Cars: What It Means to 'Buy American'

In case you thought Buy American was just a slogan, consider this.

The administration has ordered the GSA to speed up its purchases of automobiles. The agency is charged with purchasing 17,600 cars and the administration wants it done by June 1. The cars have to be American-made, but that means something more than just made in America.

The President issued this statement:

“By purchasing fuel-efficient vehicles from American automakers over the next two months, this move will help stimulate the economy, support the auto industry and achieve energy-efficiency goals.”

If you happen to live in Alabama or Kentucky or Texas and work for Toyota (TM), Honda (HMC) or one of the other companies that have their headquarters outside the U.S. but build cars here, don’t plan on any overtime. 'American automakers' means car companies that make cars here and also happen to have their headquarters in the U.S.

I’ve no problem with the government buying U.S.-manufactured products. I do have a problem with a bunch of men and women getting stiffed just because they happen to work for a company that has its headquarters elsewhere. This administration made much of a the lack of competitive bidding that went on during the Iraq War during the election campaign. When push comes to shove they pull the same sorry tricks.

Let’s not dance around this. It’s a political payoff to the unions and regions that supported the President’s candidacy. It’s not surprising but it’s also not much “change.”

More: Bloomberg

Comments

[SouthernCEO:]

I buy American whenever I can. I've always driven an American car and to be honest haven't had many problems. I work for the American part of a large foreign company and to all of you who are applauding Obama I respectfully ask you to think it through. Labor costs are one reason why our manufacturing jobs are going overseas but what about our 35% corporate tax rate? That's second only behind Japan. As Obama raises taxes our businesses will only move more opperations overseas. As far as socialized medicine is concerned you should look into the tax rates in those countries. Things are generally expensive in these countries not because of basic supply and demand but because of the taxes. I make my living working with manufacturing companies and supplying them with engineered products to help them make things better and at less costs. Many of these companies are looking at expanding outside the US. It's an expensive pain to do business here. Between the taxes, environmental regs, the liability of countless sue-happy lawyers, the SEC, Sarbanes-Oxley, etc it just isn't worth it. I travel all over America and I hate to see shuttered buildings and empty parking lots but I see more all the time. If we could cut the red tape and let businesses do away with these meaningless expenses then there would be more jobs and better paying jobs. Our workers are the best in the world but we can't saddle our companies with all this extra expense and compete. Think about it. If we removed these costs GM could beat Toyota at it's own game and make more money doing it.

Apr 10 01:05 PM

[Pstoneki:]

Most Americans don't think about where a car is built when making a purchase, unless they are specifically looking for an Amercian car. They just want a car that meets their requirements, is priced right, and has the right level of quality (and resulting resale value). Until GM and Chrysler can consistently do this across their entire US product line they will never convince a majority of Americans to buy their cars.

I don't buy the executive's statement that GM is 'just building the cars people want to buy'. If this were true they would sell more than 22% of the cars and light duty trucks sold in the US. Obviously, 1 in 5 American new car buyers can't find a single car in the 48 car model GM lineup that they would want to buy. That says something to me. Telling people to 'Buy American' isn't going to change the fact that GM's engineering and manufacturing is out of date, marketing doesn't know what people want, quality is still largely a foreign concept, etc. This doesn't mean that GM doesn't have some fantastic powertrain engineers, marketing folks, quality engineers, etc. They do. However, the end result would not indicate this.

Chrysler is the same.

And if they can't do that, they need to either shrink to an appropriate size or go away. That's how business works.

Apr 10 01:10 PM

[Dino:]

Buying American goes much further than answering the question: Where was the car built or where were the parts manufactured? In this ever growing globally inter-twined business climate most larger companies facilitate some part of their business operations in countries where labor is cheaper and it forces others to follow in order to remain competitive. I agree you need to consider where the Corporate Headquarters are, as those companies pay taxes to those states and countries. Even in states where companies such as Toyota and Honda do have operations where some form of taxes are paid, those companies were given tax breaks to lure them to those states, while their domestic counterparts have continued to pay a larger amount of the tax burden while trying to stay price competitive. I would say the strongest argument for who is here to support the US and who is not, would be when something like 9/11 happens. While the manufacturers with Corporate Headquarters located in America gave millions in money and vehilces in support of the aftermath of 9/11, the foreign counterparts gave almost nothing. The companies whose interest truly lie in the USA are the companies we need to support.

Apr 10 01:55 PM

[Lightway:]

Japanese locating plants here has to do with US tariffs on their products. Sure, there are political and PR points they score by locating plants and jobs in the US, but the main reason they locate plants here is that it's much cheaper in both tariff costs and transportation costs to just build in the same market they are selling to.




On Apr 10 12:37 AM 44wjs wrote:

> It amazes me how blatantly some people will push their agenda. Toyota
> for example has never created ONE job in this country! Each job they
> fill in this country is at the expense of 6 to 8 American jobs in
> the legacy builders. A Dodge truck assembled in Mexico contains more
> jobs than a Honda assembled in Ohio. The Japanese in particular will
> not support American companies. I have had several first hand contacts
> with this. It has nothing to do with quality or price, they support
> other Japanese companies first. They will NOT use american, what
> is done is purely tokenism.
> I could go much farther but you would have difficultly believing
> me. I would need to show you first hand. The only people pushing
> this have something to gain supporting imports.
> WJS

Apr 10 02:47 PM

[User 392819:]

I don't really buy the Japanese cars manufactured here help our economy just as much line.

From a white collar perspective look at where the overhead dollars are spent. All of the engineers are overseas as well as the finance professionals making the big bucks.

Apr 10 03:57 PM

[babyray:]

nobody pays a coporate tax rate of 35% because we have too many loopholes! Instead of raising the corporate tax rate we should just get rid of the loop holes!!Nationalized health care will bring in more companies. GM pays more in health care than any corporation in the world. Also dont tell me we have the best health care because people are leaving our country in droves for what is called medical tourism.

Apr 10 04:47 PM

[an american:]

i own three used toyota cressidas and a suzuki motorcycle. why? so i can make it home and not spend all of my money at the mechanic's shop. if american cars didn't suck, they wouldn't be in this position. i didn't read all of these posts and i am not going to. i'm not going to read the responses to mine either. i'm going to take a nap and will forget i posted this by the time i wake up.

you simply cannot beat japanese and german engineering when it comes to cars and such. it sucks as i would rather buy american but truth is truth. i know my cars will easily last about 400,000 miles. i have owned many many american cars and that is why i don't anymore. hey, at least i don't shop at walmart and my vehicles were bought used.

if america again learns how to make a good vehicle i will be first in line.

Apr 10 07:00 PM

[an american:]

also, i'd like to know what the hell nobama plans to do with all of the vehicles that have already been paid for when he goes on this nutty spending spree to buy all of these new ones. you'd think he'd make do with what we already have in these dire times with thousands of already paid for vehicles that are likely well maintained and still running just fine. spend spend spend ... what a douche.

hmmm ...

Apr 10 07:04 PM

[Miken:]

Per cent of parts manufactured outside the U.S. is only one metric. If one looks at the entire process from cradle to grave, there is a much more illustrative way to measure content.

From GM's most recent 10-K, and Toyota's most recent 20-K, it shows that even though Toyota sells 33.2% of their vehicles in North America, only 12.0% of their people are here. On the other hand, GM sells 42.7% of their vehicles in NA while employing 47.7% of their people here.

I think this is an even more telling statistic because it goes directly to the number of jobs, whether they may be union represented, management, engineering, purchasing, etc.

While both companies are multi nationals, it's clear which is American based.

I wonder how many Japanese government purchased American cars there are in Tokyo?

Apr 10 10:06 PM

[network2:]

If American vehicle manufacturers want to sell American-built vehicles to foreign markets, then they need to start building vehicles that foreigners want to buy. Apparently, even the auto industry of India did not realize how much demand there would be for an economical vehicle, the Tata Nano, as their website recently crashed on the first day car buyers could register to buy a Nano with 40,000,000 hits. Yes, 40 million hits. Instead of adding gadgets and gizmos and catalytic converters to control emissions, America could have saved more resources and energy and fuel AND pollution AND MONEY by simply building smaller, lighter-weight vehicles. Muscle cars with tinted windows, 6000-pound SUVs, and trucks with beds so small they won't even hold a 4x8 with little tiny wheels and cranked-up engines are for fruit cakes. This is a perfect example of how the profit motive does not always result in the most efficient use of resources nor production of products that are needed by the average person.

Apr 11 03:40 AM

[Bolton Peck:]

I think the auto companies are still paying for the '70s in people's minds. I have an '04 Aztek with 123K on it-the only problems it has ever had are replacements of brakes and tires. You can't get any more reliable than that. It's spacious inside, gets decent mileage, rides and drives well, and has the factory camping package to boot :-)

If this class-progenating car had been a Subaru instead of Pontiac, the car mags would have just said how useful it is, and what another win for the forward thinking folks at Subaru-but all they could say was how ugly it was. Then of course, other makes came out with a slew of crossover SUVs like mine, essentially mini-vans without the stigma. Most of them are every bit as ugly or more so than the Aztek.

The Americans thought of it first this time, however, and they even made it well. The inexcusable thing for me is that I couldn't get it in a diesel.

It's funny, American car companies actually pioneer most of the innnovations found first in production by Asian and German makes-air bags, electronic fuel injection, MacPherson strut front suspension, etc. but the corporate bean counters who took over the Big Three in the 1970s delayed their introduction. Then blamed the unions when their cars didn't sell-after they though it was 'too expensive' to use the ideas they paid to create!

Sounds like cost cutting and focusing on this quarter's profits at the cost of pretty much everything else is every bit as much to blame for US car company decline as money hungry unions. This greed, overall, is what is largely responsible for the undoing of our country in every sector. Sorry, no CEO is worth a third of a billion dollars in a year or two. Not when they lay off thousands of employees in that time!

Apr 11 11:19 AM

[Titus Andro...:]

Every single thing I buy, I try to support american companies. But it seems to be getting harder and harder these days to find a particular product that is made in america. I go to second hand stores for alot of things,(not cause I'm broke just cause I HATE EVERY OTHER COUNTRY and don't want to contribute to countries that either hate US or run sweat-shops).
If you buy anything that is cheaper made in another country, chances are it's a piece of shit and you will have to buy another one. Is it cheaper if you have to keep buying the same shitty shit to replace the shit you initially purchased. Now i'm angry!

Apr 11 04:14 PM

[rstrader:]

Virtually all car companies buy parts from all over the world, assemble and sell vehicles in as many locations as they can. But, American car companies spend a much greater proportion of their dollars here in the US. While its true that, for example, Toyota and Honda build a couple of models in the US, the majority of their vehicles are designed, assembled and (parts) sourced outside of the US. Buying a vehicle built by an American company will end up putting more dollars into the American economy. Some outside would view this as isolationist actions - but the US economy still drives the world economy as we all found out last year. And, recall most of those countries are VERY loyal to their companies and are way ahead of us in providing incentives (taxes and tarrifs) to encourage things to stay that way.

Most importantly, the government and the people of America should consider buying an American car simply because it is a BETTER choice. As a simple comparison, the Ford Fusion is safer, gets better fuel economy, has higher quality, costs less and has a greater resale value than the Toyota Camry (both the conventional and hybrid models.) Not to mention that it actually looks and handles better. The quality has been better than the Camry for 3-4 years - two full vehicle model changeovers for the Fusion - indicating that this is not just a passing phase. These changes have been under way since 1999-2000 within Ford and were driven by a change in management. Further, the Fusion Hybrid has been acclaimed by virtually every journalist who has evaluated it as the BEST hybrid drivetrain on the market - besting the $100,000+ Lexus models in both fuel economy and driveability. This is drivetrain technology designed and built in America. I am citing this example simply because it is any easy one to recognize/verify. There are other equally good examples at Ford (70% of its vehicles being a Consumer's Reports Recommended Buy) and GM.

Lastly, if the US government is to spend my tax money buying hybrid vehicles, I'd much prefer it bought the best technology AND helped our economy.

Apr 11 07:42 PM

[observer1:]

mr slowdown, most every vehicle made anywhere has the same supplier setup. many of the so called foreign brands have a very high domestic content, even without considering assembly. and as mr slowdown knows, most of the domestics use many of the same suppliers, denso, ngk, et al and other foreign names, but the components are built (and often engineered) in the US (although most are in the south and non union).


On Apr 10 12:59 AM slowdown wrote:

> From a GM standpoint - based means the engineering and design is
> common with between the two...the component parts are not shipped
> across the sea...they are manufactured somewhere (usually no more
> than one hour) near the assembly plant.

Apr 11 07:49 PM

[observer1:]

mcbain, can you site your source of these figures.


On Apr 10 12:27 PM mcbain wrote:

> Average foreign content of the Detroit 3 is 21%, average foreign
> content of other cars sold in the US is 65%, 3 times more. Plus,
> Detroit 3 spend about $18 billion in R&D, most of which is in
> the US while others R&D is not. All translates to many more American
> jobs.

Apr 11 09:25 PM

[Boiling Point:]

Along with thousands more non union companies.


On Apr 10 01:41 AM Frank S wrote:

> That had nothing to do with the unions and everything to do with
> our goods being restricted from foreign markets. By the way, those
> same asian companies have long been supported by their governments
> financially as well. Even when the best japanese car was a datsun
> b210 the japanese could not buy american cars as their sale was restricted.
>
>
> Trying to justify pulling american wages down to third world levels
> IS NOT a particularly intelligent philosophy and will only lead to
> our country entering the league of third world countries, if we can
> mange to maintain our soverignty.
>
> What dont you people understand. Foreign corporations ARE NOT our
> friends.

Apr 13 05:29 PM

[Frank S:]

With that logic we aqrent just competirive we are outright unbeatable. AT BEINGS IDIOTS that is.


On Apr 10 07:00 AM huskerbob wrote:

> How can you support American manufacturers if you only buy American?
> Buy the best quality or value, and if they have any brains they will
> make competitive products. Look at what protectionism did for American
> car companies: they struggled to catch up through the 70's and 80's.
> Foreign competition gradually pushed them to make better products.
>
> Do US manufacturers use only US suppliers? Of course not.
> Please stop treating the auto manufacturers as if they are run by
> idiot man children. They are perfectly capable of making competitive
> products at competitive prices. They don't need protection and jingoism,
> they need to make more of what people want to buy, and that won't
> happen if they are coddled.
> We have lost a lot of manufacturing because Americans, for good reason,
> won't work for $1.00/hour, or make cars for $12/hour as they do in
> Mexico. Let's concentrate on what we do well, let's be competitive!
> To blindly buy American does not help American companies to be competitive
> in the long run. If you want to see a car built with no foreign competition,
> go buy a Lada. Or an Edsel.

Apr 13 06:19 PM

[Frank S:]

Wrong!!!!

There are literally thousands of suppliers that are purely American companies, most with non union workers and amny not in the midwest, who are all but barred from doing business here or overseas with the likes of Toyota and Honda. Not because they make bad product but because they wont surrender their business to foireign doctrine. Dont for one second believe if you work for Toyota etc you have any security at all. Once they eliminate our manufacturers they will take their jobs back home and leave you high and dry too.

WAKE up out there, autos are just the next target, and when they finally wipe out all of our industry your jobs are next up.

Somone above commented we should forget autos and do what we do best (compete), compete at what???, being stupid !!!

Since Regan it is pretty obvious we are winng that race .


On Apr 11 07:49 PM observer1 wrote:

> mr slowdown, most every vehicle made anywhere has the same supplier
> setup. many of the so called foreign brands have a very high domestic
> content, even without considering assembly. and as mr slowdown knows,
> most of the domestics use many of the same suppliers, denso, ngk,
> et al and other foreign names, but the components are built (and
> often engineered) in the US (although most are in the south and non
> union).

Apr 13 06:35 PM

[Boiling Point:]

THAT IS $12 a DAY NOT A HOUR.


On Apr 13 06:19 PM Frank S wrote:

> With that logic we aqrent just competirive we are outright unbeatable.
> AT BEINGS IDIOTS that is.

Apr 13 08:34 PM

[Boiling Point:]

I agree, my point is that we lost millions of non unions jobs also so to put the loss of jobs at the unions feet is just showing how ignorant some people are.


On Apr 13 05:29 PM BOILING POINT wrote:

> Along with thousands more non union companies.

Apr 13 08:36 PM