Made in America? Hard to tell
In an age of globalization, parts and vehicles can come from most anywhere
CHICAGO -- Buying a domestic car instead of an import used to be as simple as choosing vanilla over chocolate.
``Domestic" meant going to
But in the age of globalization, when parts and vehicles can come from anywhere, a Toyota Camry can be more American than a Ford Mustang, and a Honda Pilot can have more U S -made components than a Chevrolet Suburban.
Nevertheless, a group called the Level Field Institute is trying to revive ``Buy American" sentiment through an advertising campaign that claims buying Japanese-brand vehicles built in the United States will cost American jobs because domestic automakers will further retrench.
``Made in America matters," said Jim Doyle, president of the institute, a group of retired workers from domestic manufacturers funded by Ford Motor Co. ``If Americans think all cars are the same, we are more likely to lose more jobs in the U S."
Foreign-based manufacturers like Toyota can identify models like the Camry as ``domestic" cars because they meet the government yardstick of having 75 percent or more of their parts made in the United States or Canada.
But the Automobile Trade Policy Council, a lobbying group funded by GM, Ford, and
For GM and Ford, the domestic parts content is 73 percent, and for DaimlerChrysler, it's 72.
Dennis Cuneo, executive vice president of Toyota North America, says that argument ignores the fact that Japanese manufacturers built more than 3.7 million vehicles in North America last year.
``Ten years ago the debate was imports versus domestics, and now the debate is the domestic content of the vehicles," Cuneo counters. ``Their idea of a level playing field is for us to make fewer cars."
While manufacturers and interest groups exchange verbal volleys over domestic content, Art Spinella, president of automotive research firm CNW Marketing Research, says consumers aren't paying attention.
Price stickers on new vehicles have been required to show the domestic parts content since 1994, and Spinella says ``only about 2 percent of consumers even look at it."
To most car shoppers, a Toyota Camry built in Georgetown, Ky., is as American as a Ford Five Hundred built in Chicago. Indeed, using the government's standards, both have 80 percent domestic parts.
Sid Dechter of Hanover Park believed he was buying American when he bought his daughter, Kristine, a 2006 Toyota Camry as a graduation present.
``It's made in Kentucky so while it may have some Japanese parts, it's made in America and providing jobs in America," he said.
But on the jobs issue, Doyle still sees a major distinction between a Ford and a Toyota. Even after cutting thousands of jobs this year, Ford will employ 110,000 in the United States, while Toyota will have around 32,000.
``So would you rather buy a Toyota built in Kentucky by a company with 32,000 jobs or a Mustang with parts made in another country, but from a company that supports 110,000 jobs in the U S ?" Doyle asked.
Toyota's Cuneo says such thinking is misguided. He points out that Toyota, Honda, and Nissan are net creators of jobs as they add manufacturing capacity in the United States.
Honda is planning to add an assembly plant and some 1,500 jobs in the Midwest. The Big Three, on the other hand, are reducing capacity and jobs in the United States.
``The reason for fewer workers is that we are more productive, which is good for the U S economy," Cuneo said. ``Having people in a jobs bank getting paid for not producing isn't good for the health of any enterprise."
The ``jobs bank" is a holding tank for United Auto Workers union members on long-term layoff who receive full pay and benefits for not working or for doing volunteer work.
``It drives the UAW crazy, but the fact the foreign-owned assembly plants can build more vehicles with fewer workers means they are much more efficient and the domestics more inefficient," said Dave Healy, an analyst with Burnham Securities.
``They say the more transplants built here, the more UAW workers lose jobs. Amen. According to GM's 10K report, their cost per hour in wages and benefits for UAW workers last year was $83 an hour. They can't live with that."
Healy also questioned the name of the group pursuing the jobs angle.
``Level field, that's a term that means some domestic company is trying to protect the field from fair competition," Healy said, alluding to Ford's support.
One aspect of the debate that is seldom analyzed is the significance of where each car company is based, and therefore where the profits go. Some would argue that the biggest difference between cars from Honda and GM is that the profit on an Accord -- even one manufactured in Ohio -- still goes back to Japan.
``I'm a union worker, so I stick with American vehicles," said Tom Wolfgram, an operating engineer from Lake Villa, Ill., who recently bought a Chevrolet TrailBlazer. ``I want the money to stay here and be spent here so it creates even more jobs."
Cuneo, however, says the bulk of Toyota's profit stays in the United States to invest in new plants and equipment. He would not provide details.
Some analysts say as much as 60 percent of Toyota's operating profit and 70 percent of Honda's are derived from North American sales. Healy agrees on Honda's but believes for Toyota it's less than half.
Healy estimates that $30 billion of Toyota's $68 billion in North American sales last year were from U S - and Canadian-made vehicles. Moreover, as a ``rough estimate," he says Toyota earned a profit of $2.4 billion in North America last year and spent the same amount on new plants, products, and other investments.
``When they say they're an American company, they aren't lying," he said.
Additionally, the logic of buying a Ford or GM product because its profits stay in the United States isn't necessarily accurate. Because both are global companies, at any one point profits made from domestic sales could be invested in plants abroad.
As for Chrysler Group, it's based in Auburn Hills, Mich., but its DaimlerChrysler parent is based in Stuttgart, Germany, further complicating labels.
``The domestic content issue is grasping at straws. This isn't the Big Three any more. It's the Big Six," Cuneo said, referring to the growth of Toyota, Honda, and Nissan in the United States.
``All are global companies that source [parts and vehicles] in Asia, Europe, Canada, or Mexico and build in the U S."
And regardless, Spinella says, where a product is made and by whom matters little to most shoppers.
``Country of origin doesn't register with consumers," he said. ``It's not that they are pro-Japanese as much as they are pro-bargain and value."
Domestic automakers pushed the legislation requiring domestic content labels as a way to inform consumers, but sometimes the information muddies the water about whether a vehicle is a domestic.
A major imported component such as an engine, transmission, or drive axle can significantly lower a vehicle's domestic parts content.
For example, a seemingly red, white, and blue vehicle such as the Ford Mustang has 65 percent domestic content, and the Chevy Suburban 67 percent. The
That leaves some buyers, like Joe Stetina of Riverside, Ill., to make their own rules. Stetina traded a 1997 Chrysler Concorde (made in Canada) for a Toyota Matrix (also built in Canada).
His reasoning: He didn't want to buy an import.