It's commonly thought that if you buy an "American" car, you benefit American companies and American workers.
Well, it's not quite that simple.
Many cars made by American companies are assembled in Canada or Mexico. Furthermore, lots of the parts—including pretty major parts, like transmissions—might be made outside the U.S. The sticker might indicate this.
Every car sold in the U.S. has a sticker on the window, as required by law. One bit of information given by the sticker is "domestic content." This shows what percentage of parts and components are in fact made in the U.S.
I just saw a Ford Taurus on display at my local mall. The domestic content was listed as only 65%. On other Ford models I have seen on display, the transmission was Mexican-made.
So, the people who buy an "American" car may actually be getting a car with less American-made content than a "foreign" car. This is because many of the "foreign" makes are assembled in U.S. plants. These foreign models assembled in the U.S. often have pretty high domestic content, maybe 90%. There is no need for the makers to bear the expense of importing batteries, tires, headlights, electronic modules, and many other components, so they buy them in the U.S. You might be surprised at how much of your "foreign" car is actually domestically manufactured.
You might say, Well, if you buy an American make, you're giving profits to U.S. companies and American stockholders. Well, that may be true but, again, there's more to it than that. When a particular car model has higher domestic content, that's more American workers in the parts plants that produced that domestic content, and more profits for those parts-manufacturing companies as well as wages to their workers.
And if Ford is owned by American stockholders—well, who says that Toyota, BMW, Mercedes-Benz, or Volkswagen do not have stockholders who are Americans? I can tell you that they do. By means of mutual funds, it's become much easier for millions of Americans to be invested in overseas companies.
Copyright (c) 2010 by Richard Stein
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It seems there are oodles of considerations when it comes to the subject of buying a new car. For myself I want the best performance and most options with the best mileage I can get at the lowest price. I know that many would say that I want something for nothing but in this economy adjusting for inflation with all the uncertainty and time constraints I don't feel in the least unreasonable. I really don't mind who is going to profit from a sale as much as I feel the need to get as much as I can for the meager amount of money I can spend. We live pretty much in a global economy anymore regardless of labels or where manufacturing takes place. Competition is the name of the game and any business that would argue that point needs to get out of the business.
ReplyDeleteGood point: the auto industry has been global for a while. Two of my last four "American" cars had Japanese engines. My current Subaru was assembled in Indiana. On my annual vacations in Puerto Vallarta, I used to enjoy renting VW Beetles that were manufactured in Mexico long after they were discontinued in Germany.
ReplyDeleteYes, so much of manufacturing is global nowadays, and every day mountains of goods move between countries. I'd be willing to wager that inside your computer are parts made in at least three or four countries.
ReplyDeleteAnd it's not only manufacturing that's global. Financial markets and exchanges are over the world are all wired together so that, when Wall Street sneezes, the whole world takes to bed.