Surprise! Buying American still matters

Sure, many Asian cars are now built in the United States, but the benefits they bring to the U.S. economy don't come close to what our own auto industry provides.

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by Peter Valdes-Dapena, CNNMoney.com senior writer

Quiz: Which car is built in America?
Take a look at these autos, then click on the car you think is built mostly in the U.S. The answers may surprise you.

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NEW YORK (CNNMoney.com) -- Support the U.S. economy. Buy American.

Sounds simple enough. But in a world where a Ford Fusion is built in Mexico, and a Toyota Camry is manufactured at a plant in Kentucky, the lines get blurred.

As American car companies are spreading more of their work overseas, Asian and European automakers are bringing more of their work here. So where is your money really going when you buy a car?

"When it comes to longer term benefits, a lot of activity happens in the country in which the company's world headquarters is domiciled," said Thomas Klier, an economist with the Federal Reserve Bank of Chicago who has written extensively on the auto industry.

Klier says that buying a Ford or General Motors car is still better for the American economy and for American workers, even if the particular vehicle you're buying was built in Mexico, Canada or Korea.

That's because American car companies make more cars and employ more workers in the United States than do automakers based in other countries.

The auto industry has become global enough that the badge on a car's grill no longer tells you where a car was built. (Take the quiz: Which car is more American?)

In one sense, there is a short-term economic benefit to buying an American-made car. The purchase of a Camry, for example, does support an American worker on the assembly line in Kentucky and other workers who build parts for that car.

But the largest chunk of Toyota's design, research and development operations still take place in Japan, Klier pointed out.

On the other hand, most of the profit Ford gets from selling its cars supports its overall operations, which remain centered in the United States, helping the company survive, grow stronger, and develop new products.

Also Ford and GM use more American-made parts in their cars, the Camry vs. Fusion example notwithstanding.

"In the aggregate, U.S. manufacturers still use more U.S. content than Japanese importers," says Martin Zimmerman, a University of Michigan economist and a former executive with Ford Motor Co.

Also, Ford (F, Fortune 500) and General Motors employ more people in the U.S. than Toyota (TM) or Honda (HMC), Nissan or Hyundai do. (Chrysler currently employs slightly fewer people in this country than Toyota, according the automakers' own numbers.)

Still, "import" car manufacturers that build vehicles here are making their own important contributions to the American economy, Klier said, and that shouldn't be overlooked.

Decades ago, Ford (F, Fortune 500), GM and Chrysler were about the only ones building cars in this country. "Now, 13 or 14 companies make vehicles in the U.S. alone," he said, helping to offset some the damage done to traditional domestic automakers through their sharply declining market share.

We're quickly entering a future where a company's headquarters matters less and less, counters Michael Robinet, vice president of vehicle forecasting for industry consultants CSM Automotive.

General Motors and Ford have been working for years to make better use of their overseers design and engineering centers, he points out. American tastes in cars are becoming more similar to those in Europe and Asia and those automakers already design very good vehicles for those markets that haven't yet found their way here. And Chrysler will rely more on its new partner, Fiat, to engineer better small and mid-sized cars.

At the same time, companies like Toyota and Honda are shifting more of their vehicle development work to the U.S.

In the end American consumers will tend to do what they've always done and simply shop for the best car at the best price, regardless of where it's designed or made. Ultimately that may be the best for everyone, pushing American car companies to compete globally by making better cars. To top of page

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