Forbes: "The Best Way to Boost the Economy With Your Next New-car Purchase is to Buy a Domestic-branded Model Manufactured in North America With the Highest Percentage of American-made Parts"

by Robert Farago

Published: July 2nd, 2008

forbes the best way to boost the economy with your next new car purchase is to buy

Bengt Halvorson's thesis for Newsweek/MSNBC/Forbes is a predictable, plodding piece of work. The dietribe [sic] makes a stab at exploring the muddy waters surrounding domestic vs. transplant "issue." "For instance, the Chevrolet Equinox, which is assembled in Ontario, has an engine made in China and a transmission from Japan, which brings its domestic content down to 55 percent. The Chrysler PT Cruiser is assembled in Mexico, has a Mexican-made engine and only 37 percent domestic content. Yet the Japanese-branded Toyota Sienna minivan, with a West Virginia-built engine and transmission, and a final assembly in Indiana, boasts 85 percent domestic content." Rather than negotiate a sensible path through this maze– screw it, it's a global economy, buy some Toyota shares, get over it– Halvorson's propagates the propaganda perpetuated by the " Level Field Institute." [This pro-domestic lobby group, run by United Auto Workers retirees, rightly points out that The Big 2.8 account for more U.S. jobs than transplants so that you'll consider rewarding their incompetence by buying a Korean-built Chevrolet Aveo.] Halvorson's "don't buy anything but Motown product" summary [as above] arrives in the third paragraph. His list of acceptable American cars are all made by GM, Ford and Chrysler. Well, it's supposed to. The embedded link to the "10 Most Patriotic Vehicles" takes you straight to the Honda DX Civic Sedan, one of the ten "Least Expensive Vehicles to Own." Funny, that.

Robert Farago

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4 of 47 comments

Rockit on Jul 02, 2008

Who supplies the bulk of the Sonata's parts? American, Japanese, or Korean sourced suppliers?

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Ryan on Jul 02, 2008

Yeah, I will stick with my 100% made in Japan Forester. Call me crazy but I enjoy a vehicle that is reliable and holds its resale value.

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Phil Ressler on Jul 03, 2008
People make the where-the-profits-go argument as if it were an obvious truth. It isn’t. There's a 1,100+ comments thread on this site somewhere that includes this topic.... Buying vehicles made in transplant factories has more domestic economic leverage than buying an import from a foreign company. But it gets much murkier from the collective domestic benefits standpoint when comparing transplant output with domestic and NAFTA output. The transplant purchases support the highest value headquarters jobs in their home countries, including the intellectual capital associated with R&D. Those jobs are not located in the US and do not benefit our economy. US production by US companies using mostly US-sourced content obviously has the highest economic leverage for American automotive consumers. NAFTA production is often derided here as having inferior value to transplant production. Not so. NAFTA production relieves some stress on our southern border, which is expensive to overcome through other means, and Canada is our largest trading partner and a tightly-integrated neighbor. NAFTA production returns cash to Michigan, which whether profitable or not at the moment, is helpful to the turn-around progress of these companies. Any NAFTA production purchases, ala Fusion, also directly support the rich cache of US HQ jobs associated with the Detroit 3, and their large R&D budgets. Forbes is right: if you are buying a car and want your purchase to be of maximum benefit to the US economy, buy something US or NAFTA-produced from GM, Ford or Chrysler. No, I'm not entertaining any caterwauling about your 198X Oldsmobile, Escort or Omni. Nor your bawling about a head gasket problem in something made in 1993. Nor am I sympathetic to the imagined trivial advantages that a Corolla allegedly has over a Focus or Cobalt. I've driven all of them. Yup a Civic is the most refined, but don't even think about defending its category-common cheesy interior and paper-thin plastics. I'll take a Cobalt SS, please. Or maybe an HHR SS. HHR is clearly embraced by the buying public and I have to remind you, it's just a Cobalt with more interior space, yet is pleasing owners by the tens of thousands. It's 2008. From Focus through Fusion through Taurus, Flex, Lincolns and trucks; from Cobalt through Malibu through Impala through LaCrosse, Lucerne, CTS, STS, SRX, XLR, Escalade, Silverado, Corvette; we have choices for good (some great), competent, reliable American vehicles. Some are standout, some are mid-pack, all are competitive by any realistic measure of the way people actually evaluate cars for purchase. No, don't try to persuade me that the pocket-protector data criteria claimed by the Camry/Accord market is majority mindset. I'm not arguing for "patriotic" purchasing. There's nothing patriotic about buying something conclusively inferior just because of where it's made. Kill the truly inferior Detroit products as quickly as possibly by shunning them. But drop bias, history, bigotry, resentment and choose from the D3's competitive mix if you want your automotive purchase to have maximum domestic economic leverage. If you don't, then don't. Your call. What you can't do is claim you're interested in the persistence of a domestic automotive industry and then eschew D3 products, rationalizing that "we have an American auto industry -- it's the US factories of Honda, Toyota, Nissan, et al." No, it isn't. That's just a collection of foreign-owned manufacturing capacity and attendant labor. Better than nothing, but not peer to a domestically-owned and headquartered automotive industry. As for those Chinese and Korean factories operated by GM, the company is also profitably active in those markets. It is reasonable for GM to import some production in those countries when its cost basis here in the US precludes sustainable manufacture. Should it stay that way? Not if they can manage their domestic costs to sufficiently lean production to make money on US manufacture in the thinnest-margin sectors. But in the meantime and even as a US manufacturer, it's better to sell an Aveo, for instance, than to vacate the sector entirely. They can always bring it back home later. True, free market principles work best, and free market means free will. The buying public will do what it wants, but it is also free will to include the national socio-economic context in your buying decision. "Free market" does not coerce you into making an artificially restricted product decision, nor does it compel you to artificially expand the scope of factors that weigh on your purchase. But anyone who buys an import or transplant when a competitive domestic alternative is available, is also undermining to varying degrees their own interests. If Americans want and care about persistence of a domestically-owned, large and vigorous automotive manufacturing industry, we collectively have in our reach the economic power of many individual decisions to finance the turn-around of the D3, without a single tax levied or governmental liability offered. Even in a sluggish 13 or 14 million units year, the swing of a few million customers who choose the larger context of community over narrow product differences can underpin the recovery of the D3. Yup, the executives have to change their ways, but given the crisis and the time to solve it, it's really up to us. The only question open is, "Do enough of us care?" It's not patriotic buying; it's self interest. I know it's possible: I've had Camry-like reliability from built-in-USA Detroit 3 cars since 1983. Phil

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97escort on Jul 03, 2008

Whether domestic or foreign or a mix of both, vehicles have to be powered by something. If it is oil, we import over half of it. When we do wealth flows out of the U.S. economy and into the hands of oil exporters, many of whom do not like us very much to put it mildly. Perhaps the best way to support the American economy is to drive less or do without a car if possible. Failing that, running your car E85 keeps a very large share of the wealth at home. Even E10 helps out a little. As the Post Peak Oil world unfolds it is likely that globalization will have to decline due to expensive oil and the costs of shipping parts around the globe. It may be that at some point it will become uneconomic to have other than domestically produced cars. These cars will be made by foreign companies but will have high domestic content to save on transport costs. The Detroit 2.8 would have had a home court advantage, but they are so screwed up product and management wise that it won't help. It will probably be that foreign producers like Toyota will be producing cars of high domestic content Post Peak Oil. They will be small, fuel efficient cars like the Yaris or the Prius which Detroit seems incapable of competitively producing.

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