What Is an American Car?

What Is an American Car?
http://online.wsj.com/article/SB123265601944607285.html

These Days Its Hard to Tell, and That Could Snag the Push to Save
Detroit Auto Makers

By JOSEPH B. WHITE


Could there be a more American vehicle than a "Jeep Patriot?" Nothing on
four wheels says American more proudly than Jeep, the rugged brand that
helped America win World War II, and has ferried millions into our wild,
Western spaces since.
Car Quiz

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See if you know which vehicles were made in American with our quiz.
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Yes, in fact, there could be a more American SUV than a Jeep Patriot. A
Toyota Sequoia would be one of them. The Sequoia is 80% "domestic"
according to the National Highway Traffic Safety Administration, while
the Jeep Patriot is only 66%.

"Buy American" is back on the agenda in Washington. Congress is debating
proposals to require that contractors on projects financed by the
economic-recovery package buy "American" steel.

The Treasury has pumped billions into the three American car makers with
head offices in and around Detroit, hoping to avoid a collapse of what
industry and political leaders call the U.S. auto industry. There's lots
of talk about the government supporting American efforts to develop
electric cars and batteries, and some federal programs already
established to do this.

When it comes to the car business, however, consumers and Congress and
the Obama administration are going to confront a tricky question: Just
what is an "American" car, or for that matter, an "American" car company?

Once you put down the flags and shut off all the television ads with
their Heartland, apple-pie America imagery, the truth of the car
business is that it transcends national boundaries. A car or truck sold
by a "Detroit" auto maker such as GM, Ford or Chrysler could be less
American -- as defined by the government's standards for "domestic
content" -- than a car sold by Toyota, Honda or Nissan -- all of which
have substantial assembly and components operations in the U.S.

Thomas Klier, an economist with the Federal Reserve Bank of Chicago who
has studied extensively the realignment of the American auto industry,
wrote in an October 2007 paper that as of 2006 about 25% of the parts
used in vehicles assembled in the U.S. came from overseas, and another
25% were manufactured here by foreign-owned parts makers. The Detroit
companies wave the Stars and Stripes when they advertise their wares or
look for loans in Washington, but when they talk to investors or the
business press, they stress their aggressive efforts to promote "global
sourcing," a code for, "Buy More Parts from China and Mexico."

GM, the most global of the companies with headquarters in Detroit, has
highlighted to investors that it now sells more cars (and has more
employees) outside the U.S., and that its best opportunities for growth
-- assuming the company's restructuring is successful -- are in China,
Latin America and other developing markets.

Over the next several years, the nationality of the cars sold in America
is likely to become harder to pin down. Ford intends to import to the
U.S. market the European designs for its small and medium-sized cars.
German auto maker Volkswagen is pushing ahead with plans to set up a
U.S. assembly plant again. The BMW X5 sport utility (assembled in South
Carolina) is more American than a Pontiac G8, which is an Australian
import, like Oscar host Hugh Jackman.

For nearly 15 years, the U.S. government has required, under the
American Automobile Labeling Act, that car makers disclose to consumers
what share of the car's components are made in the U.S. or Canada --
another way of saying, made by people paid something comparable to U.S.
wages. A 2001 study by NHTSA found that more than 75% of 646 people
surveyed weren't aware of the existence of the domestic content
information, and only 5% of those surveyed said the disclosures --
usually on a window sticker -- affected their decision "to any degree
whatsoever." The NHTSA study also observed that "the introduction of
AALA labels in model-year 1995 was not followed by a resurgence of
U.S./Canadian parts content in the overall new vehicle fleet, but rather
a modest decline from an average of 70 percent in model year 1995 to
67.6 percent in model year 1998."

The muddle about what constitutes an "American" car is evident in the
fleet of cars I own. Depending on who's at home, you could find a
Saturn, a Chevy, a Toyota and a Subaru crowded into my driveway. Of
these, one was assembled in the U.S. (Extra credit in the accompanying
quiz if you can guess which one.)

Meantime, spare some sympathy for the government officials trying to
sort out where to invest the taxpayers' money to support the "U.S. auto
industry."

Consider Chrysler LLC. During the 1980s and 1990s, Chrysler was the most
flag-waving, red-white-and-blue American car company among Detroit's Big
Three. Company Chairman Lee Iacocca was a clear, loud voice accusing
Japan's government and auto makers of unfair trade practices. Never mind
that Chrysler had a long-standing link to Japan's Mitsubishi Motors
Corp. and sold various Mitsubishi cars. Then, Chrysler sold itself to
Germany's Daimler-Benz AG to create DaimlerChrysler. Not long afterward,
the new German owners installed a German executive to run what used to
be Chrysler -- and began promoting German engineering as a valuable
attribute of its cars.

Confused yet? It gets better. In 2007, Chrysler was reclaimed for
America -- 80.1% of it at least -- by the U.S. hedge fund Cerberus
Capital Management LP. But Chrysler has taken a pounding as the economy
has gone south, and now Cerberus has reached a tentative agreement to
peddle 35% of Chrysler to Italian auto maker Fiat SpA in return for
access to Fiat's engine technology, small car designs and other
technology. Fiat might also use a Chrysler factory to build cars for the
U.S. market and sell its brands through Chrysler dealers. But Fiat isn't
proposing to put any cash into Chrysler. Should this deal be consummated
-- and that's by no means certain -- Chrysler would once again be
majority owned by corporations located outside the U.S.

So what should you buy if you want to buy a truly American-made car? For
the 2008 model year, the government says the Ford Crown Victoria has the
highest percentage of U.S./Canada content at 90%.

The only hitch: It's assembled in Canada.

(Answer: The Camry)

 

One manufactured in a plant owned and operated by Ford, GM, or Chrysler.
End of story. Not a difficult question at all.

 

Apparently it can be made in Mexico/Canada/Korea and have loads of parts
made all over the third world and still be an "American" car?

 

According to Steve a car made by Ford in Cologne is American, as is an Opel
(GM) made in Belgium.

Is a Mercedes made in Stuttgart by a workforce largely from Turkey (as it
was some years ago - now I don't know) 'German'?

Caring about the 'nationality' of a car is a daft exercise. Does it work?
Is it safe? Does it look nice to you?

Much more important.

DAS

To send an e-mail directly replace "spam" with "schmetterling"
---

 

Well, it's a bit of a stretch to include Korea as part of America,
isn't it? The last time I checked my atlas, (North) America included
Canada, the United States, and Mexico.

But congratulations on a post that was more than your usual clip-and-
paste.

 

Absolutely. Where is the majority ownership of the parent company?
Where is the engineering design done? Where is the aesthetic design
done? Those are the important questions. Assembly is, face it, gruntwork
that can be done anywhere there's space for a plant, access to shipping
infrastructure, workers, and/or assembly robots. The engineering and
design are what matters the most.

 

If there's a largely independent SUBSIDIARY in another country that
performs the engineering design, then I'd say that the car belongs to
that country rather than the country of the parent corporation. For
example, Saab and Volvo were still Swedish when owned by GM and Ford
respectively. Opel is European and Holden is Australian despite GM
parentage.

Mere final assembly is another thing entirely and is irrelevant to what
country the car "belongs" to. A Camry made in Kentucky is still
Japanese, and a Chrysler PT Cruiser made in Toulca MX is still American.

Which explains the success of Hyundai and Kia.

 

Yeah, I was shocked that there was even a reply.

 

But they're not independent. They share platforms with GM's American
cars. Ditto engine families. Opel has been part of GM since 1929.
It and Vauxhall are not even "direct" subsidiaries but under "GM
Europe" in corporate organization.

I suspect Toyota's American assembly operation is a subsidiary of
Toyota too. It seems grasping at straws to call a Toyota made by
Toyota USA Japanese but a car made by GM Europe European.

Toyota and Nissan have design and engineering studios in the US, and
some models are unique here -- not made in Japan at all.

 

The platform sharing is *very* loose indeed. Same floorpan and
suspension, but literally EVERYTHING that attaches to it is different.
Case in point: the Taurus is the same "platform" as a Volvo, but
different engine, transmission, interior.... EVERYTHING.

Opel and GM have only very recently started swapping a very few engines
across the pond.

My point exactly- they're not only largely independent, but they're a
layer removed from the top. Utterly and completely different from
Toyota's Kentucky and San Antonio plants... which are just that:
assembly plants. Those plants are no more an American car company than
Chrysler's Toulca plant is a Mexican car company, or their Bramlea plant
is a Canadian car company.



It seems grasping at straws to call a Toyota made by

Not at all, when you dig beneath the surface the least bit. Chrysler's
former Austrailian division was much like Opel- very largely independent
of the parent company.

 

But some cars with US brand names are simply relabeled foreign cars,
aren't they? What about the little Korean-made Chevy whose name I
forget? Is that a US design?

Perce

 

Actually, where the PROFITS are going are what matters most.

Most corporations IMHO hand out a paltry amount of profit to their
stockholders, many companies don't even bother to dividend anymore,
and those that do, their dividends are what they cannot figure out how to
spend. The bulk of the real profit is plowed back into expenditures on
the business.

And here is where the crux of the matter is.

What any country wants is for the high-dollar labor expenditure to be made
in that country. This is why there's such a fight over the H-1B visas given
to foreign tech workers. Those tech jobs are high-dollar labor and what
usually happens is the foreign national remits part of the money home, or
they
just bank it and then when their contract is over, they go back to their
country
and take their money with them. They are not spending any more money in the
US
and helping the US economy than a minimum wage employee would.

Sure, the Japanese automakers may be paying a bunch of grunt assembly jobs.
Those workers are just turning around and spending all their paycheck on
food and groceries. They aren't saving a huge pile of money, so when they
get
laid off they can start another business that helps the US economy. Instead
they go on unemployment which harms the economy. The high-dollar auto jobs
are in Japan, and those help the Japanese economy.

An American car is one where the people who got the big bucks for building
that car are spending those bucks in America, helping build up our economy.
They are making purchases for that company in America, not in Japan. They
are plowing as much profit as they can back into America, and jazzing up the
American economy.

The US is basically turning into an economy with a smaller and smaller
number
of educated, high-dollar employees who are doing the critical work that
requires
a lot of expertise, and a larger and larger number of lower-dollar,
uneducated
employees who are being told what to do by the first group, or worse by
people in
the first group who live in other countries. Only a handful of industries,
like medical,
construction, agriculture, and a few others, which require people to be here
and
cannot be outsourced, don't work like this. And those are increasingly
working to
draw in foreigners who come to the US and get educated, or bring their
education
with them, work and make their money, then leave and go back home. It is
not
a good situation.

Ted

 

Yes, there have been foreign cars sold with US brands dating way back to
the 70s. But those are still FOREIGN cars and everyone knew it. Dodge
Colt (Mitsubishi), Geo Prism (Toyota), Ford Courier (Mazda), Plymouth
Cricket (Hillman), Chevy Luv (Isuzu) are all examples.

 

Yet the rabid Detroit 2 apologists call them "American" cars. What irony!

 

What irony?

 

You previously said "One manufactured in a plant owned and operated by Ford,
GM, or Chrysler.
End of story. Not a difficult question at all."

Thus -- by your definition -- Cologne Fords and Antwerp Opels are American.

DAS

To send an e-mail directly replace "spam" with "schmetterling"[/QUOTE]

Absolutely. Where is the majority ownership of the parent company? Where
is the engineering design done? Where is the aesthetic design done? Those
are the important questions. Assembly is, face it, gruntwork that can be
done anywhere there's space for a plant, access to shipping
infrastructure, workers, and/or assembly robots. The engineering and
design are what matters the most.
[/QUOTE]

 

This all just goes to show that the discussion about car's 'nationality' is
akin to the mediaeval debates about the number of angels on a pin.

DAS

To send an e-mail directly replace "spam" with "schmetterling"

 

No dumber than the rabid asian car apologists calling the San Antonio
built Tundra "American."

 

GM is closer -- Malibu, Saab 9-3, Opel Vectra; plus Opel Speedster/
Saturn Sky...

2.2 Ecotec 4, 2.0 turbo Ecotec 4 now.

The L81 was used longitudinally in the Opel Omega, Cadillac Catera and
transversely in the Saturn L-Series, Saturn Vue and Saab 9000.

The 3.2 L LA3 is a complete redesign of the L81 for the Cadillac CTS
and Opel Omega B.

The Saab 2.8 V6 is a GM engine.

You're missing the point.

"Toyota Motor Engineering & Manufacturing North America, Inc. (TEMA)

[Note the Incorporated -- that means it's a subsidiary]

"TEMA is responsible for Toyota's North American engineering design,
advanced research and development,

[Note the above -- it's not just assembly plants]

TEMA provides engineering design and development, R&D and centralized
support to Toyota's North American manufacturing plants.

Except Opel isn't. Not when GM forces divisions to use common
platforms and engines, decides which site gets to design said
platforms and engines, etc.

 

Any American can buy stock in Toyota. Plus, what about the profits
dealers make? Suppliers? Heck, what about worker salaries?

Totally false. The main ones who don't are tech companies and those
in trouble.

So why would people buy the stock?

So all the time they're here, what, they're getting food sent from
back home? Transportation? Clothes?

Uh, $25 a hour buys more than food and groceries.

Toyota employs engineers, designers, etc. here too.

So you consider what, just the million-dollar executives? The rank-
and-file workers help our economy much more, just by numbers.