Understanding How to Buy American
Many consumers want to buy products made in America. According to a recent Adweek Media/Harris Poll, a large percentage of Americans respond to an ad that identifies a product as being domestic.
18-34 Years Old – 44%
35-44 – 61%
45-54 – 66%
55 and Older – 75%
It is difficult, however, to know what exactly is ‘Made in America’. For instance, when one thinks about domestic automobiles, we identify with the Big 3. Cars.com has an American Made Index that rates vehicles built and bought in the US. Factors include sales, where the car’s parts are made and whether the car is assembled in the US. Here are the top 10 for 2019.
- Jeep Cherokee
- Honda Odyssey
- Honda Ridgeline
- Honda Passport
- Chevrolet Corvette
- Acura MDX
- Honda Pilot
- Chevrolet Colorado
- GMC Canyon
- Acura RDX
When evaluating a product, there are several elements besides where it is assembled. In terms of an automobile, consider where the product is both designed and engineered, where the parts come from, especially the engine and transmission, where it is assembled, and where do the profits go after it’s sold. To be fair, the Big 3 do most of their engineering and design domestically. Both Honda and Toyota also employ those skills within the US. Regarding assembly, that equates to approximately 20-25% of the total value of an automobile. It is fine and well that Volvo, BMW, Mercedes, Hyundai, Kia and Volkswagen have assembly plants here, BUT, they are a minimal investment. When the major parts still come from overseas, it’s a modest contribution at best. They are what Mrs. Thatcher referred to as ‘Screw Driver Plants’. Please look at the invoice attached to the car’s window. It does reveal the level of domestic content.
Finally, profits don’t stay within our borders. The money goes to help investment and capital improvement in other countries. That is a major justification to support the Big3.
Cars are much easier to determine domestic content than electronics. Let’s take the IPhone. Like so many electronic gadgets, the nuts and bolts are made in various countries in Asia. So does it make sense to get an IPhone vs an Asian or Finnish brand? Absolutely. Apple does most of its design and engineering in the US. Since their products are extremely popular and profitable, those funds return to California to continue research and development on new products. That means getting an HP computer vs an Hitachi makes good sense. At least some of the funds return to America.
Globalization has made the world difficult to understand. Even the concept of an ‘American company’ is a little hazy. In general, American companies are better to support than foreign ones, and foreign ones that include US content (Windows software, Intel computer chips, etc) are better than those who don’t.
Finally, what goes around doesn’t always come around. Since we run trade deficits with our top 9 trading partners (and with 12 of the top 15), we need to do our part to keep our dollars within our shores. America has been good to us as consumers; return the compliment.