Japanese automakers playing the "Made in America" card

[idlisambar]

Japanese auto-makers have been touting their "made in America" credentials of late. The big three (Toyota, Honda, and Nissan) do have a considerable U.S. presence, but we can't lose sight of the fact that despite all of the offshoring in recent years GM and Ford have 4 times as many major manufacturing facilities and over 4 times the employee base in the U.S. -- http://www.detnews.com/2004/autosinsider/0410/03/a01-286716.htm

Still, in the early 1980's Japanese automakers didn't have any U.S. manufacturing facilities, so at least they are doing more for American workers than they once did right? Well, the trade figures reveal a different picture: The total U.S. automotive trade deficit with Japan (in current dollars) for 2004 was $45.3 dollars compared to $32.6 billion in 1986 (http://www.ita.doc.gov/td/auto/japan04.pdf). Thus, despite the fact that more and more Japanese brand cars are assembled in America, the US is importing more automotive products from Japan than ever. The apparent contradiction is partially explained by the fact that Japanese automakers have made steady gains in U.S. market share, but there is another important factor -- of the $13 billion dollar increase in the automotive deficit, auto part imports increased 133% compared to an increase in completed vehicles of about 20%. The big boost in parts imports is one more indication that much of the value-added production of auto parts and materials still takes place in Japan, while the American plants are used primarily for final assembly work.

Keep in mind also that these stats only account for direct trade between the U.S. and Japan. There are now many indirect paths to the U.S. market for the Japanese auto industry, as major manufacturers have since the 80's added offshore platforms (from China to Mexico to Canada) for automotive products that export directly to the U.S. Finally, these numbers do not account for imports of capital equipment such as molds and robots used in auto production, items that the US imports heavily from Japan.

The next time you see an ad or some PR by Toyota or Honda showing off an American manufacturing facility, keep these numbers in mind. American consumers may be doing themselves a favor buying a Toyota or Honda, but don't kid yourself into thinking they are doing American workers any favors. The U.S. auto industry is fading in the face of Japanese, not to mention German and Korean, competition. Their assembly plants located here are best seen as nothing more than a small consolation prize rather than a symbol of the gains that can be had from insourcing.

[SteppingRazor]

1. Yeah, but...

As long as the Japanese keep making better cars that hold their resale value longer, we'll keep buying them.

[idlisambar]

4. I own one myself

but the point is not to be fooled by the latest PR campaign. Despite the muddying of the waters, an American brand car supports far more U.S. workers than a Japanese brand car.

[ironman202]

5. sort of a self-fulfilling prophesy

Given the chice, I prefer a Japanese car because they tend to be bulletproof. Yet I drive a 96 chevy with 170,000 miles on it that has required only one major repair. Am I the exception that proves the rule or is the rule just wrong?

[Deja Q]

12. And US offshroing their homeland brands is why they devalue and are junk

Made cheaply.

That's why Toyota, et al, cost more whereas GM costs less.

I sure as hell wouldn't use a GM bucket of rusty bolts...

[Double T]

2. Yes, But They Are Still Assembled And Parts Are Made In America.....

and Americans are employed. Can't say that about a lot of other things.

[LSK]

15. the parts are NOT made here

From the OP:

"of the $13 billion dollar increase in the automotive deficit, auto part imports increased 133% compared to an increase in completed vehicles of about 20%."

[charlie]

16. Not all cars, either

I looked in the doorframe of my Scion after I bought it and found that it was assembled in Nagoya.

[Double T]

19. some parts are made in the US.....

General Motors, Ford, etc. are bringing in more and more parts from outside the US.

[TheFarseer]

3. I noticed that in one of their ads

the ad ended with, "these Honda cars are manufactured in Muncie Indiana". I think that along with a plug for it's mpg and showing a cool looking car is an effective ad. I don't personally give a f*ck if a chopper can airlift a car to the top of a mountain for a pretty picture like GM thinks will impress me. For another thing, right now, I feel Japanese cars are superior in general to American cars. I wish it were not true but it is IMO. I'm glad the Japanese are manufacturing cars here and I hope their presence keeps on growing.

[idlisambar]

9. The problem is

their presence will always be limited. You can be sure that the most technologically sophisticated value-added work and highest paying jobs will always be in Japan. The American worker is relegated to doing the low-level assembly work.

[Tierra_y_Libertad]

6. I love my Toyota. Best car I've ever owned.

Bought it new in '93 (it's a '94). Bottom of the line 4WD pickup. No air, no radio, no gizmos. No repairs, starts every time, has never failed me.

I've owned everything from a '52 Lincoln to a Jag XKE to a Honda.

Hat's off to Toyota for producing a car that does what a car is supposed to do. If this one should ever die..guess what I'll be buying?

[idlisambar]

7. Toyotas are great products but don't confuse the issue

The issue at hand is the health of the American auto industry. Japanese assembly plants help a few, but they are no substitute for the GM and Ford plants that are being lost. Without a strong auto manufacturing base, our automotive trade deficit will increase further, creating downward pressure on the dollar, and forcing the prices of all imported products to rise.

[RaleighNCDUer]

10. In tht case, maybe Ford and GM better start making something

other than POS SUVs.

I'd be happy to support American industry and American workers if they could offer me an affordable product I can live with.

It's one thing to forgo buying at WalMart, even at the cost of higher prices for what I buy, but when I'm buying something as costly as a vehicle, I gotta follow the money.

[charlie]

13. Trouble is

the US auto industry has shown time and again that they won't straighten out their business model, opting for whatever will pad their bottom line this quarter over value and quality. They've had many opportunities since their initial wakeup call over 25 years ago and squandered most of them. If they're given a reprieve with yet another Buy American campaign, there's little to indicate they wouldn't just stuff their pockets today and plead helplessness tomorrow.

[idlisambar]

17. "Buy American" campaigns don't work anyway

the U.S. auto industry is not the only manufacturing industry that is fading. Pleading with individual consumers to buy American is not effective. A better strategy is to change the way GM, Ford, and our other manufacturers do business, providing them with a stringer regulatory framework that will help them compete. Of course, a national health care system would also be of great help.

[tx_dem41]

18. In other words, "Help America...

...buy an inferior product!"

[idlisambar]

20. one can't reasonably ask that

pleading with individual consumers is not an effective tactic. Getting the American auto industry and other manufacturers back on their feet will require stronger medicine than that.

[CBGLuthier]

8. Tell Detroit to make a better car

I am on my last POS american car and will not buy one again unless Detroit stops making shitty cars. The new and exciting trend for Detroit is to make everything "special" I have "special bearings, so when they have to eb replaced it costs $800.00. My last car had a "special" new type of automatic transmission. So when it went out it cost twice as much as a standard one.

I have owned a good 10 or more cars in my life and worked on many more.

By and large the american cars cost more to fix, are harder to work on and have more chickenshit breakdowns and failures.

Don't lecture to me about the american automotive industry until it is something worth talking about.

[idlisambar]

14. that's the point

It is granted that American brand cars are not as good, but the point is that the costs of this fact are greater than most people realize. The fact that Japananese, German, and Korean automakers have assembly plants here acts as a balm to many folks in the face of the fading away of our domestic automakers, but these plants will never bring us the economic dividends that a strong domestic auto industry would. The interests of the consumer are hardly the only interests at stake, but even consumers will face trouble eventually as those quality Japanese automobiles get more and more expensive as the dollar falls in value for lack of a strong manufacturing base.

The American automobile industry is broken as you say, but the point is that this hurts us even more than we think.

[Touchdown]

11. Wrong question to ask.

The rel question to ask, unless you are a nationalist, is do they pay good wages, accept collective bargaining, have decent benefits, and offer value to the American marketplace, and consumer/worker. Who gives a shit what country the multi-national corporation has the HQ building in. Considering that CEO pay for Jpnese executives is arounf $400,000 year, compred to a US CEO's $3-22 million salaries, at the expense of their lower employees, you might be barking up the wrong tree in bashing the Japanese way of doing business. They're doing it better than our compaanies are.

Mazda, Mitsubishi, Toyota and Honda all have unionized workforces in their plants in Michigan, California, Illinois, and Ohio. Nissan and BMW are in the South (Tenn & SC) in right to work for less states, they my or may not have unions at their plants.

[idlisambar]

22. I have a great deal of respect for the Japanese way of doing business

but I think these issues you are discussing are missing the point. Japanese businesses in general, and auto makers in particular, serve the interests of their Japanese workers first. Whether you or I are nationalist doesn't matter, the point is that they are nationalist in the way they operate. The bulk of the value-added work will always take place in Japan, and American workers, unionized or otherwise, will get the scraps.

[Touchdown]

27. Not according to Motor Trend and NHTSA

Their criteria for what mount of content designtes a domestic car is 75% US made components. In this, the Accord, Corolla, Camry, Civic, Tundra, Titan, and Altima are considered domestic cars. 2 models of Buick's, since components are made at various places and assembled in Canada, are considered by the Government to be imports.

I would need more than just your word that Japanese manufacturers are more nationalistic than those of the US. Got any statistics, articles, research dta to back tht assumption up? On the contrary, I am fully getting the point. It was a red herring in the 80s as it is now. Profits to GM go to GM shareholders and the BODs. What's left over is spent buying Saab, Isuzu, Hummer, new factories in Mexico and Honduras, not to mention the Los Angeles Railcar transit system in the 1940s, for the expressed purpose of dismantling it, turning the world's most efficient public trnsportation system at the time, into a gridlocked city. teeming with noxious gas...and a lot more GM cars.

Excuse the typing if you find problems. My A button is being a bitch.

[idlisambar]

29. on your points

On your first point regarding domestic content, to some extent I grant it, Japanese and other foreign automakers have increased their domestic content since the 80's, but consider this...

The transplants love to tout the U.S. content - parts and labor -- of their products, pointing out the number of jobs their plants and dealerships have created. According to CAR Economics and Business Group Director Sean McAlinden, 20-30 percent of Japanese transplant vehicle parts are imported from Japan. Most of the rest are sourced from North American facilities owned by Japanese supplier companies. Highest in U.S. content are Honda's Accord at a claimed 85 percent and Toyota's Camry at 70-75 percent, but McAlinden points out that the first 25 percent of these figures is sales and marketing expense. That makes the Accord closer to 65 percent U.S. parts and labor and the Camry 50-55 percent.

A vehicle's engine represents a big chunk of value, and a lot of Japanese transplant engines are assembled here. But how "American" is a Japanese engine built in a Japanese-owned U.S. plant with mostly Japanese parts? While a few U.S. companies have been able to penetrate the very tight community of Japanese suppliers, very few parts going into U.S.-built Japanese vehicles are sourced from non-Japanese suppliers. And the labor to assemble these transplant cars and trucks amounts to just five to ten percent of their value.

http://microsite.consumerguide.com/auto/editorial/imho/index.cfm/act/opinion07

The overall point is that domestic content numbers are not definitive. The automotive supply chain is complex and breaking it down by value-added is non-trivial and somewhat arbitrary. In addition as pointed out above since marketing and sales (as well as transportation, distribution, and dealer profits) are counted to some extent even cars that are imported outright have substantial "domestic content", as these are expenses that the foreign maker would need to pay in any case.

The overall picture is getting more complex, but the trade numbers clearly show that over the last 15-20 years as Japanese car companies have supposedly been increasing their use of domestic auto parts, imports of parts directly from Japan have increased from $6 billion to $14 billion, while overall vehicle imports have also increased.

Regarding whether Japanese auto makers are more nationalistic, I will retreat a little bit from this simplistic statement to say more accurately that the Japanese auto industry is structured to meet nationalistic aims. Evidence is present in the trade numbers from the original post, if you just look at the imports of autos and auto parts from the US to Japan. Generally speaking the Japanese auto market is tightly closed to foreign automakers. And it is not just U.S. auto producers that can't get a break, Korean autos have made almost no inroads in Japan despite the fact that low-cost Korean producers have been highly successful in virtually every other market they have entered.

[Touchdown]

33. It seems you are making my point for me.

"The overall point is that domestic content numbers are not definitive. The automotive supply chain is complex and breaking it down by value-added is non-trivial and somewhat arbitrary. "

Exactly, and it has never been an easy to define industry, as any industry with complex components is. So to make an argument that we should make Americans lose their jobs because other Americans get to save theirs until their American employers decide to set up shop overseas, just because of what nationality their employer hails from is a sort of damned if you do, damned if you don't quandry. This is why their called GLOBAL corporations. Most American companies headquarters are in the Cayman Islands avoiding taxes...hardly a patriotic company to support.

While true that OVERALL vehicle imports have increased. The operative word is "overall". Korean imports are on the rise, and have been since the 80s. Volkswagen is making a comeback, the Mini Cooper is popular. Range Rover has never been more popular. European and Japanese SUVs account for a balance in that, since most of them are made domestically, if however few American made parts comprise in the content.

But here's the thing. Jaguar and Volvo, while european makes, are wholly owned subsidiaries of Ford. Saab, as I said above is owned by GM. I don't know the exact number, but a majority stake in Kia is also owned by Ford. 25% of Mazda is controlled by Ford, and all their trucks are rebadged Fords. Chrysler, on the other hand, is wholly owned by Diamler Benz, so they are not a domestic automaker any more. In essence, and this is an important point, the US autommakers have turned themselves into holding companies, stock traders, and bankers at the expense of making cars, so even they abandoned the domestic auto manufacturing your clinging to. If corporate preferences for companies that started as US companies is what your aiming for, then technically, buying a Mazda6 is a patriotic thing to do, while buyng a Dodge Ram is selling America short.

Have I mudddied the issue enough? If your main thrust is to support American corporations over Japanese ones, without much concern for German, Korean or British makes, then my question would be why? The trade deficit will never go down until American manuffacturers re-start making things here, which they seem to have no interst in doing at this point in history. If you are talking to someone who lives in Smyrna TN about this issue, and they know that that Nissan plant has made their town thrive again with jobs, and all you have to compare it to is Flint MI, where GM closed plants before Nissan broke ground in Smyrna, devastating the city, they wouldn't get the logic either.

[idlisambar]

36. You misunderstand my purpose

I am not as interested in supporting American "makes", as I am interested in supporting the American automobile industry. In other words I would like to see "American manufacturers re-start making things" as you say. I am well-aware that U.S. makes are globalized, though it is still the case that the bulk of there production and their customer base is in the United States.

The point of the post is to demonstrate that the fact that Japanese makes are being assembled in the U.S. has not reduced the overall bilateral trade deficit in auto goods, and so the presence of these transplants should not give us false comfort.

On the matter of measurements, yes it is tough nail down the entire supply chain of an industry as complex as autos, but this effects the "domestic content" numbers much more than the trade numbers. By comparison the trade numbers are much more reliable and more indicative of the true reality. One reason, besides the fact that they are easier to calculate, is that the trade numbers between nations must "line up" at least within a certain degree of tolerance, so individual governments are less likely to use creative accounting to meet some political objective.

[Touchdown]

37. So what you want is...

For American auto makers to start acting like auto makers, instead of holding companies, parent companies, banks, and investment firms...and behave more like the Japanese auto makers you are criticizing? I would go for that, but me buying a Buick Century isn't going to change their minds.

I don't get any false sense of comfort from the trade defict, and I certainly don't blame the Japanese for looking out for their own best interests. I would expect them to. However, thousands of people are reciving benefits, health insurance, pensions, and livable wages from these Japanese transplants, and while far from solving the trade deficit (and China's surplus dwarfs Japan's), that is not a bad thing.

[idlisambar]

38. Precisely

Making the U.S. auto industry and other critical industries more competitive is of great importance, and it goes beyond "buy American", because you are right as an individual consumer you don't have a lot of influence -- collective action is necessary through our government. One obvious step would be to alleviate their health care costs by instituting a publicly funded health care system. Another step might be to discourage domestic layoffs by capping executive income in the event. These are hardly sufficient steps but they would help. There are many other possible changes to be made but the problem is that no major political force in America today is suggesting strong enough medicine to even begin to solve the problem.

I don't blame Japanese companies for doing good business, precisely the opposite -- I think the US has a lot to learn from Japanese business practices. However, this does not mean that their "made in America" ad campaign and the accompanying PR should be accepted uncritically.

Trade with China is deservedly a hot issue but the issues with Japan are on balance even greater because they compete and win in the space that we would like to occupy -- capital intensive, knowledge-intensive goods. The bilateral trade deficit with China is indeed larger than with Japan, but China serves mainly as the final assembly center for other East Asian and European manufacturers. Thus, China actually runs large trade deficits with the rest of the world not including America. Japan maintains the largest overall current account surpluses in the world, and much of the content exported from China (especially in electronics) consists of assembled Japanese components.

[tsuki]

35. So I should buy a Chrysler with an Assembled in Mexico sticker before

I buy a Toyota with and Assembled in the US sticker. Sorry, Hoisers build better cars than Mexicans.

[DelawareValleyDem]

23. Honda's North American plants are not unionized

http://www.uaw.org/solidarity/01/1201/union06.html

[Touchdown]

28. Too bad. It should be.

Sorry about that. I made an assumption that since Ohio is a big union state, that they might have cracked Honda's plant by now.

[Tactical Progressive]

21. Yeah, but

There's nothing US auto executives like better than to send manufacturing down to Mexico. Remember 'Roger & Me'?

Thinking that buying US brand cars is helping American labor is thinking that US corporate executives care about American labor.

They don't.

[idlisambar]

24. Granted

their is no doubt that the lines have been muddied, and I wouldn't suggest that individual consumers buy American, just that individual citizens recongnize that the loss of the American auto industry is an unwelcome development. As citizens we can pressure the government to act on behalf of society's interests and help make the auto industry more competitive, while at the same time keeping the jobs here.

[Tactical Progressive]

25. If we had a govenment that would be true

What we have is a full-house of ultra-rightwing corporatists running this country now, from the legislature to the executive to the judiciary to the media. These people could care less about pressure or honesty or America. They are playing this country strictly for their own immediate benefit and will twist anything, including the truth, to their ends. The pressure only comes every two and four years, and they've pretty much got that locked up with a greedy citizenship and their ownership of the voting machines.

There is no pressure between elections, and almost none in the elections themselves.

And back to your main point, I'm not sure that the Japanese aren't better for keeping auto manufacturing in this country than their American counterparts. That's how much I distrust American corporate executives - I think they're probably less patriotic than foreign control. At least the Japanese have to make a show about caring about American labor. With US corporate executives, there is no such onus to moderate their greed, or more accurately the greed of the stockholders that they represent.

[idlisambar]

26. They do have to make a show

One must recognize that one big reason that Japanese automakers are located here is to neutralize protectionist sentiments, while there are certainly other reasons the PR benefits are substantial. Globalist pundits often use the example of Honda and Toyota assemblers being located here to show that insourcing is helping the U.S.

You are right that American auto executives are not really looking out for American auto-workers, but this is no reason to favor Japanese manufacturers as they, unlike our manufacturers, are indeed nationalist in the way they operate -- they act primarily in the interests of their Japanese workforce.

[Pithlet]

30. Yes, it is a very unwelcome development.

I wish the Big Three would get their heads out of their asses. The economic devastation wreaked by their business practices is heartbreaking, particularly for those directly affected. You make some valid points in this thread, and we should all be putting the pressure on them and all other corporations. It's a very complex issue. Bottom line is the Big Three have brought their problems competing with Japan on themselves, and it is the American autoworker that has had to pay the price.

[idlisambar]

31. The big three share part of the blame

No question about it, but the real question goes even deeper -- to the heart of how our companies are managed. Specifically, the emphasis on short-term profit in America's capital markets discourages patient investment. This is one reason why Toyota and Honda are so far out in front on green vehicle technology.

[Pithlet]

32. Very true.

Profits made on the backs of the workers they're screwing. A business model that's all too common in corporate America. One that will almost always bite them in the ass eventually, but they're too shortsighted to see it. And, the people running the show make it big no matter what, with their golden parachutes, so they don't have a whole lot of motivation to change anything. Make the big buck now, and run.

[Touchdown]

34. You mean Big Two.

Chrysler is a German company.