Is there a 100% American Made Car?

Welcome! This is my first installment to this blog. As the comments in the introductory section of this blog state, my name is Dan Kulkarni. I have lived and worked in the metro Detroit area for the last 17 years. I am a degreed Mechanical Engineer with experience in design, product launch, sales and project management. I have worked for tier 1 automotive suppliers and the OEM's. I have started this blog to share my views and opinions on developments the U.S. automotive industry. Your feedback is always appreciated.

This first blog is on the subject of "is there a 100% American made car?". I decided to review this subject due to an incident that happened to me recently. I had pulled in to get gas at my local Meijer supermarket, when an older gentlemen at the next pump asked how I liked my car. I was driving my five year old Toyota Camry SE at the time. I told him that I liked my car and it performed just fine. He then proceeded to tell me that driving my "foreign" made vehicle was costing people in Detroit jobs. Now, being currently unemployed myself, I don't need to be lectured by anyone on the issues plaguing the auto industry and Detroit in particular. So I decided to look into this issue in greater detail.

As many of you are probably aware, in order to remain competitive automotive OEM's and their suppliers have been cutting costs. This relentless pressure to squeeze every last penny out of each part and out of every vehicle, without compromising quality, safety or comfort, has already driven many suppliers bankrupt. The surviving suppliers have sourced the manufacturing of their parts globally in order to remain competitive. The passage of the North American Free Trade Agreement (NAFTA), by the Clinton administration, has also eased the barriers to free trade in North America.

In order to chase the cheapest labor costs, automotive suppliers and the OEMs have sourced parts manufacturing and vehicle assembly overseas. In North America, this has meant that the supply base and the OEMs have established manufacturing plants in Mexico and Canada to build vehicles for the U.S. market.

I did a very rough survey to check this out. I looked at the U.S. versus foreign content on three vehicles. These are the Toyota Camry LS, the Ford Fusion SE and the Chevy Malibu LS. These vehicles are all comparable in pricing and features and are 2009 model year vehicles. I choose the Toyota Camry LE as that is the most popular vehicle in terms of sales in the U.S. at this time. I visited three dealerships in the Canton and Westland area in Detroit and found the following information:
(a.) Toyota Camry - Manufactured in the U.S. at Georgetown (KY) and Lafayette (IN). The car is built with 75% U.S. made parts and 25% Japanese made parts.
(b.) Ford Fusion - Manufactured in Hermsillo, Mexico. The vehicle is made with 55% U.S. made parts and 40% Mexican made parts.
(c.) Chevy Malibu - Manufactured in Kansas City, KS. The vehicle has 80% U.S. content.

As you can see, the U.S. versus foreign content varies on each vehicle. Of the three OEM's, the Chevy Malibu came closest to being 100% U.S. made. Toyota, even though a Japanese OEM, assembles its vehicles in the US and has higher domestic content that the comparable vehicle from Ford. Tier 1 suppliers are also themselves multi-nationals who will supply an OEM in one country and manufacture the parts in another country.

In my view there is no such thing as a 100% U.S. made vehicle. The decision on how and where to build a vehicle is an operations management decision that will be driven by cost competitiveness and logistics amongst many other factors. The globalization of the automotive industry has made it more cost effective to base manufacturing and assembly operations overseas rather than within the U.S. Prior to the current recession this had been credited with creating jobs and expanding trade. This means that we need to revise our views of what constitutes a U.S. made vehicle.