What's So Special About This Starbuck's Mug?

IndivisibleOn the verge of bankruptcy last fall, the American Mug and Stein Company in East Liverpool, Ohio, got a new lease on life, courtesy of Starbucks (SBUX).

The small ceramics manufacturer was contacted completely out of the blue to make mugs for the coffee giant's new "Indivisible" collection -- a line of mugs and tumblers that will be made exclusively in the U.S. and, starting Tuesday, went on sale in Starbucks cafes across the country.

In an interview with The New York Times, American Mug and Stein owner Clyde M. McClellan said of the surprise phone call: "I almost didn't take [it] because I figured it was a crank call or something."

Indivisible12 People Back to Work Is a Good Place to Start

East Liverpool was once a bustling ceramics manufacturing enclave, home to some four dozen ceramics factories. But like so many other American manufacturing industries, over time ceramics companies followed the path of cheapest labor and moved overseas.

That trend may actually be slowly starting to reverse, however, thanks to the medicine of simple economics and companies committed to making a difference for American workers, like Starbucks.

That call that McClellan took resulted in a contract that has put 12 people to work at his company, four of whom were previously on the verge of losing their jobs and another eight he took on to meet the new demand.

"I Think We're Better Than This"

Starbucks began its crusade to help put Americans back to work not long after the financial crash of 2008, which displaced millions of workers and caused the unemployment rate to hit a 26-year high of 10.2% in 2009, a fact that compelled CEO Howard Schultz to take action.

"There are thousands of facilities like the one we found in East Liverpool, and hundreds of small towns in America that have been left for dead," says Schultz. "I think we're better than this. We can make a difference. We can't be bystanders."

"Create Jobs for USA" is Schultz's way to get off the sidelines. Teamed up with Opportunity Finance Network, a national network of lenders that invest in low-income and low-wealth American communities, Create Jobs for USA's mission is to not just create jobs but to sustain them as well.

Putting his corporate money where his mouth was, Schultz seeded the organization with an initial grant of $5 million from the Starbucks Foundation.


Rising Cost of Labor Can Cut Both Ways

Assisting Schultz in his drive to bring jobs back from overseas is the simple economics of labor.

Manufacturing tends to move where labor is cheapest. This has been the story in countless American industries, including steel, textiles, electronics: You name it. Ceramics, too. In the 1970s and 1980s that low-cost labor destination was Japan. In the 1990s and 2000s it's been China.

But as manufacturing moves abroad, standards of living rise, and with it the cost of labor. That's what's happening now in China. As such, it's becoming more cost-effective in some industries to actually move production back to the U.S.

But besides labor costs, there are other considerations as well.

According to The New York Times, American Mug and Stein can deliver mugs to Starbucks in four days; Chinese manufacturers can take months. And the East Liverpool company can also tailor the number of mugs to Starbucks' taste. Placing an order with a Chinese supplier, Starbucks may have to buy hundreds of thousands of mugs, which could leave the coffee maker knee-deep in unwanted inventory.

Knowing the backstory to the Indivisible mugs, how likely are you to buy one?
Very Likely436 (69.0%)
I'd probably buy them anyways. I like the style and message.29 (4.6%)
I might104 (16.5%)
Unlikely63 (10.0%)
A bad call by Steve Jobs
Last year, in response to a question posed to him by President Obama about what it would take to make iPhones in America, then-Apple (AAPL) CEO Steve Jobs replied with seeming certainty: "Those jobs aren't coming back."

For such a visionary businessman, that may have been too fast and too easy an answer.

John Grgurich is a regular contributor to The Motley Fool. John holds no positions in either Starbucks or Apple. The Motley Fool owns shares of Starbucks and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Starbucks, creating a bull call spread position in Apple and writing covered calls on Starbucks.

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Matt Smith

More awesome info at their blog at: http://www.americanmugandstein.com

July 31 2012 at 11:51 PM Report abuse rate up rate down Reply
iamsprtkus

i believe it's time for a nice new mug...

June 18 2012 at 11:31 AM Report abuse rate up rate down Reply
ascorpies

I am a huge starbucks fan and this article makes me feel a little better about the amount of money I spend yearly at my local starbucks. Great company and awesome coffee.

June 18 2012 at 9:13 AM Report abuse +1 rate up rate down Reply
thanybea

Like some of the post-ers I am not a huge starbucks fan, however I will be buying some mugs! Thanks to Starbucks, I feel a bit better this Monday morning with out the coffee even!

June 18 2012 at 8:39 AM Report abuse +2 rate up rate down Reply
lamby

I have never been at a starbucks (inside that is) in my life.....but i'm gonna go today and purchase 4 of these mugs! I wont buy your coffee yet however as it is still way too overpriced!!

June 18 2012 at 8:24 AM Report abuse +2 rate up rate down Reply
trusgold

Well I know I will increase my visits to Starbucks....I PROMISE MR>. SCHULZ YOU HAVE MY WORD!

June 17 2012 at 4:28 AM Report abuse +1 rate up rate down Reply
1 reply to trusgold's comment
paulw3tzi

Never been there. Never will. Why? Ancient, I guess. I used to get a cuppa joe and a sinker for a dime in my local diner. " Sinker". A donut so hard you had to soak it in coffee to eat it. You haven't lived til you've done that. One of the great pleasures of the past. Who says modern times are better?

June 18 2012 at 8:47 AM Report abuse rate up rate down Reply
jonny

Next time I see a Starbucks I'm making a purchase! great ino.thnks

June 16 2012 at 8:17 PM Report abuse +2 rate up rate down Reply
Mike Henriquez

I live in El Salvador but I hope they bring the collection here because I'll always prefer giving my money to an American company than a Chinese sweat shop.

June 16 2012 at 2:59 PM Report abuse +1 rate up rate down Reply
1 reply to Mike Henriquez's comment
paulw3tzi

You really mean Taiwan. We do not import from main land China. This country has deep ties with Taiwain (china). They are not swea tshops.

June 18 2012 at 8:36 AM Report abuse rate up rate down Reply
don917

I haven't been in a Starbucks in years, but I might have to go in and buy one of those mugs !!! Qudoos to Starbucks !!!!

June 15 2012 at 10:30 PM Report abuse +1 rate up rate down Reply
1 reply to don917's comment
paulw3tzi

Kudos....... And the mugs are too expensive. I can get all the mugs I want from my state recycling center for 50 cents each. Oh yes "it's a 'start'" Hmmmm. I don't like mugs in the first place.

June 18 2012 at 8:39 AM Report abuse rate up rate down Reply
1 reply to paulw3tzi's comment
iamsprtkus

bah humbug! how's that for ancient? the point of the article, Paul, is supporting an American company that was going under and now has a chance to keep people working, not where to find the cheapest thrift store mug.

June 18 2012 at 11:29 AM Report abuse rate up rate down
AMS

Good for them, grab your mugs and starbucks gear at their website http://americanmugandstein.com

June 15 2012 at 5:58 PM Report abuse rate up rate down Reply