Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 9, 1992 TAG: 9202080021
SECTION: BUSINESS PAGE: C1 EDITION: METRO
SOURCE: STEFAN FATSIS and BART ZIEGLER ASSOCIATED PRESS
DATELINE: NEW YORK LENGTH: Long
`MADE IN AMERICA' MEANS LESS THAN IT ONCE DID
What's an American product?Is it a TV made by U.S.-based Zenith Electronics Corp. at a plant in Mexico? A General Motors Corp. car assembled at a California factory that's half owned by Toyota? A polo shirt made for San Francisco-based The Gap Inc. that's sewn in Honduras from cloth cut in the United States?
To truly buy American, you can't drive a Chevrolet Lumina sedan - it's assembled in Canada - or eat at Burger King - it's owned by a British company - or buy groceries at the A&P because it is German-controlled.
And don't think of munching a Nestle's Crunch bar (Swiss) while watching a Columbia Pictures movie (Japanese) at a Cineplex Odeon theater (Canadian).
Identical products on a store shelf may be imported or domestic depending on when they were ordered. Seemingly American brands often are foreign owned. And foreign brands can be made in the United States.
In fact, many economists, trade experts, manufacturers and business people believe that in a world of international trade and multinational corporations, increasingly there's no such thing as a totally American product.
They also say the question misses the point. What matters today is not whose flag flies over corporate headquarters, but where goods are made, the type of jobs they provide, the benefit to communities and the advantages for consumers.
"Almost any one product weighing more than 10 pounds and costing more than $10 these days is a global composite, combining parts or services from many different nations," said Robert B. Reich, a Harvard political economist.
"Decades ago, `Made in America' meant something," he said. "Today it's more deceptive than helpful."
A frenzy over American-made goods has erupted in the weeks since President Bush's acrimonious trade mission to Japan. With impassioned rhetoric and anti-Japan commentary, the debate reflects a worried nation locked in an election-year recession.
Members of Congress have backed legislation to protect the U.S. auto industry. Business groups have aired "pro-American" ads. Companies have offered incentives to employees to buy American cars. Cities and towns have canceled orders to Japan.
"We're losing our shirts in this country. We're losing our dresses too," begins a television ad by the Crafted With Pride in the U.S.A. Council, a textile industry marketing group.
The ad shows a seemingly endless line of people snaking across a countryside to a city unemployment office, implying 500,000 U.S. textile jobs have been lost to foreign countries in the last decade.
"The worst part is we're doing this to ourselves," the commercial's voice-over says. "Because we're buying so many imports. The time to look out for ourselves is now. Buy American, and we won't have to throw in the towel."
Some of the hysteria has backfired. Town leaders of Greece, N.Y., discovered that a Komatsu Ltd. excavating machine they rejected was made in the United States and a John Deere Co. model they chose instead used an engine from Japan.
In the 10 days after Bush's trip, domestic sales of cars and trucks made by the three big U.S. automakers fell 5 percent. Sales of Japanese cars made in North America rose 22 percent.
So which is more American? A Chrysler Eagle Summit made at Mitsubishi's Diamond-Star Motors plant in Normal, Ill., containing 52 percent U.S. parts, or a Toyota Camry made in Georgetown, Ky., with 74 percent American parts?
And what constitutes an "American" part anyway? The question can be carried to almost ridiculous extremes. Is it where the ore was mined? Where the steel was forged? Where the part was molded?
For all their bellyaching about Japan, the Big Three often fail to note that Ford owns 24 percent of Mazda, GM owns 38 percent of Isuzu and Chrysler owns 11 percent of Mitsubishi Motors. Ford owns Jaguar outright, GM owns Lotus, Chrysler owns Lamborghini.
And the Big Three continue to import parts and raw materials such as steel from Japan, although Chrysler said it would end all steel imports by 1994.
It is not abnormal for an automobile assembled in America to contain parts from the United States, Japan, Korea and Mexico. GM's Chevrolet division - the "Heartbeat of America" - imports most of its Geo line. Ford makes Mercury Tracers in Mexico. Chrysler's Dodge Colts are made in Japan.
In addition to tens of thousands of jobs, foreign automakers have provided revenues that have invigorated towns.
Toyota is paying Georgetown, Ky., more than $1 million annually for 20 years in lieu of taxes. Nissan, whose 4-year-old Smyrna, Tenn., plant employs 4,300 people, paid the town $1.25 million last year - about 20 percent of its budget.
Smyrna also hosts a Canadian-owned Better-Bilt Aluminum Products Co. factory, which employs 700 people, and a French-owned Square D Co. electronics plant with 375 workers. That blue-collar town isn't complaining about foreign investment.
"It's a helluva lot better to buy Nissans that are made in Smyrna, Tennessee, than ones made in Zama, Japan," said Sam Ridley, the town's 72-year-old former mayor, who negotiated the deal with Nissan.
"We're only making them for Americans, that's what I say. Made by Americans, sold to Americans with a Japanese name and product," said Ridley, who is no Japan apologist. He fought in World War II.
Many economists agree that what's important is creating jobs in America - regardless of who creates them - because that improves the economy.
"Location means jobs, which means standard of living," said Howard Rosen, an economist at the Institute for International Economics in Washington. "Standard of living is the ultimate measure of economic success. That's what this is all about."
But foreign plant ownership does have other consequences.
American unions, for one, have lost some power as traditionally non-union Japanese auto companies have opened plants. U.S. automakers have lost market share to the stiffer competition.
Foreign companies also can gain a stranglehold on an industry, such as Japan's near-monopoly in making flat screens for portable computers, said Laura D'Andrea Tyson, a trade expert at the University of California at Berkeley. Companies enjoying such dominance could control supply and price, she said.
And since most Americans don't own stock in foreign companies, they don't earn dividends or other shareholder benefits from foreign-owned plants.
U.S. manufacturing jobs have been disappearing for decades, from 34 percent of the total employment force in 1950 to 17 percent in 1990, federal statistics show. The job losses - including 1 million in the last two years - partly reflect cheaper labor costs overseas.
That's devastated some industries, particularly textile manufacturing. Imports of cotton, wool, synthetic fibers, textiles and apparel have risen 27 percent since 1985, according to the Commerce Department.
"There are social costs that are associated with this that are monumental," Tyson said. She said the nation needs more retraining and other programs for dislocated workers.
Economists say the trend toward multinationalism is only growing. In many respects, companies like International Business Machines Corp., Grand Metropolitan PLC, Siemens AG and Sony Corp. are American, British, German and Japanese in name only.
"They build their products all over the world. They ship across borders," said Bruce L. Townsend, who advises companies on international manufacturing for Coopers & Lybrand, an accounting and consulting firm.
GM and Ford are among the largest carmakers in Europe. IBM makes products in 12 countries, from Argentina to Australia, and has research and development centers in 11 nations.
General Electric Co. builds gas ranges in Mexico and sells U.S.-made refrigerator compressors to Sanyo Electric Co. of Japan. GE last year recorded $2.6 billion in imports and $8.16 billion in exports.
High- and low-tech industries alike involve a cross-border mix of products and workers.
An IBM PS-1 personal computer assembled in Raleigh, N.C. - "Made in U.S.A." - contains a floppy disk drive from IBM's Japanese plants, a monitor from Korea and a mixture of imported and domestic computer chips.
A $400 Richard Warren-label dress sold by Saks Fifth Avenue might be made of Japanese silk with American trim sewn in Hong Kong and shipped back to New York for distribution.
"If you find it's impossible to make it here you have to do what you have to do to stay in business," said Robert Bronstein, president of Richard Warren Inc. To control quality, he prefers U.S. materials and sewers, but often can't afford domestic supplies or labor.
Rather than simply who owns plants, economists also look at the "value added" that trickles down to the finished product. In other words, what percentage of a product's manufacture benefits American raw material processors, suppliers, subcontractors and vendors?
Many economic planners say the challenge for government and business into the 21st century is to replace low-skilled jobs with higher-skilled, higher-paying ones - "knowledge workers" such as engineers, researchers and technicians.
"Assembly jobs in a free world-trade environment are going to go where it's most cost effective for them to go," said Jerry Pearlman, chairman of Zenith Electronics Corp. But, he said, "There's a whole food chain in intellectual property and that's very important."
While Zenith's low-skilled TV assembly jobs are moving to Mexico, its U.S. employees are developing high-definition TV along with scientists at American Telephone & Telegraph Co. Pearlman said the computer chips to power these next-generation televisions would come primarily from U.S. makers.
Many foreign companies that make TVs in this country have extensive research labs here as well. NV Philips, the Dutch electronics giant that makes Magnavox and Sylvania brands, said computer chips for its HDTV proposal also would be American.
"Which is better," Harvard's Reich asked, "a product involving 100 workers, 80 of whom are in Singapore making $100 a month and 20 of whom are in Tennessee making $500 a week? Or a product in which 80 jobs are in the United States states paying minumum wages and 20 in Japan involving high-tech research and development paying very good wages?
"If you're only looking at jobs, maybe you choose the latter," he said. "But if you're looking at the future and take the broad view of the American economy, you opt for the former."