Does "Made in America" Still Mean Anything?

Does "Made in America" Still Mean Anything?

At the 2007 Chicago Auto Show, General Motors' product czar, Vice Chairman Bob Lutz, beat the GM drum with two exciting intros. First was the Saturn Aura, scheduled for showrooms in the fourth quarter of '07. But, to even bigger fanfare, Lutz introduced the Pontiac G8, a performance-oriented four-door coming to market in the first quarter of 2008. Both of these new vehicles should continue the product turnaround at General Motors. And in both cases these new products, carrying well-established domestic nameplates, will be produced overseas.

Conversely, Japan's Nissan occupied its Chicago stage with a bevy of Nissan-branded trucks and SUVs, most of them produced in Nissan's plant in Canton, Mississippi. Obviously, Nissan is far removed — corporately and culturally — from the domestic Big Three. With the exception of an occasional collaboration (the joint minivan project with Ford, for example), Nissan is most closely linked with global partner Renault. But don't tell anyone in Canton — where Nissan builds the Altima, Armada, Quest and Titan — that Nissan's domestic product isn't American. The Mississippi plant puts food in American mouths, and the plant's profits underwrite an increasing amount of Nissan design and engineering in the States.

Going global — and coming to America

Supplying overseas markets with plants based in those markets isn't a new concept; it isn't even new in the U.S. Sustained operation of those foreign-owned U.S. plants, however, is new, with Honda and Toyota spearheading a movement that now includes Mercedes-Benz, Nissan, Subaru, Suzuki and — most recently — Hyundai.

Today, some 75 years since the Model T made Ford a global monolith, the lines between domestic and foreign automakers are so blurred as to be virtually indistinguishable. A global GM is importing an Australian Holden model (the basis for the Pontiac G8) and a German Opel model (the basis for the Saturn Aura). Meanwhile, we have the omnipotent Toyota producing trucks in both Texas and Indiana, Honda with a vast presence in Ohio and Ontario, Canada and the Koreans opening plants in both Alabama (Hyundai) and Georgia (Kia, in 2009).

Adding to the mix (and confusion) is how U.S. consumers define "American." Following the North American Free Trade Agreement (NAFTA), both Canada and Mexico have grown in importance to the U.S. marketplace. Detroit's presence in Canada is well established (and precedes NAFTA), but the free trade agreement opened a wave of investment south of our border; much of that production is directed back to the U.S. and Canada.

For example, Chrysler's retro PT Cruiser may recall American cars of the prewar era, but it's produced at a Chrysler plant in Toluca, Mexico. And according to the National Highway Transportation Safety Administration (NHTSA), only 35 percent of the PT Cruiser's content is sourced in the U.S. or Canada. The "American" Ford Fusion contains just 30-percent U.S./Canadian content, whereas the competing "Japanese" Honda Accord contains 70 percent, Nissan Altima 65 percent and Toyota Camry 80 percent.

Conversely, the all-new Toyota Tundra (engineered in the U.S. and produced at Toyota's newest manufacturing facility in San Antonio, Texas) is as wholly American as any Japanese vehicle has been to date. In conjunction with the Tundra's rollout is an intensified marketing campaign to paint Toyota as a wholly American company. The campaign includes macho TV ads whose gruff-voiced narrator sounds as if he just walked off the cattle farm. And it's reinforced by Toyota dealers throughout the country, including one in North Texas that hung its Tundra from a crane, draped with a "Made in America" banner.

Leveling the field

The Level Field Institute — a study and marketing enterprise formed by retirees from Chrysler, Ford, GM and their domestic suppliers — conducted a July 2006 study comparing the number of Americans employed by various manufacturers to the number of cars produced, creating a U.S. jobs-per-car ratio. The results are telling.

Despite massive investments by Honda and Toyota, the Japanese companies still lag significantly behind the domestics in their total commitment to the American labor market. According to the survey, domestic automakers currently employ 35 U.S. employees for every 1,000 vehicles sold, whereas foreign automakers employ only 13. Despite the latest round of aggressive layoffs by domestic automakers, those numbers are projected to remain almost constant through 2010 due to changes in projected production output.

To whom do we write the check?

There's little in the above observations to inspire a sea change in outlook or opinion. Automotive wisdom suggests buying the best car or truck you can, one that provides relevant features, appealing style, responsive performance, solid build quality and appropriate safety — all at an affordable price. But as sales numbers indicate, even those who wish to "buy American" are finding the lure of foreign makes too strong to resist. This is due in part to domestic automakers' historical tendency to offer inconsistent product quality. With few exceptions, the Europeans and Asians take a longer view, leading to more consistent sales growth in most of their competitive segments.

Ultimately, while rooting for the home team, America's auto industry probably falls into the "mature industry" descriptive, one built and nurtured in the last century but too "old school" for today's world unless it undergoes radical change. The continued reduction in U.S. automotive capacity, and the ongoing streamlining of the associated workforce, suggests the domestic automakers are aware of this need for change.

Americans may buy some captive imports (imported entries sold under American labels) in volume, such as the PT Cruisers built in Mexico. Others are collectively ignored, such as Pontiac's revived GTO, sourced from Australia and since discontinued. And some, like the Ford Edge built in Ontario, hold the future of entire corporations.

Perhaps the increasing globalization of the auto industry makes these distinctions less relevant. In the final assessment, Americans simply want the best car they can buy for the money. And supplying that car will be a goal regardless of where it is built.