Howes: In autos,'buy local' collides with reality of global supply
American-made metal ain't what Detroit loyalists may prefer to think.
In its 2015 "American-Made Index," cars.com finds that the Toyota Camry built in Kentucky and Indiana has the most American content among vehicles produced in U.S. — even though Detroit automakers still account for the majority of 101 models assembled across the country with 60 percent or more in domestic parts.
Production continues to expand in U.S. plants operated by the Detroit Three and their foreign rivals, a marker of the robust American market now well into its sixth consecutive year of expansion. But only seven models, led by the Camry and Sienna minivan, claim 75 percent or more of U.S.-sourced parts, this year's index found, down from 29 models that broached the same threshold five years ago.
The message is clear. Even as global automakers generally continue to produce where they sell, chiefly to control distribution costs and reap the political benefits of supporting regional economies, the suppliers they are tapping are far more likely to produce components in less expensive developing markets around the world. Why? To meet their customers' price demands.
The result is a reduction in American-made components in many of the cars and trucks assembled in the States for sale to Americans, Canadians and a steadily growing number of export markets. The challenge, at least for those who care, is navigating the maze of connections behind the logo on the hood and deciding whether any of it matters — and to whom.
More, the confusing web of parts and final assembly locations, and who builds what where, complicates Buy American impulses grounded in both economic nationalism and the increasingly fashionable "buy local" movement. Namely: is buying a Kentucky-built Camry more or less patriotic, more or less supportive of the U.S. economy and American workers, than buying a South Korean-built Buick Encore or Chevrolet Trax, the two Detroit models with less than 5 percent U.S. content?
The question answers itself, and not in the way many Detroit loyalists have long held. For as long as I can remember, the "Buy Big Three" standard hinged on where vehicles were built, whether union members assembled them and which country's automaker claimed the corporate profit, if any.
Reality intervened. Chrysler Corp.'s odyssey from German ownership, to American, and then to an Italian rescue engineered by Fiat SpA's Sergio Marchionne challenged a key component of that standard. But who, really, would question whether driving a Jeep Grand Cherokee assembled in Detroit represents anything less than supporting the home team?
Not many fair-minded folks willing to see the world as it is now. The rich U.S. market is an attractive and productive place to build cars and trucks, but that competitive cost structure is under continuous pressure from new labor agreements, disadvantageous trade deals, management missteps or all three.
Globalization of the supply base — and, in limited ways, production networks — is changing that more with each passing model year. Detroit's revitalization and renewed profit-generation at home, two unambiguously positive developments, do not change the fact that foreign-owned automakers combined build and sell more cars and trucks in the United States than domestic manufacturers do.
Ford Motor Co.'s powerhouse F-150 pickup, last year's index leader, slipped below the 75-percent mark with its redesign for the current model year, the index found. Key General Motors Co. models — including the Michigan-made Chevrolet Traverse, GMC Acadia and Buick Enclave — ranked third, fifth and sixth, respectively, in the 75-percent club, along with the Chevrolet Corvette and Honda Odyssey minivan.
"Detroit has the bulk of cars with high domestic content," says cars.com. "GM, Ford and Fiat Chrysler Automobiles build 37 of the 57 U.S.-assembled cars with 60 percent or higher domestic content. Foreign-based automakers are responsible for dozens of imported cars with zero percent domestic content, according to the National Highway Traffic Safety Administration."
Where will the industry be in another five years? In five short model years, vehicles with 75 percent or more in American-made content slipped to seven models from 29 — making "Buy American" a fraught proposition for buyers hungry to know just who produced their next ride and where.
Increasingly, the answer lay not in the brand or the site of its corporate headquarters, but in a plant location, its employees and a network of suppliers stretching across the globe.
Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found at detroitnews.com/staff/27151.