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Destroying More Anti-American Automobile Industry Myths
Our Buy American Mention of the Week!
by Roger Simmermaker
July 17, 2005

The opportunities to de-bunk more of the baseless anti-American rhetoric biased against our country's two remaining American-owned automakers never cease to present themselves.

As reported in its Thursday, July 14, 2005, paper, the Wall Street Journal details how rising gas prices are triggering the increased production of "minicars." Before I even begin to discuss the information in this article, it must be said that a traditional anti-Detroit refrain has been that the Motor City has always been slow to respond to marketplace realities (such as high gas prices) and has always seemed to simply follow their Japanese competitors rather than set the standard. If you want to continue to believe these things and keep your head in the sand, it's best that you stop reading here.

It seems the Korean-made Chevy Aveo is the best selling economy car in the United States, ranking higher than the Toyota Scion xA, the Kia Rio, and the Hyundai Accent. I purposely mentioned that the Chevy Aveo is made outside the U.S. right up front so the Anti-American crowd could momentarily crow about how this GM car was not made in America. But as it turns out, none of their foreign minicar competitors are made in the U.S., either. American investors, owners, stockholders, and stakeholders can take comfort that they, not their foreign counterparts, will profit from a more successful General Motors, even when those cars are made elsewhere. The same cannot be said about foreign-made cars from foreign-owned companies.

The article continues and says that since Toyota, Nissan, and Honda now see the evident and supposedly unexpected American success story, they are reacting (rather than leading) to grab their slice of the American pie. Toyota is considering launching a U.S. version of the Vitz (available only in Japan) to replace the Toyota Echo. Why is Toyota sending the Echo to the exit? According to the Wall Street Journal, it is partly because of "stodgy styling." If the accusation of "stodgy styling" isn't the most consistently launched term aimed at the heart of Detroit over the last few decades, I don't know what is.

Both Honda and Nissan are reported to be considering U.S. versions of their own cars currently marketed only in Japan. One can only wonder what is happening here. Gone are the once seemingly credible accusations of stodgy styling and slow-to-respond mindsets that only applied to American automakers courtesy of their own people. One has to wonder to which country these Americans actually pledge their allegiance.

Another key point made in this Wall Street Journal article is that GM scored an "unexpected hit" with the Aveo. Business Week even recently devoted its cover to propagating how GM's turnaround plan won't work. Since then, the GM employees' discount plan has been launched and has resulted in the highest market share GM has experienced since the 1990s.

The fact that the Chevy Aveo is made outside the U.S. should not deter any patriotic American from supporting GM, and this is not only because their foreign competitors' cars are not made in America, either. Patriotic consumers should not be geared toward only considering any American-made car. For America to truly benefit, we need to recognize that the primary consideration is ownership.

For instance, many supposedly Buy American-conscious consumers bought an American-made Camry or Corolla instead of an American-made Taurus or Bonneville. It seemingly made no difference which company got the profits as long as the assembly workers were in America. It never occurred to us that the salaried workers who designed the American cars were in America. It never occurred to us that the domestic parts-content on the American cars were higher than on the Japanese cars. It never occurred to us that profits of American companies are repatriated to America, and the taxes on those profits were paid to the U.S. Treasury. Next time you are reminded how this nation is drowning in red ink, you'll hopefully realize that this is especially important.

Now that it is apparent that had we bought GM and Ford products (like the Korean-made Aveo) even when they were produced overseas, GM and Ford would have raked in the profit and might not be experiencing junk bond status or considering layoffs of thousands of American workers, putting retirees, their families, and dependents at risk of being de-funded. It's more than just about American-made. It's also about American-owned.

Toyota and Honda were certainly profitable enough to not lay off American workers even if fewer of us bought the Corolla made in California or a Honda made in Ohio. Japanese automakers have to keep a factory presence in the United States to be able to play the "made in USA" card, even though it is a fraction of the factory presence American automakers have always had. This likely means that buying an American-made Bonneville instead of any American-made Japanese car would have likely not led to layoffs of American workers of foreign companies but could have prevented planned layoffs of American workers from the Big Two.

Just like buying New Balance shoes made in Indonesia (New Balance makes 30 percent of their shoes in the U.S.) is better than buying Nike shoes made in Indonesia (Nike makes none of their shoes in the U.S.), it's better to buy a foreign-made GM instead of a foreign-made Toyota. General Motors has 82 major plants in the United States--over three times more than Toyota, Honda, and Nissan combined. It is unrealistic to expect GM or Ford to remain as profitable as their competitors with so many factories in high-wage America when Toyota imports more of their cars and parts from low-wage Asia. If New Balance were to announce tomorrow that they were moving their plants offshore (along with Nike, Reebok, and Adidas), would it be corporate greed or because their labor costs were higher since they employ more Americans? It would be unfair and unjust to direct our anger at New Balance. And it is also unfair to direct our anger at GM for closing some factories in the U.S. What are we really revealing that we are angry about? That GM employed too many Americans for too long? Too many of us want GM to be loyal to America while too few Americans care about showing any loyalty to GM. It has to work both ways, folks. No American can rightfully complain that GM is not doing right by America while they drive behind the steering wheel of a foreign car. Let's be Americans and not hypocrites.

Friedrich List, a now-deceased German economist, once said, "The power of producing wealth is...infinitely more important than wealth itself." And by supporting American companies, America retains the power to create wealth. American companies are more subject to American laws and more influenced by American pleas for corporate responsibility. American presidents can, as both President Clinton and Bush have, stress corporate responsibility in America, but foreign companies need not listen. Why? Foreign companies owe no loyalty to America, and when faced with the option to side with their home country or their American subsidiary, nationalism and self-interest will dictate that they side with their home country. Americans must understand that nationalism is not an American phenomenon but is also alive and well in several countries around the globe, as it should be.

The importance of America's power to create wealth is manifested in the recent bid by Chinese-controlled CNOOC to buy American-based Unocal. If the deal goes through to allow a Chinese company (which is 70 percent owned and controlled by the Communist Chinese government) to buy Unocal instead of allowing American-owned Chevron to do so (which stopped exporting oil to Iran at the request of corporate responsibility pleas from the American government), America will have lost the power to create wealth. Sure, some Americans would profit from the sale to the Chinese company, but it would be a net loss for the nation.

The importance of America's power to create wealth is also manifested in Chinese-owned Haier's bid to buy out Maytag. See the now prophetic Buy American Mention of the Week from February 14, 2005, entitled "To Boycott or Not to Boycott Maytag". Had we not penalized Maytag for moving one refrigerator plant to Mexico when 96 percent of its workers were in America and its American competitors' percentage of American workers was even less, they might not be suffering from a lack of profits and might not be susceptible to a Chinese takeover. Again, the ownership of the company is the primary concern.

It is further blatantly hypocritical to be in favor of free trade with China while they practice protectionism at home and then be against China investing in America to buy American assets like Unocal and Maytag. China is merely finding a use for all those American dollars we sent to them in exchange for all those cheaply made goods. We have to realize that China is using our money to buy our companies. That money used to be ours! But we sent it to China thinking we were getting a good deal on cheap products. I am against foreign investment in America, by Chinese companies in particular, probably more than anyone, but I only point out the hypocrisy in the stance of free traders. How can one be for certain policies but against the resulting affects from those same policies? Have we placed our heads that deeply in the sand?

Focusing on just how cheaply we can find consumer products is ruining America. The "cheap" mindset has invaded our culture and seems to have taken a permanent place in the American way of life. How sad. President William McKinley had a few things to say about the word "cheap." He said, "I do not prize the word 'cheap.' It is not a badge of honor. It is a symbol of despair. Cheap prices make for cheap goods, cheap goods make for cheap men, and cheap men make for a cheap country."

It is unfortunate that within our government, hypocrisy often reigns. This does not mean that we should abandon the hope that a properly run government can offer but that we should band together to reform it and make it better. In the meantime, however, we need to band together to Buy American in the purest sense of the term. That means buying American-made products from American-owned companies whenever possible and even supporting American companies when some of their products are made overseas because their foreign-based competitors usually have an even greater percentage of their products made overseas. The beauty of a Buy American strategy is that while we are telling our legislators how we feel and electing them or ejecting them as appropriate, we can use the influence of our pocketbook all the while.

We as consumers have the power to steer the global economy in a direction that best benefits the United States of America. Let's use it.


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