An American-made Auto Industry Deserves Our Support
Memorial Day has come and gone. It’s officially summer: The most American of seasons.
That means baseball games, barbecues, and cruising your local drag in an American-made automobile.
Okay, okay, it’s been a long time since the days of American Graffiti, when nearly every car model you saw on your drive around town was made by Ford, Chrysler, or General Motors. The auto industry of 2017? It’s a global one with an international supply chain, which means every car on the road has a significant amount of material in it that wasn’t made in the USA.
Still, even if it’s a matter of degree, I’m proud to drive American. At home I’ve got a Chevrolet Volt (made in Michigan), the most recent model of which came in at №. 30 on the Made in America Auto Index. Produced by the Kogod School of Business at American University, this annual index looks at where the main components of an auto are assembled or manufactured; where the R&D that went into each model takes place; and where its parent company’s headquarters are located to determine which model is truly the most American-made.
The top of the 2017 list is dominated by the Big Three domestic auto companies — Ford, General Motors, and Fiat/Chrysler — who took 19 of the first 25 spots.
That’s good news for them, and for the rest of the U.S. economy. Domestic auto production means more jobs, more tax revenue, and a healthy industrial ecosystem, wherein more local businesses are likely to crop up, think of new business ideas, sell more products … and, yep, create more jobs. It’s an example of a virtuous cycle in action, and it’s why the Obama administration made the right decision in extending a credit lifeline to Detroit in 2009: the American auto sector is worthy of investment and of our support.
So three cheers for the domestic firms. Now how do we get more of them into the top of the Kogod rankings?
Well, we can (and should) show our support with our wallets. We’re all consumers with finite resources, but if your next auto purchase comes down to six in one hand or half a dozen in the other, consider choosing the American option.
But there are also policy answers to that question, which we should expect the Trump administration (and its vociferous “America first” posturing) to provide. After all, President Trump was quick to take credit for news of recent auto plant expansions — despite a lack of involvement — early in his transition. Now that he’s in office, why shouldn’t the president make good on his American-made rhetoric?
Mr. Trump and his appointees have a real chance to do that as they chart a course on trade policy. For instance, as it revisits bilateral trade agreements and seeks out new ones, the White House should insist upon rules discouraging currency manipulation, a beggar-thy-neighbor monetary policy that distorts trade flows and has indirectly led to millions of displaced American workers over the years.
It should do it again specifically when it meets with its Mexican and Canadian counterparts for a renegotiation of NAFTA. That’s an opportunity to fine tune and strengthen trade enforcement mechanisms, and it shouldn’t be wasted.
Ultimately, what will determine the future of the American auto industry in a world full of enthusiastic rivals will be its ingenuity; its ability to deliver a great, innovative product to the market at a reasonable cost. And domestic automakers’ placing in the latest Kogod rankings suggest the industry is in good health: strong at home and ready to take on all challengers.
But trade policy in support of U.S. manufacturers has a role to play in that success, too. Washington should make sure it’s put to use, and I hope to see it reflected in the next Made in America Auto Index.