Sunday, July 6, 2008

Made in America



Buy American. It's a slogan that pops up during slow economies as predictably as Top Ten Ways to Save $ on “x.” Our current economic cycle includes stagnant wages, low GDP growth, and high gasoline prices. Because of that last item, some of the hottest cars on the road today are hybrids... and most of those are from Japanese companies. Sociologically, politically, and economically speaking, there are always a number of pendulums, relative positions of various segments of whatever is being studied, at different points on their respective arcs. While “foreign” engineered products are hot commodities, so are pro-American sentiments on manufactured goods. The argument that Japanese efficiency is a potential cure for our dependence on oil is counter-balanced by the sentiment that we need to re-source our manufacturing to domestic plants and rebuild the American auto industry. What I suspect that the “I only buy American cars” crowd is unaware of, is that many Japanese cars are more American than some GM models. Car shoppers typically look at 3 bits of information on a car's window sticker: equipment specs, fuel efficiency, and purchase price. Perhaps they should consider the domestic content information... that is, how much of the “stuff” in the car comes from here... and whether or not the car was made “here.” Here is some junk to ponder:

Chevy Equinox-
Assembled in Ontario, Canada
Transmission built in Japan
Engine built in China
Domestic content % = 55%

Chrysler PT Cruiser-
Assembled in Mexico
Engine built in Mexico
Domestic content % = 37%

Toyota Sienna-
Assembled in Indiana
Engine built in West Virginia
Domestic content % = 85%

The implied message in “buy American” is that buying an American made product supports American workers. If that's true, the next time you are kicking the tires, look at the small print on the sticker. You may find that you need to buy Japanese to put food on an Indiana family's table.

7 Comments:

Blogger PRIguy said...

Once again it comes back to people being too lazy to do a little bit of research or reading. We've been brainwashed by the whole "Buy American" thing. This makes people feel like they're doing something good, something right. It gives them the warm and fuzzies. Too often the only Americans benefiting are the dealers who sell the foreign-made cars.

July 6, 2008 at 1:41 PM  
Blogger Roger said...

The "buy American automobiles" mantra has slowed considerably in the last few years. People have become much more aware of the global nature of business, manufacturing, food supply, etc. Also, the strong presence of what has been known as foreign manufacturers has changed the perspective. Manufacturers such as Honda, Toyota, BMW, etc. have large plants in the US now, and people are much more aware of their existence here. Two decades ago, the supply of their autos were all coming to the shores via boat, unlike the present time.

It would be interesting to see the cost makeup of an automobile. Shipping parts around the world costs money, but the cost of labor to build must more than offset the transportation costs. The major airplane manufacturers have significant portions of the aircraft built elsewhere, then shipped to a common location for final assembly. Again, the transportation costs must be significant, but they choose to work this way. Perhaps part of the problem being solved is access to labor pools for the work.

I heard a report the other day with regard to the tainted tomato crop that really made me take notice. The report spoke about how Florida growers ship their tomatoes to Mexico for packaging. This means the bulk crop of produce is not being packaged near the production location, but rather being shipped in bulk elsewhere (a long distance) for putting into packages, then shipped back to the US for distribution to consumers.

July 7, 2008 at 6:50 AM  
Blogger Ellipses said...

That tomato bit is astounding, Roger... I do agree that the "buy American automobiles" is becoming a vestige of the past in a lot of areas... However, you would be surprised at how prevalent the idea is in poorer, more rural areas (especially in the south). Ironically, those markets would be best served by a willingness to buy low-cost, highly efficient "foreign" cars... considering that some of them (Hyundai) are built in the region.

-ellipses

July 7, 2008 at 7:56 AM  
Blogger PRIguy said...

I've mentioned before that I live in Virginia. Many years ago, I worked for a restaurant supply company here in Richmond. Our biggest customers were the hotels and restaurants in Virginia Beach, roughly 100 miles from here. As can be imagined, we sold incredible amounts of seafood.

Our main source for seafood was the Wholey Fish Company in the Strip District in Pittsburgh. We sold hundreds of 50-lb. cases of Chesapeake Bay crabs. So, the crabs were caught in the Chesapeake Bay, which is near Virginia Beach, shipped to Pittsburgh, then shipped to Richmond, only to be shipped right back to the beach...near the Chesapeake Bay! I was always amazed by that.

It just never made sense. I took a class in college called Operations Management. I hated the class, it was grueling, and I barely passed, but at least I learned that there's a reason things like this are done. There are complex formulas which calculate data based on distance, time, labor, transportation, etc. It still makes no sense to me why companies do this, but at least I know there's a legitimate reason.

July 7, 2008 at 8:49 AM  
Anonymous Anonymous said...

Your tale of the circulating seafood makes as much sense as people from Pennsylvania drinking bottled water from Maine while the people in Maine drink bottled water from Pennsylvania or somewhere else. But bottled water makes no sense, either. 16 million plastic bottles go into landfills and incinerators daily. All because some marketing geniuses convinced us that it's better than tap water.

July 7, 2008 at 9:47 PM  
Blogger Ellipses said...

But it IS better than tap water... after I drink water out of the tap, I don't have a convenient plastic bottle to fill up my trash bags with... you get what you pay for... in this case, you pay for a plastic bottle!

-ellipses

July 8, 2008 at 6:17 PM  
Anonymous Anonymous said...

The last time I recall reading something about it, an "American-Made Car" normally had 60 percent of its parts shipped in from other parts of the world, including Mexico and Canada.

Buy the cars from neighborhood sdealers so you can help the people who employ your neighbors.

July 11, 2008 at 5:33 PM  

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