Is it possible for an American car to be more American than the Jeep Patriot? Jo

Question

Is it possible for an American car to be more American than the Jeep Patriot? Joseph B. White writes that no other vehicle “says American more proudly than Jeep, the rugged brand that helped America win World War II.” However, according to White, there could be a more American sport utility vehicle (SUV) than the Jeep Patriot: the Toyota Sequoia, which is 80 percent “domestic” according to the National Highway Traffic Safety Administration (NHTSA). In contrast, the Jeep Patriot is only 66 percent domestic. So what defines an “American” car, or, what defines an “American” car company? The car industry transcends national boundaries. When one considers the “domestic content” as defined by NHTSA, cars or trucks sold by “Detroit” automakers, such as Chrysler, Ford, or General Motors (GM), could be less American than cars or trucks sold by “Japanese” companies, such as Toyota, Honda, or Nissan, despite that they all own and operate major components and assembly plants in the United States. According to Thomas H. Klier, an economist with the Federal Reserve Bank of Chicago, and James M. Rubenstein, a Miami University professor, the distinction between “American” and “foreign” vehicles is not so clear: Some models produced by the American-owned “Detroit Three” carmakers have a smaller share of domestic parts than models produced by foreign-owned carmakers. In 2006, approximately 25 percent of parts used in vehicles assembled in the United States were imported, and an equal percentage were produced by U.S.-based operations of foreign parts makers. Klier and Rubenstein add, “Against a background of global supply chains, it has become quite difficult to identify and label products such as autos by nationality.”

Q U E S T I O N S:

1) How would you decide what defines an American car and an American car company?

2) What is the impact of global operations and supply chain management on the “nationality” of goods and services?

Explanation / Answer

Answer: (1) The best criteria to define an American car and American Car company is by using a combination of percentage of indigenously produced parts used in manufacturing and the conformance of the features of the product with the American culture. No one dimension can reveal the actual definition.

(2) The impact of the global operations and supply chain management on the nationality of the goods and services is that it has become very difficult to determine the nationality or the origin of the products. The products produced are made up from the different components which are sourced from different countries in the supply chain. Hence no product is completely made from components of any one nationality hence it is very difficult to establish the nationality of the products.

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