Do You Really Drive an American Car?
Hondas made in Ohio. Buicks made in Germany. We take a look at what it means to be "foreign" or "domestic" in today's global economy.
Foreign or domestic: While the "American" Lincoln MKZ's engine and transmission are made here in the U.S., only 20 percent of its components come from the U.S. and Canada. Plus, final assembly happens in Mexico.
What most people see as "American" cars, the UAW does not. It bans Hondas, Toyotas, Volkswagens and all other foreign-branded cars from union property, as well as those cars from Detroit's Big Three automakers for which final assembly occurs outside U.S. borders, such as the Lincoln MKZ, even if those vehicles have bits and pieces built in the U.S. For instance, the MKZ's engine is built in Lima, Ohio, and its transmission is made in Livonia, Mich. Yet, by UAW definition, it is a foreign automobile.
It comes down to the car's vehicle identification number. "The only cars that you can actually park in their parking lots have to have a VIN number starting with a one or two," says McAlinden, executive vice president of research and chief economist at the Center for Automotive Research, and a former UAW worker. "They look at it from the guard shack."
VINs that start with one indicate the car was assembled in the U.S., two indicates Canada, three Mexico, and four anywhere else in the world. A vehicle's VIN is at the base of the windshield on the driver's side, as well as other places on the vehicle.
Most consumers aren't nearly as concerned with where their car is built as UAW members are. But the reality is that millions of Americans' livelihoods, not to mention a large part of the American economy, depend on the domestic auto industry. And as Chrysler, Ford and General Motors launch their biggest product offensives in decades, the questions of whether to "buy American" and what exactly that means in the new global economy are thrust into the public view.
What Does "Made in America" Mean?
As far as the federal government is concerned, the National Highway Traffic Safety Administration is the final arbiter on what constitutes "foreign" and "domestic." Since 1994, the American Automobile Labeling Act (AALA), under NHTSA's purview, has required that every new vehicle for sale in the U.S. include on its window sticker the location of final assembly, the percent of domestic content and where the engine and transmission were built. A full list of these data for every model sold in the U.S. is available on NHTSA's website.
It gets confusing, though. The AALA does not account for labor costs in the final assembly, has convoluted formulas for determining the place of origin for parts, and considers Canadian content as domestic. "Ontario is kind of like the 51st state when it comes to the auto industry," Honda spokesman Edward Miller says.
Flawed as they are, the AALA data illustrate how blurred the line between domestic and foreign has become, as American automakers increasingly use foreign parts and as foreign automakers source more content from the U.S.
Take the new Buick Regal, for example. According to AALA data, it has only 21 percent U.S./Canadian content and is assembled in Russelsheim, Germany. Meanwhile, the Honda Accord has 80 percent U.S./Canadian content and is assembled in Lincoln, Ala.
The AALA does not actually rule on whether these or any other cars are foreign or domestic. It simply offers information on the location of assembly and parts content, and lets consumers draw their own conclusions. What this means is that even the federal government has opted out of defining what "Made in America" really means.
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There are other government policies — the North American Free Trade Agreement and the Environmental Protection Agency's corporate average fuel-economy regulations, for instance — that do put vehicles into foreign and domestic categories. However, their purpose is to set trade tariffs and fuel-economy standards for car companies, not to inform consumers. Their standards and data aren't readily available to the public, and industry insiders consider them to be even more convoluted than those of the AALA.
"The nameplate is not a very reliable indicator of where the vehicle was made, either for the international nameplates or for the traditional Detroit makers," says Paul Ryan, director of government affairs for the Association of International Automobile Manufacturers.
Collectively, AIAM members, which include Honda, Hyundai, Nissan, Toyota and others, produced 2.3 million vehicles in the United States in 2009 — nearly 40 percent of total U.S. production. Over the past several decades, they have invested $44 billion in more than 300 U.S. facilities that employ 81,000 Americans, with a payroll of $6 billion.
"All these companies and more have moved tremendous amounts of production capacity here to the United States, to a point where now most of the companies produce in the United States about 50 percent of the vehicles that they sell in the United States," Ryan says.
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After living up in the Detroit area for 16 years, I've experienced first hand the fall out economically of the farce known as the Big 3 (this includes the workers on the line). The good old boy network in that town was alive and well, thank you very much. I watched as workers sat idle, drawing a good salary while doing so, sometimes even 3 times what my annual salary was. I watched white collar jobs disappear in droves, first by Ford then Chrysler and finally GM. Then when the cuts were sent to the factory lines, oh was there wailing and gnashing of teeth. The end result is still after all of these measures, the state of MI still has 13 percent unemployment. In the 16 years of living there, my salary as a church musician went from 11K to 16.500 over 8 1/2 years. I was laid off because the church I worked for couldn't afford to renew my contract. (The majority of the members worked for the Big 3. This church I've since heard has now had to consider closing because too many have lost jobs/transferred out.)
In 2008, I found another church musician position that paid 12K plus with the weddings fees bumped it up to 14k for the first year there. The next year the salary had to be cut by 10% for all staff, which then took it down to 10.800K and the weddings fees became fewer because of the economy tanking. There was a strong possibility that my position was going to be cut (that was what discussed by the church board in 2009 once, but I've since heard that this church has voted to cut the position for 2011, the secretary and custodian will be reduced in their hours per week, the pastor will go from Full Time to Part Time Salary).
I supplemented my income working as a substitute teacher in Dearborn, home of Ford, but the district is no longer lily white, but primarily arabic. In 2000 subs were paid 85-95 a day. If you were long time after 90 consecutive days it bumped up to 160 a day, but you were pulled out before the 120 day mark because then the district would have to issue a contract and they wouldn't do that. 8 years later the district was still paying the same pay rate per day and went to a "privatized" firm to oversee the sub teacher program. The extra money at the 90 day mark disappeared, so did any holiday pay. This equates to no pay increase of any kind for 8 years.
In the meantime, during all of this the costs to live there kept going up an up. Natural Gas Bills doubled. Gasoline fill ups went to almost $4 a gallon. Electric Bills went up. Car Insurance Rates were higher than other cities due to the high crime rate. Car Repair bills were expensive (suspension, front end alignments, tire replacement) all because of the poor condition of the roads in and around Detroit. Credit Card Companies doubled the finance charges.Food prices went up. All of this began to happen 3 years before the rest of the nation would begin to even feel the slightest bit uncomfortable, economically.
I say all of this to you, because the cold hard reality is, if a car's parts are cheaply made, and the car itself is put together by people (from the CEO down to the line worker) that could give a rat's butt about what the product will look like, run or how long it will last, then we will continue to have the problems economically as a nation that we do.
SO HEY BIG 3 WORKERS!!!! Build a car that will last 300k miles and consistently! Not just one or two occasionally that we'll hear about. CARE ABOUT WHAT YOU BUILD!!!! From the line worker all the way up to the top CEO. Stop with the "liquid lunches". UAW and BIG 3, stop trying to "rape" each other in your negotiations! Stop charging and arm and a leg for a piece of crap car!
There are other people in the world, whose incomes depend upon the work that you do. START CARING!!!!
I don't really give a hoot where my cars are made, I just try to buy the best ones I can afford. Currently that includes an American built pickup (F150), an American built sports car, (Corvette). and a German built sedan (BMW).
Forget about country of manufacture and just buy the best products you can. Actually compare the products. Reward the companies that design and engineer the best products. Reward the workers that pride themselves on quality workmanship. That may be American made . . . . or may not. But just buying American made for the sake of being American made is foolish, just like only buying Japanese because Consumer Reports says so is foolish.
Wow back in the 1980's My 1985 Nissan was assembled in USA with domestic and foreign parts. Meanwhile the Bosses Wife had 1987 Plymouth mini van American? NOT at all!! Assembled in Canada, Mitsubishi engine, JATCO transmission (Japanese automatic transmission company) brake rotors made in Mexico, Frt axles made in Spain ( if my memory is right). and the list went on and on.
Sold Nissan at 170,000 trouble free miles. Van was traded at aprox. 55,000 and had LOOOONNNNNGGGGGG repair history and was traded for Toyota.
Both of us are all for America but when quality is so far behind, working people have to make choices that are practical.
The Unions strike for more money while the average assembly worker made 3 times the money I made (as well as most AMERICANS) and wonder why we bought imports and now they don't have a job. Greed is like cancer it comes back to haunt you.
My 2 cents worth from Missouri.
THANK YOU for doing an article like this. It's about time. Maybe it will shut up these "Buy-American" ignoramuses. Then again, maybe not. There is no such thing as a COMPLETELY American made vehicle. That means they are all shades of gray. The only question remaining is the shade closer to black or white?