Buying American: What About U.S.-Built Toyotas?

In our previous story on the "Buy American" debate, several consumers and a UAW official said that buying American cars during this time of crisis for the Big Three was an act of "economic patriotism."

But there is another angle to the "Buy American" debate.

That is the broader context of the ever-climbing unemployment rates across all American industries. During this time of massive unemployment, many "transplanted" foreign carmakers continue to operate assembly plants, manufacturing facilities and research & development centers in the U.S. All of that, obviously, provides jobs to American workers at a time when unemployment is worse than it's been in 25 years.

So, that raises the question: In the context of the "Buy American" debate, how do consumers -- or industry officials / analysts -- feel about Americans buying a foreign car especially when it was built in a plant located in Kentucky, Tennessee, Ohio, or any number of states?

The answer depends in part on geography -- that is, how the current crisis is impacting people in the most economically-devastated industrial states that are home to Big Three facilities and other manufacturing plants -- Michigan being first and foremost among them. Given that the state has lost 300,000 manufacturing jobs since 2000 -- and that the Detroit-area unemployment rate is a sky-high 14 percent -- many buyers in Michigan still strongly adhere to a "Buy American" stance, transplants aside.

"Americans simply need to buy domestic vehicles if they want the U.S. auto industry to survive," asserted John Kuzava. Kuzava lives in Ann Arbor, a politically-progressive university town (home to the University of Michigan) about 40 minutes west of Detroit, not exactly known as a hotbed of "protectionist" sentiments.

"There's just no alternative," Kuzava continued. "There's virtually no risk that any of the off-shore carmakers will fail if Americans support our home-grown carmakers. All of the foreign carmakers have strong networks across the globe. The American global system is relatively weak by comparison, and more dependent on its home market. If it fails here, it will fail across the globe."

Maureen McDonald, a longtime Detroiter, drives a 2002 Volkswagen Jetta but says that when she buys her next car, she's definitely going the "Buy American" route -- as opposed to buying an import built in the U.S. -- in order to support her state's biggest industry in a time of crisis.

"I've actually had four VWs, ever since I had a bad experience with a '79 Pontiac Sunbird -- I spent a lot of money on repairs on that one," said McDonald, recalling the dark days when GM wrestled with quality problems. "I was afraid, like a jilted lover, to give Pontiac another chance with my pocketbook."

But McDonald made her last VW purchase before the Detroit automakers fell on their current hard times. And she knows that Detroit now builds a much higher-quality product than it did in the '70s and '80s. She said she's aware of the recent quality studies reported by J.D. Power and other research groups that show that many American vehicles now rank as high as, or higher than, imports when it comes to initial quality and long-term dependability.

"I drove a Pontiac Vibe on a recent trip to Florida, and it had much better ride and handling than my old Pontiac did," she says. "Today, I'd buy a Vibe or a Saturn Vue in a quick minute, given the Big Three's current crisis situation -- so my dollars would do the most good for our local industry, and for the state."

Mike Stanton is president and CEO of the Association of International Auto Manufacturers, a trade association based in Arlington, Va., that represents the interests of 13 foreign (mostly Asian) carmakers, including Honda, Toyota, Nissan, Subaru, Suzuki, Isuzu, Mitsubishi and Kia.

So it's understandable that his perspective is different than that of those in Michigan and other states that are home to many Big Three plants.

"Exactly what does it mean any more to say 'Buy American'?," Stanton asked. "If you look at the suppliers who make parts and components for the Big Three, well, many of them are also making parts for Hondas and Nissans and other foreign carmakers. So when you buy one of those imports, you're also supporting those American-based suppliers.

"And our members have 69 manufacturing facilities, component plants and R&D centers in the U.S., employing almost 93,000 American workers, with a payroll of $6.3 billion."

Some "Buy American" supporters point out that, even if you buy, say, a Honda Accord built in Ohio, by American workers, the profits still go back to the parent company, based in Japan -- and therefore don't help Detroit's carmakers.

"A lot of the revenues earned by the transplants are re-invested in their U.S. facilities," Stanton countered. "Like the Kia plant that's opening in Georgia at the end of the year. Our members have invested $30 billion in investment in U.S. facilities."

For Tom Brandstetter, of Milwaukee, his purchase choice is not about geography or loyalty to either imports or domestics. For him, it's all about fuel economy and helping to slow the emission of toxins into the environment. He drives a 2003 VW Golf that runs on bio-diesel fuel. "I'm very concerned about the environment, global warming, and reducing our dependence on foreign oil," Brandstetter said.

"So I don't decide what vehicle to buy based on who's building it, or where it's built -- it's the final product that I care about. As it happens, my Golf was built in Brazil, but I'd be happy to buy an import that was built in America, or an American car, if it ran on bio-diesel and got this kind of mileage -- my Golf technically gets 49 miles per gallon, but I drive it carefully, I can get 54 mpg.

"I feel sorry for the autoworkers who are losing their jobs, because it's not their fault," muses Brandstetter. "And I'm very concerned about the loss of the manufacturing base in this country -- if that were to collapse because one of the Big Three goes bankrupt, or goes out of business -- and then the suppliers follow suit as a result -- that would obviously be terrible for America."

But Brandstetter feels that one reason for the Big Three's current situation is that, "for years, they lobbied against an increase in fuel-economy standards -- but, the government just kept going along with it, so the government shares some of the responsibility for that," he adds.

Brandstetter also understands the larger business equation -- that carmakers, whether domestic or foreign, earn much higher profit margins on large, higher-priced vehicles.

"So, since Congress didn't pass higher fuel-economy standards for so long, that allowed the Big Three to just keep giving Americans what they wanted, but shouldn't want -- big, gas-guzzling trucks and SUVs. And I understand why the carmakers did that, because those are the vehicles they made the most money on."

"But, again, if an American carmaker would build a vehicle that would let me run it on low-sulfur, clean-diesel fuel, I would buy it."

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