Buy American-Made or Goodbye, American-Made?
By Charles Krome
Every now and then, there’s a flurry of discussion here in the U.S. about the importance of buying vehicles from one of the home teams, and this usually leads into a discussion of exactly what it means to be an American automaker. Well, that’s the case today, thanks to a recent story on CNNMoney.com.
The impetus behind this is a recent discussion a CNN writer had with John Krafcik, CEO of Hyundai Motor America. The bottom line: “By next year about 80% of the vehicles Korean automaker Hyundai sells in the United States will be built here.”
It’s a telling choice of targets, too, because despite (because of?) all the money that taxpayers have poured into GM and Chrysler, it’s the red, white and Blue Oval that gets most of the patriotic cred in the marketplace today. And that makes sense when you also consider that GM and Chrysler are teetering on the edge of losing their home-field advantage. Fiat, of course, owns 20 percent of Chrysler, and the Italian company will soon be raising that to 35 percent. Then, although there are some hurdles to overcome before it can happen, Sergio Marchionne “did not rule out the wisdom of ratcheting up that stake in the future if the value of Chrysler grows,” according to a story in the “Detroit News.”
As for GM, the details are few and far between, but it seems clear that the company will be looking at foreign investors for its IPO, with an ongoing rumor making the rounds that Chinese automaker SAIC—one of GM’s China partners—could be in for a nice chunk of the General’s new stock offering.
In other words, Ford could soon be the last “real” American automaker left, and it would be building a smaller percentage of its vehicles in the U.S. than Hyundai does.
On the other hand, the numbers game can be a funny thing, and CNNMoney drops some notable caveats. For the General, if GM’s claim that it builds between 60 percent and 70 percent of its vehicles in the U.S. is correct, the total number of units the company manufactured here in 2009 would be roughly triple the number that Hyundai hopes to build to achieve that 80 percent mark.
And Hyundai is only talking about final assembly numbers, which can be skewed when you take into account that Chrysler, for example, builds plenty of engines and transmissions in the U.S., then ships the components to Canada to put whole vehicles together.
Then there’s the whole NAFTA business. It may not be politically correct to remind people of this, but the North American Free Trade Act lives up to its name by allowing the auto companies (and many others) to consider products made in Mexico, the U.S. and Canada as simply “North American production.”
Finally, large U.S. manufacturing footprints haven’t really done much to get people to think of Honda and Toyota as American companies, so it’s an open question as to whether this would make a difference to Hyundai (and Kia).
Or to U.S. customers, for that matter.