Jobs Mob US
How to Drive Economic Patriotism But when it comes to economic patriotism, our country has fallen asleep at the wheel. Our car buying preferences as a nation do not reflect our national economic interests, but instead have evolved into serving our own individual perceived self-interest.
Michael Dumond, MS/MBA 10/10/10
We have the type of patriotism required to fight wars with other countries. Our nation has been more than willing to recruit, train and deploy armed forces who sacrifice the comforts of civilian living and, if necessary, their lives in order to preserve our freedom or to help free other oppressed people.
Is it an overstatement to link what car you drive to our national economic interests? Green conscious consumers point out the environmental impact of choosing vehicles with low miles per gallon inefficiency and many of us are on board with that. But are we considering the impact that our selection of a particular brand of vehicle has on our economic security?
It depends how you define economic security. Many of us would say that it means getting the most for each dollar we earn and spend. But if you are considering the economic well-being of you and your neighbor, then you might be concerned about the economic impact of vehicle selection.
According to the Level Field Institute[1] direct U.S. automaker employment in the U.S. as of December 2008 was 295,000 workers, while direct employment in the U.S. supported by foreign automakers was 95,000. Direct employment is not only defined as assembly workers, but also includes research, design and engineering. Spin-off employment – jobs at suppliers and other companies that directly serve automakers - is a huge component of jobs related to auto manufacturing. It is estimated that each auto manufacturing job supports nine other jobs in the community.
The statistics are quite an eye opener. The number of U.S. workers employed for each 2,500 vehicles purchased in the U.S. varies substantially depending on which company makes the vehicle and where the vehicles (and the parts) are made and assembled. The data that follows present a sobering case. For every 2,500 Ford, General Motors or Chrysler vehicles sold, 78-92 U.S. jobs are supported. For Honda and Toyota, the number of U.S. jobs would be 51-54. Nissan supports 38 U.S. jobs for every 2,500 vehicles purchased in the U.S., while Kia supports a mere 26 U.S. jobs. This includes accounting for the percentage of parts in each vehicle that are made in the U.S., the percentage of vehicles assembled here, and the number purchased here. 67% of the parts of U.S. big three automaker autos are actually made in the U.S., while only 33% of the parts of foreign automaker autos sold in the U.S. are made here.
There are 28 U.S. vehicle assembly plants in the compared to 18 foreign assembly plants, with each directly employing about 2,000 workers. So, a vehicle from a big three brand might not be made here, while a Toyota Corolla might be U.S.A. made.
So what can you do about all this? Economic patriotism begins at home with a little homework. If you care at all about your country’s economic security then you have an obligation to do some research before you buy. There was a time when U.S. made vehicles had a reputation of being of inferior quality. But the big three have noticed the slacking consumer demand and the migration of their customer base towards perceived quality. I’m not suggesting that anyone should buy an inferior product or pay more for a product that was only as good as the foreign made vehicle. But I do advocate for consideration of buying a vehicle made in the U.S.A. if and when a product of equal price, quality and value made here at home is available. And, don’t forget to make sure that the Ford, Chrysler or GM car you’re considering was really made here - the big three have outsourced plenty of U.S. jobs, with a trend toward more production in Mexico where wages are only 10% of what U.S. auto workers are paid.[i]
Of course you as an individual don’t really think that what you do will matter much. One vehicle bought here but made elsewhere won’t impact the bottom line or jobs of people we know, right? Well, wait a minute mister one minute man patriot. Let’s do the math. If 78-92 U.S. jobs are created for every 2,500 cars purchased in the U.S. that were produced here, then we are supporting one job for every 27-32 U.S. produced cars we purchase that is made by Ford, GM and Chrysler, while we are only supporting one U.S. job for every 46-49 Hondas and Toyotas purchased. The consuming public should know that they would have to buy 66 Nissans to support one U.S. job and nearly 100 Kias. If you think the allegiance to these foreign brands is unpatriotic, consider buying a Volkswagon as the ultimate act of indifference to economic patriotism, because you would literally have to buy a boatload of VWs in order to support one U.S. job, since no VWs are produced in the U.S. and only 8% of a VW’s parts are U.S. made! We have seen our support of the big three U.S. automakers on a downward spiral as shown by their declining revenue, which collectively slid from $423 billion in 2000 to $280 billion in 2008, while Japanese automakers share of the U.S. vehicle sales revenue has grown from $225 billion to $380 billion.[2] U.S. big three vehicle manufacturing employment has shown a similar decline from 1,250,000 workers (834,000 in parts production) to 843,000 workers (541,000 in parts production) over that same period. Some of the 33% decline was due to increased productivity (a 28.6% increase in output per worker employed between 1998-2008). But the rest of the decline is related to lost market share. GM’s market share dropped from 36% in 1990 to 26% in 2005, and Ford fell from 24% to 17%.[3] What about government incentive programs like Cash for Clunkers? Each 1% increase in new U.S. produced car sales is associated with a .7% increase in U.S. employment.[ii] The Cash for Clunkers was a successful government economic stimulus intervention, as it is estimated that the incentives resulted in a minimum of 125,000 new car sales in the U.S. However, the percentage of the vehicles sold that were actually made here was mixed, with the top ten models sold including Ford Focus, Honda Civic, Toyota Corolla, Toyota Prius, Ford Escape, Toyota Camry, Dodge Caliber, Hyundai Elantra, Honda Fit and Chevy Cobalt. Well, it’s not a 100% stimulus of U.S. made cars, but at least most on this list are in the 50 U.S. jobs or more for every 2,500 purchased in the U.S. range. We helped stimulate our economy and that of other countries. We also met the goal of increasing fuel efficiency by 60%, as the clunkers traded in average mpg was 16 compared to 25 mpg for the new vehicles purchased. The Cash for Clunkers program was paid for 100% by U.S. taxpayers. So why did we include these incentives for cars not even made in the U.S.? Because it was not politically feasible to start a trade incentive war with these other auto making countries, or to discriminate against Ford, Chrysler or GM cars made abroad. Any move our government makes to protect or incentivize U.S. consumers to buy U.S. made goods can be countered with similar moves by other countries, making it more difficult for the U.S. to export and sell all kinds of products. An important point in the debate about national economic interests: our government can’t take the lead on promoting the purchase of products made in the U.S.A. because it would set up a battle of incentives and tariffs between nations that currently engage in free trade. So if our government can’t take the lead, who can? Private citizens like you and me. Tag, we’re it! It is ultimately up to us to wake up at the wheel and think about the importance of what we drive and how buying products made in the U.S.A. can take us where we need to go. [1] www.levelfieldinstitute.org, an organization supported by retired U.S. auto workers [2] Source: Indiana Business Review, Employment and Economic Growth in the U.S. Auto Manufacturing Industry, Considering the Impact of American and Japanese Automakers, Michael F. Thompson, Economic Research Analyst, Indiana Business Research Center, Kelly School of Business, Indiana University
[3] Source: U.S. Automotive Industry Employment Trends, Office of Aerospace and Automotive Industries, U.S. Department of Commerce, March 30, 2005 [i] This information is available on-line in an article in Bloomberg; GM, Ford Accelerate Shift to Mexico Workers Making $26 a Day, by Thomas Black, June 9, 2009. The consumer can research vehicle models on line at Edmunds.com to determine % made in the U.S.A. [ii] Note: This is not a 1 to 1 ratio perhaps because as noted previously U.S. produced cars have only 67% of their parts made here.
