auto

The most American-made cars of 2014

This is the reason the U.S. government bailed out the auto industry. Had GM gone bankrupt as some politicians wished, it would have devastated those communities that rely on the auto industry to provide a reasonable living for its workers.

Some countries have seen their industrial base disappear, causing a concomitant reduction in living standards and income equality in the affected communities. Manufacturing jobs are typically good jobs that can support a decent middle-class lifestyle.

It appears that some cars are more American-made than others? Any thoughts about why this might be? What factors motivate a car company to create cars that are more American-made?

Managers have numerous choices with regard to where they can source parts and components for the automobiles they manufacture.

In the case of non-U.S. automakers with plants in the U.S., suppliers have often been impelled to relocate operations close to the point of final production and assembly. These relocations support just-in-time and "lean manufacturing" strategies that focus on reduction in supply chain costs in the production process.

In the academic literature, there is a concept known as the "liability of foreignness" that nondomestic enterprises must overcome. Some foreign manufacturers are able to parlay their localness or "American-ness" into marketing collateral. On the other hand, others may not want to. In some cases, there may be an advantage to identifying as nondomestic.

Global sourcing is significantly influenced by currency exposure issues. Producing a vehicle in the same location in which it is sold will negate much of the currency risk that occurs in exporting strategies. These strategies are often intentional in terms of providing a currency exposure hedging strategy.

Why is this information important for consumers? How can they use it?

In a perfect world, it should not matter where a product is made, or the impact that it may have on a particular economy. The reality is that some consumers may want to express their patriotism by purchasing products with as much U.S. content as possible.

Asian manufacturers are to be applauded for their efforts to increase their U.S. production and sourcing. In the end, though, profits and revenues will still be transferred back to stakeholders in the country of primary ownership.

It may be important to some consumers to think in terms of environmental factors and reducing their carbon footprint by purchasing locally made products.

For example, engines and transmissions in BMW SUVs exported from the U.S. plant in South Carolina to European markets have crossed the Atlantic twice! Once when they were sent from the mother plant in Germany to the assembly plant in South Carolina, and again when they are sent back to the European market for eventual sale.

In the end, country of origin is simply another product attribute that consumers use when making a purchase decision. Countries go to great pains to develop and protect positive geographic indicators: French wines, Italian fashion, Japanese electronics, etc. Some positive attributes for autos may include performance, styling, quality, features and so on.

In the end, the consumer's purchase decision is a complicated one, one that the marketing arms of all the major automakers go out of their way to try to understand and to influence. The "Made in America" label is simply another product attribute that may resonate positively with some buyers.

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