Posted on 11/29/2005 3:05:13 PM PST by BurbankKarl
Buying American has never been so complicated.
In the 1990s, the Big 3 aggressively lobbied Congress to require labels on new cars and trucks that list U.S. and Canadian content.
Today those federal labels reveal an unexpected trend: To cut production costs, the Big 3 are using more foreign parts in North America-built vehicles. Meanwhile, Japanese transplants are increasing their use of American-made parts.
The Japan-built vehicle with the most U.S. and Canadian content - 90 percent - is the Toyota Sienna, a minivan built in Princeton, Ind. General Motors has some vehicles with more U.S. and Canadian content, but the Sienna's content is as high as any nameplate built by Ford Motor Co. and higher than anything built by the Chrysler group.
The American Automobile Labeling Act requires window stickers on all new vehicles to display its domestic content (See box at right). Each year, the National Highway Traffic Safety Administration gathers the data from automakers.
Determining true North American content is tricky: The agency counts parts produced in Canada and the United States as domestic, but components produced in Mexico, or anywhere else, are considered foreign.
According to NHTSA data, the 2005 Chevrolet Suburban and its sister
SUVs list domestic content of 61 percent, down from 95 percent in 1997, because many of them now are built in Mexico with parts made in Mexico.
The 2005 Ford Mustang had a domestic content of 65 percent, down from 85 percent in 1997. The Mercury Mountaineer fell from 95 percent to 65 percent. And the Jeep Grand Cherokee declined from 85 percent to 72 percent.
Different priorities
The data indicate fundamentally different priorities for the Big 3 and Japanese automakers.
For Detroit, the overriding priority is to reduce component costs. By contrast, the Japanese want to make their assembly operations more secure by finding local suppliers for parts that used to be shipped from Asia.
"The Japanese have showed a willingness to pay a little more for their components in exchange for peace of mind," says Michael Robinet, director of global forecasting at CSM Worldwide in Farmington Hills, Mich. "It's important to them to have a local supply base that buffers them from problems with currency and supply line interruptions. For the Big 3, the real issue has been bringing down cost."
The end result: As the two groups creep closer together on domestic content, the Big 3 may lose bragging rights as producers of vehicles that are "Made in America" down to their core.
That distinction has more to do with public relations than manufacturing. The UAW has maintained that people would buy more Big 3 cars and trucks if they knew which vehicles had the most domestic content.
One big problem is Mexico. Even though Mexican content is counted as domestic under the North American Free Trade Agreement, the federal labeling act excludes it.
That's a double whammy for the Big 3. Detroit automakers are assembling more vehicles there and buying more parts there, too. Last year, GM built 35,592 Chevrolet Suburbans in Janesville, Wis., and 97,259 in Silao, Mexico.
Under the labeling act's accounting rules, the parts content of all Suburbans is averaged together, along with the content of every other nameplate built on the Suburban platform, including the Chevrolet Avalanche and Tahoe, Cadillac Escalade and GMC Yukon.
Global sourcing
The Ford Mustang's local content declined after 1999 when Ford began importing V-6 engines made in Cologne, Germany.
The Mustang, which was redesigned for 2005, now is manufactured at AutoAlliance International Inc., Ford's 50-50 joint venture with Mazda Motor Corp. in Flat Rock, Mich.
The redesign uses cam covers from a Dana Corp. plant in Germany, and cylinder heads from Nemak SA de CV, which casts aluminum in Mexico, Canada and eastern Europe.
"We've made no secret of looking for competitive sources of content," says Ford spokesman Paul Wood. "Global companies go to global solutions."
Wood says that electronics and forgings, including wheels and exhaust manifolds, are now more readily available from overseas sources.
The Chrysler group watered down its domestic content after it expanded production of the Hemi engine. Chrysler makes some Hemis in Mexico, and the engine now features more European components.
When Chrysler Corp. merged with Daimler-Benz in 1998, the Jeep Grand Cherokee had zero German content, says Markus Mainka, a spokesman for Chrysler's procurement operations. Now the Grand Cherokee's Germany-made transmission gives the SUV a German content of 2.5 percent.
Other view
Meanwhile, Japanese transplants continue to use more parts from the United States and Canada.
This month, Bodine Aluminum Inc., a Toyota Motor Corp. subsidiary, opened a $164 million plant in Jackson, Tenn. The factory will produce a million engine blocks a year, plus transmission housings.
In Huntsville, Ala., Toyota is doubling its U.S. production capacity for V-8 engines. In August, the Huntsville plant also began building V-6 engines using castings imported from Japan.
lots of Mexican Suburbans out there...
its simple...its all non union.
They should count Canadian content as foreign too.
There's quite a bit of auto manufacturing done up there by the big 3.
HAH !
I knew it !
My Yot's are more USA than my Mexican Dooooooge !
LMAO !!
Phew, for a split second I was thinking Blue Cross, Cigna, and Aetna. *rimshot*
Huh...imagine that!
Then go to Roanoke, VA.
Then go to Darlington, TX.
Big labor and mis-management have, and are contuing to, destroy manufacturing jobs here in the USA.
I have been been following these sectors for almost 40 years due to my involvement in these industies.
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