared to some other manufacturing destinations, it compensates with advantages in other areas. Reduced transportation costs, shorter supply chains, and responsive logistics networks contribute to overall cost savings. Manufacturers can better manage inventory levels, respond swiftly to market demands, and maintain efficient production cycles. This also allows manufacturers to require lower production minimums that lead to lower inventory risk.

Mexico offers lower operating costs compared to its North American counterparts. With competitive wages and a lower cost of living, Mexico presents an attractive option for manufacturing. Additionally, the Mexican government has implemented various programs and incentives to attract foreign investment, further supporting cost efficiency.

Regulatory Alignment and Quality Standards
Manufacturing pet products in North America ensures regulatory alignment and adherence to high-quality standards. The region shares similar regulatory frameworks and safety standards, guaranteeing compliance with consumer protection laws. Businesses can streamline their manufacturing processes, align product labeling and certifications, and uphold consistent quality assurance protocols. This enhances consumer trust and facilitates market access across North America, creating opportunities for expansion and growth.

Manufacturing pet products in North America is quickly becoming a trend that will make our region more competitive and will provide protections against global crises as we saw during Covid and the clogging of the Suez Canal in 2021. As a distributor and manufacturer of pet products we saw a sharp increase in demand for products made in North America simply by virtue of availability. This opened opportunities for regional, smaller companies to position their products in the market.  By capitalizing on all these advantages, manufacturers can position themselves strategically to meet the evolving needs of pet owners while maximizing their operational efficiency.

Michel Schnaas is General Manager at the Gralen Company, a leading company in the veterinary field, currently focusing on an ambitious initiative of digital transformation for the company. Previous to his current role, Michel spent over 16 years in various management roles at industry-leading multinational companies in the Sports and Action Sports industries. He has a successful track record in establishing and growing businesses for various product brands in multiple markets throughout Latin America and South East Asia under a variety of business models, including subsidiaries, distributors, licensing, and joint ventures.