Fair's fair, even for foreign car manufacturers - The American Automobile Labeling Act - Fair Comment

0 Comments | Insight on the News, Oct 17, 1994 | by Eric Peters

Buy American" used to be the easy-to-understand slogan of the jingoistically correct. That was in the good old days, when an American car was an American car, and "furrin" cars were foreign. If it said Ford on the fender, it came from Dearborn. Of course, in those days, Nissan was still called Datsun and General Motors still fancied fake wood trim.

Today, you can't be sure where the car you're looking at really comes from - no matter whose brand name adorns its flanks.

The Ford Windstar and Crown Victoria, for example, are built entirely in Canada - as are all of GM's Camaros and Firebirds. The Chrysler Grand Cherokee, Intrepid and Voyager minivan also come from the Great White North - yet all are considered domestic products under a crazy new law called the American Automobile Labeling Act.

Passed by Congress in 1992 with the always helpful stewardship of Maryland's Little Giant, Democratic Sen. Barbara Mikulski, but effective beginning this October, the AALA requires that all new cars sold in this country display a parts-content label that provides consumers with information regarding the car's origin and the origin of the components used to build it. The idea implicit in the AALA seems to be to heighten buyers' awareness of "non-American" (read Asian) vehicles, thereby heightening the patriotic pressure to "Buy American."

Whether you agree or disagree with the idea behind the AALA, the way it will actually work on the showroom floor should offend your sense of fairness and honesty. The law is structured to give foreign manufacturers virtually no credit for the cars they build right here in the good old U.S.A. - while overstating the American-built content of Big Three products.

Consider the first line on the forthcoming label that you'll soon see on new car windows: "U.S./Canadian parts content." This verbiage allows Ford, GM and Chrysler to count the vehicles they assemble in Canada - a foreign country - as "domestic," while a Honda built in Ohio is labeled to look imported. How is that done? Simple. You just average the total production figures of a particular model, combining cars built in the United States with those built, say, in Japan. Thus, if half of this year's run of Accords are built in Ohio and the rest in Japan, the crafty label says the "domestic content" of the Accord you're looking at is only 50 percent - even if the car was built entirely on U.S. soil.

The AALA also excludes the value of final assembly work on cars and components performed in this country by foreign manufacturers. If Nissan makes a part for the 300ZX in Tennessee, the value of that part cannot be counted toward the domestic content of the completed car - yet parts made in America or Canada by the Big Three do count toward the domestic value of their finished cars.

Even worse, if the part involved comes from a wholly owned subsidiary of a Big Three manufacturer - for example, AC-Delco in the case of GM - that manufacturer can claim full credit for the amount of U.S.-Canadian content while the exact same part, if sold to a Japanese manufacturer (which is commonplace in the industry), receives no credit for "domestic" content unless the part has more than 70 percent U.S.-Canadian content. This artful contortion is called "roll-up, roll down," and it unfairly denies foreign manufacturers credit for the hundreds of millions of dollars of American- and Canadian-built parts they buy every year for installation in the vehicles they sell in this country.

If you find all of this confusing, just try to decipher the actual labels the next time you shop for a new car. I have no objection to informing buyers about the origin of a car or its parts. But fair is fair, and the foreign manufacturers who've invested vast sums in this country and employ thousands of American workers should be given credit for what they've done - just like the Big Three.