It’s not easy to buy American
Thursday, November 13, 2008
I got into bit of an argument with a friend recently when he made the statement that it was crucial to save the American auto industry, and to do that the government should not only hand over the $25 billion bailout to GM, Ford and Chrysler, but impose a stiff tariff on all those foreign cars. Encourage people to buy American, he said. Make foreign cars more expensive. That’s what Ronald Reagan did in the 1980s. It worked then, it can work now.
But, I asked, what qualifies as a foreign car? Cars sold by foreign companies, he said. He meant Toyotas, Hondas, Nissans, Hyundais, etc. But “foreign” is an increasingly difficult distinction to make.
I own two vehicles. One is a pickup, assembled by American workers in Indiana from mostly American-made parts. The second is a hatchback coupe, assembled in Hermosillo, Mexico, from a worldwide assortment, including a Japanese engine. The pickup is a Toyota. The coupe is a Ford. Which of these is a “foreign” car? On which do you impose the tariff?
On the truck made by the foreign-owned company, he said. Chrysler until recently was owned by Daimler-Benz, a German company, I noted. Does that mean a Dodge Ram pickup is a foreign car subject to penalty? No, he said. Mazda is owned mostly by Ford. Are Mazdas American cars? No, he said. Saab is owned by General Motors, Volvo by Ford. Should Swedes shun these cars as “foreign”? No, he said. So why should we shun a Toyota or a Nissan that Americans make?
The lesson is, it’s not simple to buy American. Each year Cars.com puts out a list of the 10 best-selling cars assembled in America that include at least 75 percent “domestic content,” that is, parts from the United States or Canada. The list tends to change substantially from year to year, since carmakers routinely ignore international borders. Still, this year the top 10 included the Toyota Tundra and Toyota Sienna, made in San Antonio, Texas, and Princeton, Ind.; and the Honda Odyssey, from Lincoln, Ala. Not on the list are cars like the Dodge Ram and Grand Caravan minivan, made in Canada with many non-North American parts, and the Ford Escape SUV. Off was the Ford Mustang, assembled in Michigan but with only 65 percent American parts. The Chrysler PT Cruiser looks all-American, but is assembled in Mexico. The Toyota Camry, Honda Accord, Toyota Corolla, Toyota Matrix, Honda Pilot and Honda Civic are all assembled in the United States, but with their domestic content between 50 and 70 percent, are off the list, but just barely. Most cars contain a good percentage of foreign-made parts. Even the venerable Ford F-150 pickup, No. 1 on the list forever, has 80 percent domestic content, said Cars.com. Part for part, a Camry or a Civic or a Nissan Altima are more American than a Mustang. They are way more American than a Mexican-made Ford Fusion.
Congress can’t rescue the Big Three automakers by forcing people to “buy American.” You can’t help them with a tariff on foreign cars, because the Big Three sell many foreign-made cars and their competitors sell many cars made in America. The world is the source; the world is the market.
The trouble with the Big Three is not that their competitors are foreign, it’s that their competitors make more popular cars with lower costs and higher profit. The average hourly labor cost for General Motors is over $80; for Toyota’s American factories it’s $48, according to the Wall Street Journal. The Toyota factories are more efficient, taking fewer man-hours per vehicle, and their productivity is improving faster. The Big Three are hamstrung by union labor contracts and work rules and sluggish management. Their competitors are not.
Buying American, even if you could figure out what “American” is, won’t change any of those problems.
Tracy Warner’s column appears Tuesday through Friday. He can be reached at warner@wenworld.com or 665-1163.

















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