20 April 2008

The Enduring Myth of American Steel

If you don’t live in Michigan, you may not know the term “American Steel.” It’s not a company name, but a term referring to American cars. Well, not all American cars, just General Motors, Ford and Chrysler—what we call “the big three.”

Problem is, the big three are shrinking. Daimler eagerly dumper Chrysler recently, for far less than it had bought it for not so long ago; Ford is bleeding money; and GM—also a money bleeder—recently lost its place as the largest auto seller in the world, by volume. (Ironically, since GM loses money on each car it sells, it’s probably better off selling fewer cars.) Their struggles are a big casual factor in Michigan’s long-term economic malaise, as they have collectively shed hundreds of thousands of manufacturing jobs in recent years. And everyone here knows the cause of the problem—all those traitorous Americans driving “foreign” cars and our free trade laws, which make those foreign cars so cheap, destroying American jobs.

The Detroit Free Press—which almost never fails to have an auto industry story above the fold on the front page—inadvertently highlighted the perversity of this myth recently. The front page of the business section had a column using the phrase American steel,* while the back page had two brief articles that an alert business reporter ought to have highlighted.
· One was about Volvo laying off workers at its truck plant in Virginia;
· The other was about demand for Honda’s new corporate jet, made in California

So, just what counts as American anyway?

This all reminds me of a conversation I had with my brother-in-law back in the ‘90s when I was looking for a new car. It went something like this.

B.I.L. “What kind of cars are you looking at?”
Me: “Oh, I was looking at a Toyota.”
B.I.L. “Why don’t you buy an American car, like I did?”
Me: “What do you drive?”
B.I.L. “A Geo Metro. It’s made by GM”
Me: “Hmm, you ever noticed how much that looks like the Suzuki Swift?”
B.I.L. “Yeah, they are kind of similar.”
Me: “Yeah, because it’s the same car, built at the same plant in Japan.”
B.I.L. “Oh.”
Me: “You know where most of the Toyotas sold in the US are built?”
B.I.L.: “No.”
Me: “Tennessee.”
B.I.L. “Oh.”

For the record, I bought a Saturn, also made in Tennessee, by GM, but with God only knows how many imported components. Now I drive a Subaru, a nominally Japanese car built in Indiana. And I have no idea where the actual steel came from in any of the cars I’ve driven.

Now it turns out that that Subaru’s Indiana plant has begun producing Toyota Camrys (apparently Toyota owns a stake in Fuji Heavy Industries, which is the parent company of Subaru Indiana Automotive). And of course Ford actually owns Volvo. And GM’s new sedan is being designed in China.

So what is American steel nowadays?

Just a phrase trying to guilt trip me into buying a car built by hard working men and women in Michigan, instead of one built by hard-working men and women in Indiana, Tennessee, Kentucky, California, etc.

1 comment:

James K said...

That's the thing about economics, it recognises no borders (well, apart from the currency markets). The concept of a good being made in a given place is incoherent.