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

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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.

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"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.

5 Companies Americans Can Be Proud Of
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What's So Special About This Starbuck's Mug?

Nucor (NUE)  A company in a cyclical industry like the steel-making business could certainly be excused for paring down its workforce during tough times. During the Great Recession, Nucor's revenues were cut in half -- and yet the company didn't lay off a single worker.

Following a plan instituted by his predecessor, F. Kenneth Iverson, CEO Dan DiMicco has the company carry out a "pain-sharing" program when business is slow. Executives are the first to take pay cuts -- and they can be steep. After that, hours are reduced. That can hurt, but in the end, everyone keeps their jobs.

Whole Foods (WFM)  Sure, it's great that this grocer is encouraging Americans to eat smarter, but that alone isn't enough reason to celebrate it. The presence of Whole Foods has encouraged the proliferation of organic foods, which are unquestionably better for the environment. The company's color-coded seafood sustainability index encourages customers to consume responsibly, and it has taken huge steps to encourage sustainable farming in Costa Rica.

But it doesn't end there: Whole Foods also has an admirable approach to salaries. Co-CEO and founder John Mackey gets a $1 salary and took home just $78,000 in 2011 in accrued vacation time; no executive is allowed to earn more than 19 times the average worker's total pay.

Berkshire Hathaway (BRK-B)  Warren Buffett's baby makes it on to the list for how it's run: with an uber-long-term horizon and the utmost respect for shareholders. Arguably the greatest investor the world has ever seen, Buffett has also set the standard for transparency when it comes to communicating with the financial community.

Case in point: the David Sokol fiasco of early 2011. Sokol, one of Buffett's top charges, convinced Berkshire that Lubrizol -- a chemicals company -- was worthy of acquisition. The problem: Sokol held a substantial amount of Lubrizol shares that stood to appreciate upon the acquisition, and he didn't disclose the holding.

Sokol left the company around the time this information became known. Buffett was quick to give a full account of the situation, baring all for outsiders to see -- including his later bewilderment with Sokol's behavior.

Starbucks (SBUX)  Sure, it's easy to see this coffee king as a symbol of all that's wrong with corporate America. Satirical newspaper The Onion once joked that the stores were so ubiquitous, a new Starbucks was being opened in the restroom of an existing Starbucks.

All jokes aside, the company has been a model employer and partner with suppliers. Any employee who works just 20 hours per week is given health-care coverage. During the economic downturn, the company spent more money on this benefit annually than it did on all the coffee it bought. Starbucks has spearheaded the move for fair-trade coffee as well. It is the world's largest purchaser of fair-trade coffee, and it often pays above market value to its producers in developing countries.

And this past year, CEO Howard Schultz launched a drive to kick-start American job growth. In the program dubbed "Create Jobs for USA," the company collects donations from customers. All of the donations are poured into a fund that facilitates micro-loans to spur small-business job growth.

Costco (COST)  Competitor Walmart (WMT) has been in the headlines a lot lately. Whether it's for bribing officials in Mexico or not allowing employees to form unions, there seems to be a dark cloud hanging over the company. So why doesn't Costco get any bad press when the majority of its employees don't have union representation either?

It's actually quite simple: The company believes in its employees, and it backs that up with its actions. Employees are paid an average of $17 per hour and have generous health-care and retirement benefits -- two things Walmart employees certainly can't claim.

And customers are huge beneficiaries as well. Costco has razor-thin margins -- which means nearly every penny of savings Costco can squeeze out using its size and efficiency is passed on to customers. The company's profits, in fact, are almost entirely accounted for in membership dues -- not sales. The approach has worked out well for shareholders, too; including dividends, Costco shares have returned 131% over the past decade, doubling what the larger market has offered up and quintupling Walmart returns.

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.

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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