Why Finding ‘American’ Cars Is Pretty Difficult – Forbes
President-elect Donald Trump has taken public aim at Ford and General Motors for moving production of some of its vehicles to Mexico in recent years. But this campaign by the incoming President is fraught with hypocrisy based on his own business dealings, as well as the irreversible global nature of manufacturing today.
Earlier this week, Ford reversed a decision to invest in a big expansion of its Mexican plant, a move highly criticized by Trump during the campaign. Ford, though, made the move after a decision to reduce its forecast for sales of small cars that would have been built in Mexico, and to make its Flat Rock, Michigan plant, which builds the Mustang, more efficient and productive. Nevertheless, the Trump camp is taking credit for strong-arming Ford into the move, though Ford denies that Trump’s criticism had anything to do with the move.
Trump’s focus on trying to compel companies to relocate jobs to heartland states he carried, and prevent them from further out-sourcing of jobs is probably going to be a pillar of his Presidency. How successful he is at delivering real incremental job or wage growth remains to be seen (and it will have to be analyzed relative to the impact of Obama policies since Trump inherits an almost full-employment economy and wage growth as it is) with a free-trade oriented Republican Congress that does not share his protectionist rhetoric.
But where vehicles are assembled is only part of the picture when it comes to auto manufacturing jobs.
The global-supply reality of today’s automotive industry can be found in Cars.com’s most recent “American Car” Index, which resulted in just eight American cars being on the list in 2016. This is down from nearly 30 cars as recently as 2011. Adding to both the reality and irony is the fact that for the second consecutive year and sixth time overall, the Kentucky-built Toyota Camry topped the list.
“After reaching an all-time low of just seven cars on the 2015 American-Made Index, this year’s list is up one car, but still remains much smaller than earlier indexes, when the list included nearly 30 eligible cars,” said Patrick Olsen, Cars.com editor-in-chief. “The reason for the shrinking list continues to be the globalization of today’s automakers. While building the same car for all markets is better for an automaker’s bottom line, tracking just how American a car is has become more difficult because so few meet the criteria for our index,” said Carlson.
Of eight “American Cars” that qualify for the Index, just three come from Detroit –the GMC Acadia, Buick Enclave and Chevy Traverse from GM. There are no Fords on the list. The others are: Honda Accord, Toyota Sienna, Honda Odyssey and Honda Pilot. Those Toyotas and Hondas are not only manufactured in the U.S., but the parts largely come from the U.S.-based supplier parks that have been built up around the plants.
“Buying local” has been a growing phenomenon the last few years, but politicians have been divided about how much to embrace it, especially Republicans who have been confirmed “free-traders,” but also like to see jobs created in their districts.
Consumers have been a bit fickle about “buying local,” liking the idea of it, but not much liking the higher prices that tend to go with it. In a consumer survey conducted by Cars.com last summer when asked about reasons for they prefer to purchase from an American manufacturer, 53 percent of respondents indicated it was because they wanted to support the local economy. However, only 13 percent of consumers base their purchase decision on whether a vehicle is from an American manufacturer; that’s down from 28 percent just one year ago.
“People often claim in surveys that they will buy ‘green’ or buy ‘American,’ or buy ‘local,’ but then do not spend more money for those goods and rather go with the best value,” says Aradhna Krishna, Professor of Marketing at The University of Michigan Ross School of Business. Trump is a wild card, though, with regard to how much his rhetoric will move even his supporters. After all, even union workers shop at Costco and Walmart and buy stuff without regard to country of origin.