With Globalization, Finding A Car's 'Nationality' is No Easy Task

John Birchard
May 28, 2002
Washington, D.C.

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Is a Toyota made in the U.S. state of Kentucky an American car? How about a BMW made in South Carolina or a Mercedes-Benz assembled in Alabama? These days it grows ever harder to pin down a motor vehicle's "nationality."

What flag should be flying from a Nissan made in Tennessee? Japanese or American? Or maybe French, since Nissan is owned by Renault.

Last year, for the first time, international auto-makers accounted for more than half of the new passenger cars sold in the United States. And an ever-increasing percentage of those cars are made in the USA. Ten overseas auto-makers have manufacturing facilities here. The president of the Center for Automotive Research in Ann Arbor, Michigan, David Cole, explains why.

"You really have to build where you sell. The old model, in fact, was I think epitomized by Japan in the early days of the evolution of their global industry. [It] was built in Japan and sold all over the world. Well, that is now passe', and you really have to build where you sell. That is the only way you are going to be ultimately accepted as part of the domestic industry," he said.

The biggest overseas automaker in U.S. sales is Toyota, with more than ten percent of the overall market. Company spokesman Jim Wiseman has said a lot of Americans earn their livings by producing Toyotas.

"Toyota overall, including the dealerships in North America, employs more than 30,000. If you are looking at just our manufacturing facilities in North America, it is more than 20,000," he said.

Mr. Cole points out those automotive jobs have a considerable economic impact. "This is 1998 data. The average auto worker, whether it is a manufacturer or a supplier, that is the average auto job, contributed about $137,000 [a year] to the U.S. economy. The average worker in our economy, at that point, contributed only 62,000," Mr. Cole said.

With its eight U.S. plants and two Canadian facilities, Mr. Wiseman said his company has a long reach. "Toyota will produce more than one-point-three million vehicles in North America and more than one million engines [this year]. And when you are talking about an operation that big, obviously it needs a pretty dense supplier network here in the U.S.," Mr. Wiseman said.

Not only do the companies that directly supply the auto-maker thrive off that company, said Mr. Cole, but the indirect effect is significant, too. "For every job in an auto manufacturing plant, whether it is a Hyundai, a Toyota or a GM or a Ford plant, there are 6.6 jobs elsewhere supported by that job. Now, those jobs might be in the suppliers making parts, but also jobs in the community grocery stores, restaurants, other services that are, in a sense, supported by the income generated by that plant," he said.

But, back to our original question: is a Toyota made in Kentucky or California "American?"

Mr. Wiseman says, absolutely.

"The old criticism that we were simply screwing together parts that were made in Japan and shipped over here is no longer valid by any means. These are cars that have 85 percent U.S. content now. They are virtually as American as any other car that is made here," he said.

Other Japanese automakers with U.S. plants include Honda, Nissan, Isuzu, Subaru, Mitsubishi and Mazda. Germany's Mercedes-Benz and BMW assemble vehicles here, too. And just recently, Hyundai, the Korean company, broke ground on its first American plant in Alabama. Global economy, indeed.