Wednesday, April 29, 2009

Buy American Automobiles: An Idle Question or Two

There has been a lot of discussion in recent weeks over the automobile industry in the United States (some of it in this blog today). In spite of the fact that almost all of the manufacturers of automobile in the United States have manufacturing relationships with each other for various parts or parts of their product line, we never the less insist upon defining them as either foreign or domestic.  

This definition gets plenty of discussion as well. Is a car foreign or domestic based on where the preponderance of its parts are manufactured, where it is assembled, or where the company in questioned is Incorporated? There are many good arguments for all of these points, but all discussion seems to end when we talk about the country of incorporation comes up. 

We are told that we should buy from the Big Three not because the parts for these vehicles are manufactured in this country (which in many cases they are not), not because they are assembled in this country (which again, in many cases they are not), but because these corporations return and reinvest their profits in the US economy. Forgive me for asking the obvious, but:  

What profits?
 The Big three have routinely proved themselves unable to make a profit, in fact losing money. So what profits are we actually worried about them reinvesting. In many cases quite frankly, the only profit that the Big Three are making is in their overseas sales. Which leads to my next question.

 If we restrict ourselves to the purchase of "American Automobiles", what do we do if the rest of the world decides to do the same kind of restrictive auto purchasing? Where would the Big Three be if their only market was in the United States?  

Maybe I'm being a bit simplistic here, but this problem will not be solved by trade barriers, or worse trade wars, over the manufacturing of automobiles. I recommend a bit of reading on a situation that eerily relates to the current auto crisis, "Well Made In America" by Peter C. Reid. It is the story of the fall, and rise of Harley Davidson in the motorcycle market. It's a real eye opener.

 

5 comments:

Winky Twinky said...

There ya go again...bringing LOGIC into it... ;)

Tim Higgins said...

WT,

I apologize. It is a fatal character flaw that I have never been able to effectively deal with, aggravated by a classical education in both math and philosphy.

I attempt to make up for it by keeping a healthy sense of the ridiculous.

Roland Hansen said...

I get such a headache trying to understand all this.

Heck, I am not even so sure there any bicycles made in the USA anymore. I heard Schwinn bicycles are actually made in China.

Tim Higgins said...

Roland,

Did the lookup. Shcwinn was purchased by Pacific, which was in turn purchase by Dorel. The bikes are now made in Taiwan and the People's Republic of China.

Sorry...

Hooda Thunkit said...

Tim,

To add a little more confusion to the topic:

Try checking and qualifying cars ("foreign?|" AND "domestic") by their content and things get even more confusing.

I believe that the actual crux of the matter boils down to who makes/assembles the vehicles; more specifically, UAW (THOSE EVIL UNION THUGS) or non-UAW (IOW, Scabs).

(BTW, I buy cars built in America (NOT Mehico or Kanada,eh?) by Americans, and am much more satisfied with them than I ever was with any UAW build car/van that I ever owned...


So, in my experience it isn't the nationality of the workers building the cars, but the corporate mindset of the comapay's management and the standards that they set/enforce that makes the BIG difference.