In a Global Economy, "Buying American" is Kind of Complicated

Jim Motavalli

Jim Motavalli | Jan 22, 2015

WASHINGTON, DC—Congresswoman Debbie Dingell (D-MI) came to Washington as the successor to her long-serving husband, John, known as Detroit’s man in Washington. On a blustery, snowy Wednesday afternoon this week, she stood in front of 60 cars parked near the Capitol and proclaimed the “Made Across America” message—every one of vehicles on display, many with foreign nameplates, were made in the U.S.A.
 Rep. Debbie Dingell makes a point at the snowy "Made Across America" rally. All the cars behind her came from American car plants. (Jim Motavalli photo)“This is an awesome display of what the men and women of this country can produce,” she said. “I’m a proud car girl, and I’m tired of the bashing.” Automobiles, she added, “are the backbone of the American economy.”
 
By bashing one presumes she means the politicians who were in favor of letting the bankrupt Chrysler and General Motors twist in the wind, though now that the Big Two are again thriving, most would probably retreat from what they said then. The fact is that American auto manufacturing is back in a big way. Some 16.4 million cars were sold in the U.S. in 2014, an increasing percentage of them American made.
 
Not all the "Made Across America" cars were American cars. (Jim Motavalli photo)Another closely related policy issue is, “What is an American car? It’s not as simple as it sounds. For instance, the Cars.com survey says the, ahem, Toyota Camry is the number one American-made car. Built in Georgetown, Kentucky and Lafayette, Indiana, this popular Japanese model has more U.S. content than the red, white and blue second in line, the ever-popular Ford F-150. Number three is the Honda Accord (Marysville, Ohio). Oh, and the U.S. auto manufacturer with the largest number of exports? It’s BMW.
 
Conversely, all-American cars can be quite heavily sourced from abroad, such as the Mexican plants that supply Jeep.

A Jeep on the floor of the Washington Auto Show. Partial credit for being North American made? (Jim Motavalli photo) Nissan makes an interesting case study. Some 79.5 percent of Nissan and Infiniti cars rolled out of American assembly plants. The company bought $12.8 billion in U.S. parts and materials last year, and has 400 suppliers in 40 states.
 
Rebecca Barker Vest, vice president of purchasing for Nissan Americas, told me that locating parts near auto plants is a priority for the company, so that increases the chance that a U.S.-built car (like the Leafs Nissan makes in Tennessee) will have a lot of U.S. content. The bottom line for a component, she said, is its “total delivered cost,” and transportation is a big part of that.
 
Electric inverters and lithium-ion battery controllers for the Leaf come from Calsonic Kansei in Shelbyville, Tennessee. Is it a Japanese company making parts in America? You bet. TDK, also Japanese, supplies the Leaf with rare earth motor magnets from Shawnee, Oklahoma, and Panasonic with battery components from Reynosa, Mexico. German supplier Bosch makes Nissan parts in South Carolina. How international could this be?

The made-in-Tennessee Nissan Leaf: locally sourced parts are a priority. (Nissan photo) Actually, having multiple sources for parts is quite a good idea. Vest reminded me that the tsunami in Japan disrupted manufacture of “a vital little chip” that no one else in the world made, thus stalling plants on several continents.   
 
I talked to David Kiley, the outgoing head of the International Motor Press Association (IMPA), who had a big role in arranging for the Capitol car display, and the “Made Across America” theme at the auto show. “People see a Subaru and they assume it was made in Japan,” he said. “In fact it was probably made in Lafayette, Indiana. They also may say something about Chrysler not really being an American carmaker because it’s owned by Fiat, but the company has saved a lot of American jobs and created a lot of new ones. Eight to 10 spinoff jobs are created by every assembly job. Go out to Ohio and people will tell you that Honda walks on water.”
 
This employment theme was picked up in a new report, presented at the Washington show by the Center for Auto Research in Michigan.  According to Kim Hill of CAR, automakers directly employ 322,000 Americans, and their suppliers give jobs to 521,000. Automobile dealers add in another 710,000, so we’re talking about a total of 1.5 million people who depend on the auto industry.”
 
The Washington Auto Show has a fitting (but unusual for a car event) focus on public policy. I was surprised to attend a Ford press conference at with Ziad Ojakli, a Ford vice president for government and community relations, started talking about trade policy and international currency manipulation. It was part of making a case for Mustang sales in 100 global markets, but you’d never see politics rear its head in New York or Detroit.

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