Drones Made in America: The FTC Crackdown on Fraudulent Labeling, and What that Means for the Industry

News and Commentary.  Since the U.S. military began a campaign to limit Chinese-made drone tech purchased with government funds, drones made in America have had a significant marketing advantage.  Global manufacturers like Parrot are offering a U.S. made model added to the Blue sUAS list: Autel went through a lengthy process of working with U.S. export authorities to establish one of their models “made in the U.S.A.,” according to stringent rules about the percentage of parts and labor that must originate in the U.S.  Many U.S. companies assembling drones in the U.S. have made the claim – generally in all good faith – that they provide drones made in America.  Now, however, the U.S. Federal Trade Commission (FTC) is cracking down on which companies may genuinely claim the coveted “Made in the U.S.A.” title.  The new requirements could have a significant impact on the drone industry.

Drones Made in America – with Globally Sourced Parts

Many companies based in the U.S., and with U.S. manufacturing and assembly facilities, may find that they can no longer claim their products are “Made in the U.S.” if more than the allowed proportion of parts are globally sourced.  The FTC’s new Made in the USA labeling rule specifies that products may not carry the label unless  “1) final assembly or processing of the product occurs in the United States; 2) all significant processing that goes into the product occurs in the United States; and 3) all or virtually all ingredients or components of the product are made and sourced in the United States,” says the FTC announcement.

“Virtually all” components may be the difficult issue for drone manufacturers.  Cameras, gimbals, plastic parts, airframes, batteries and more often come from overseas – and could be expensive or difficult to source domestically.  It remains to be seen exactly what “virtually all” means – and if companies will have to find new sources, and perhaps raise prices, to meet the requirements.

The Need for Transparency

Hopefully, the FTC ruling will do what it is intended to do: provide clarity for consumers.  With strict rules – and signficant penalties for transgressions – all manufacturing, including the drone industry, will be forced to uphold a new level of transparency about their manufacturing process.  That’s a point that many consumers and manufacturers support.

Randall Warnas, Autel CEO, says that clarity will benefit the industry and allow drone manufacturers to stand on their merits.  “Anyone ducking the rules to make small gains is not representing the industry well and should be penalized,” says Warnas. “At Autel, we feel we have the right technology at the right price with the right relationships. We don’t believe that we should be punished for the transgressions of other manufacturers regardless of country of origin. We are working to achieve approval in the right fashion so that we can be the vehicle of choice for federal, commercial, and civic drone programs across the country.”

Industry thought leader Romeo Durscher, VP of Public Safety for Auterion, formerly worked for Chinese drone manufacturer DJI – the industry leader most impacted by U.S. government mandates to source drones domestically.  “The new FTC rule may just be the crackdown the drone industry needs to set drone makers on the path to more clarity when touting certain claims,” Dursher says. “In an attempt to replace DJI, marketers rushed to use “made in the USA” on their products. This does not equate to compliance. The intentional misleading of customers have caused confusion around where a drone is made and if it is NDAA compliant. Enterprise drone buyers are already seeking US-made compliant drones, and this rule will hopefully be another push towards providing more transparency.”