At Witz’ End: What’s an American Car?

February 27, 2007

So what is an “American” car?

If it is simply one built inAmerica, as most foreign makers and U.S. media would have you believe, then vehicles built in Canada are Canadian, those assembled in Mexico are Mexican and Porsches built in Finland are Finnish.

 

But we know intuitively that’s not the case. And yet in this global age of autos, some people insist on sticking to the idea of purely “American,” or “German,” or “Japanese” cars — when in many cases, today’s vehicles are polyglots, products of the same global industry.

 

But that doesn’t change the political nature of the question.

 

Say General Motors decides to build Chevrolets in Japan. If the cars are competitive (could happen), that might make sense to escape expensive barriers the Japanese government puts in the way of imported vehicles to protect its own automakers.

 

So GM buys some land outside Nagoya, builds a plant and hires some local workers and managers to run it. Say it builds a GM Powertrain plant next door, hires more locals and — since it would be cheaper to source parts and components locally than import them — sources most of them with Japanese suppliers. Say it starts cranking out enough appealing and carefully assembled cars to put a meaningful dent in the Japanese market.

 

This would be good for the local economy in and around Nagoya. However, assuming that the Japanese new-car market was not growing, it would displace sales of cars built by weaker Japanese makers and hurt employment elsewhere in Japan. And as those companies’ sales and shares declined, the jobs displaced would not be limited to factories; a lot of better, higher-paying headquarters jobs would be lost as well, most of them in and around Tokyo.

 

Would the Japanese people and media see this displacement, and net loss, as okay because “home-built Chevrolets are as Japanese as anything from our own makers”? Would they see profits from increasingly popular Japan-built Chevys going back eastward across the Pacific as okay for their own (currently struggling) economy? What do you think? MORE--

 

 

Protection or barrier?

 

Let’s carry this scenario a few steps further: Say GM’s success with its first Japanese plant and its growing penetration of the Japanese market leads it to build more plants there. Say Ford and Chrysler Group follow, and their American suppliers are encouraged to build parts plants there to support them…and to win business away from Japanese suppliers.

 

Japan’s highly protective government, of course, would never allow any of this to happen. And even if it did, few highly nationalistic Japanese would buy American-brand vehicles at the expense of their own coveted makers regardless of where they were built.

 

But say, just for a moment, that they would. Would those Japan-built cars and trucks — most designed and developed in North America -- qualify as “Japanese?” Would those parts built in American-owned Japanese plants be considered “Japanese?” Would the assembly and sales of those vehicles in Japan be perceived as good for Japanese jobs and the Japanese economy? Could their U.S. makers get away with advertising them as such? Would the Japanese media endorse and recommend them as such? What do you think?

 

So why has exactly this scenario evolved in the U.S.A., where nearly every Japanese automaker and some Europeans and Koreans assemble cars and trucks for the American market and beyond? Because, once import vehicle makers began achieving serious penetration of this market during the fuel-crisis 1970s, our government essentially forced them into it by imposing quotas on imported vehicles. Because our domestic makers during the 1980s and '90s were not especially worthy of protection. Because enlightened off-shore makers saw huge PR and some business benefits in building vehicles here despite our much higher business costs. And because our governments (federal and especially state and local) and most media encouraged, enabled and welcomed them here as job “creators.” MORE--

 

 

Job creation – or job death

 

What they did not see, or chose to ignore, is that “creation” of a few thousand plant jobs here and there would eventually destroy many more and better jobs elsewhere. So while some (mostly southern) states continue to battle each other with big incentives to attract new foreign-maker plants to gain two or three thousand jobs, other (mostly northern) states lose tens of thousands. While import companies will “create” about 3000 U.S. jobs in 2007, raising their total to 106,000, U.S. automakers will lose nearly 43,000 this year, falling to about 378,000, according to Jim Doyle, president of the Washington, DC-based Level Field Institute, which tracks and reports auto-company U.S. employment.

 

Doyle further predicts that U.S. industry-job losses will total some 95,000 (from 2005 employment) by 2010, and even then the three U.S.-based companies will employ 71 percent of all American auto workers — four times more per car sold than Hyundai, 2.5 times more than Toyota, and nearly twice as many as Honda. “Reporters tend to focus on plant jobs and miss the headquarters jobs,” Doyle asserts.

 

“Foreign automakers spend millions around the country promoting their new plants and U.S. investment,” he says. “We welcome their investment, but Americans should know that each Ford, GM, or Chrysler Group purchase supports nearly 2.5 times the number of U.S. jobs of foreign automakers, on average.”

 

What’s more American?

 

Some say a Japanese car bolted together in America with a fair amount of U.S. content is more “American” than a U.S.-brand car assembled in Canada or Mexico with some foreign-sourced parts. Nonsense! Ask yourself, again, where are the bulk of the better jobs and where do the profits go? DaimlerChrysler’s Chrysler Group, by the way, still qualifies as “American” because it is an entire self-contained car company based in America and employing tens of thousands of Americans at all levels that happens to be owned by a German company, just as Opel is a self-contained German company owned by General Motors.

 

Toyota spends huge sums of money promoting the idea that they ‘support’ 368,000 U.S. jobs,” Doyle says, “but those include supplier, dealership and other peripheral jobs. Using the same multiplier, GM supports 1.9 million U.S. jobs and Ford 1.2 million. Toyota also says it builds here most of the vehicles it sells here. That may be its eventual intent, but Automotive News reported that 48 percent of the vehicles Toyota sold here in 2006 were imported.

 

“Is it more important to the U.S. economy for someone to buy a Ford Fusion, although it’s built in Mexico, from a company that employs 105,000 Americans,” Doyle asks, “than a Honda built in Ohio from a company that employs 27,000? Domestic makers also purchase nearly 80 percent of the parts made here, and domestic vehicles average 76 percent U.S. content vs. 48 percent for U.S.-built imports. That represents billions of dollars in spending.”

 

No, an “American” car or truck is one built by a U.S.-based company that supports primarily U.S. jobs and the U.S. economy, regardless of its parts content and especially its point of assembly.

 

And should Americans buy “American” out of patriotism. No, but they should carefully consider U.S.-brand vehicles — now that most are competitive or better in design, engineering, quality, and fuel economy — out of their own economic self-interest. Because whatever business they are in, every time “Detroit” and its struggling U.S. auto suppliers shed another 10,000, or 20,000, or 30,000 American workers, that multiplies to hundreds of thousands who can no longer afford whatever goods or services their own employers sell.

 

Think about it.

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