Home Grown?

Global Economic Ties Give New Meaning to ‘Made In’

Is a Cadillac built in China an American car? A BMW built in South Carolina? How about a German Volkswagen with 80 percent American made parts?

For American car buyers, it used to be simple: A Chevy was a Chevy. A Toyota was a Toyota. No more.

“It’s harder than ever before to tell where products are manufactured,” said Trey Denton, Georgia Southern professor of international marketing and advertising. “That’s because we’re sourcing components from all over the world and frequently we’re assembling the products somewhere else.”

Countries have even developed some elaborate rules to determine where their products are made, said Denton. “Some do it by the value of the largest piece, some do it by the greatest value added, and some by where it was assembled. When you see a ‘made in’ label, very frequently only a small part of it was actually made in that particular country.”

The iPad, for example, which counts as being manufactured in China, only has a very small percentage of its value produced in China. “The rest comes from around the world,” Denton added, “and yet, 100 percent of its value counts as coming from China in terms of how we calculate our trade deficit.”

It’s hard to tell where things are manufactured, said Denton, but even imported products, as they are sold in the U.S., contribute to jobs. “Each time they are bought and sold somebody’s making a profit, and that profit goes to supporting jobs.”

Globalization – the intertwining of the world’s economies – is sometimes a politically charged topic, but is also an undeniable fact of life.

Even those who profess to prefer buying home-grown products, often don’t. “There’s a real conflict between intention and behavior,” Denton said. “Who’s against buying American? But when you’re shopping, it’s all about quality versus price. We don’t look. Ask 100 people if they look to see where their clothing is made. They do not look. I do that exercise in all of my classes, and I’ve never had a student tell me they know where their shirt was made.

“The talk of globalization in the U.S. tends to focus on it being somehow still open for debate – as if it’s reversible,” said Denton. “When you do that, you develop an air of victimhood. Isn’t it better to teach students how to recognize global opportunities and seize on them, given that globalization is here to stay? The fact of life is that the U.S. has the world’s largest economy, so why are we so afraid?”

What we wear, from where

About 98 percent of the clothing purchased in the United States is imported from abroad. Only 2 percent of clothing bought in this country is manufactured on U.S. soil.

China is far and away the leader in manufactured clothing, having entire towns dedicated to making specific goods. The city of Datang, for example, makes one-third of all the socks in the world.

The amount of clothing produced in the United States is not insignificant – there are 132 clothing factories here – but India and Pakistan in addition to China have more clothing plants than the United States. Clothing manufacturing is a major source of exports and jobs for many of the world’s smaller, developing nations. Little Sri Lanka is home to 21 factories in a geographic footprint about the size of West Virginia. Malaysia, about the size of New Mexico, has 35 clothing plants.

Some American manufacturers, notably The North Face, Roundhouse Workwear and American Classic Outfitters have enjoyed a resurgence in sales of late due to increased demand for domestic products and an international demand for “Made in the USA” clothing.

Uniquely American… Or is it?

In 1975, nothing could more typify our culture than baseball, hot dogs, apple pie and Chevrolet, or so went the commercial jingle of the day. But just how many of these remain uniquely American?

Baseball:

Baseball is America’s unofficial “national sport,” but is hugely popular in Latin America and Japan. China produces 80 percent of the world’s baseballs, but every baseball pitched in the American Major Leagues is made in Costa Rica in a Rawlings factory. Rawlings is headquartered in St. Louis and is part of the Jarden Corporation of Rye, N.Y.

Hot dogs:

According to recent survey data obtained by the National Hot Dog and Sausage Council,
Americans purchase 350 million pounds of hot dogs at retail stores – that’s 9 billion hot dogs. But the actual number of hot dogs consumed by Americans is probably much larger. It is difficult to calculate the number of hot dogs Americans may eat at sporting events, local picnics and carnivals. The Council estimates Americans consume 20 billion hot dogs a year. That works out to about 70 hot dogs per person. Hot dogs are served in 95 percent of homes in the United States. Fifteen percent of hot dogs are purchased from street vendors and 9 percent are purchased at ballparks, according to statistics from the Heartland Buffalo Company. While the United States consumes the lion’s share of what we know as “hot dogs,” other countries have their own sausage-in-a-bun variations. The world’s largest hot dog was 197 feet and was prepared by Shizuoka Meat Producers in Shizuoka, Japan.

Apple pie:

National Apple Pie Day is May 13. To us, apple pie is an American dessert, but it actually originated in Europe sometime in the 14th century. The first known published apple pie recipe was printed by Geoffrey Chaucer in England. Arriving with the Pilgrims, apple pie quickly became an American dessert staple given the availability of fruit. About 55 million tons of apples were grown worldwide in 2005, with a value of about $10 billion. About two-fifths of the total was produced in China. More than 7.5 percent of the world’s production occurs in the United States, where more than 60 percent of all the apples sold are grown in the state of Washington. Imported apples from New Zealand and other temperate areas are increasingly competing with U.S. production.

Chevrolet:

How “American” is one iconic make? That depends on which model one examines. According to ConsumerGuide Automotive, the Chevy Aveo is built in South Korea with only 1 percent American or Canadian parts. The HHR is built in Mexico using only 36 percent U.S. parts. At the other end of the spectrum, the Chevrolet Impala is made in Canada with 75 percent U.S./Canadian parts and the Express van is made in the U.S. with 80 percent American/Canadian parts.

Like a rock…

Imported parts rolling into the truck market

With perhaps the exception of the Jeep, what could be a more American vehicle than a rock-hard ground-pounding fullsized pickup truck?

Truth is, this year all of Detroit’s full sized pickups contain less than 70 percent domestic parts. The Ford F-150, once with a domestic content as high as 90 percent, is now at 60 percent. The Chevrolet Silverado contains 61 percent American/Canadian parts. Chrysler’s Ram 1500 comes in at 70 percent domestic content.

It should be noted, however, that the domestic content of many U.S. cars varies year by year depending on the reliable supply of quality lower-cost, overseas parts available to U.S. automakers. The Ford Escape, for example, had a 65 percent domestic content in 2009 and 2011. In 2010, however, it was at 90 percent.

Surely any truck hailing from Texas would be an all-American hauler, right? Unless it’s a Toyota Tundra, built in San Antonio with 80 percent domestic content.

China:

Are the economic fears justified?

Made in China. It seems to be everywhere from flat-screen TVs to ball point pens.

But is China really the coming indomitable economic force it’s often portrayed to be?

“China is a huge competitor and has a huge influence on the global economy, but they probably don’t deserve the fear that is ascribed to them,” said University marketing professor Trey Denton. “China is approaching the limits for many of its industries in terms of resources and worker productivity. They’ve got a lot of structural problems that limit their growth. They’ve got a capitalist economy with a communist government and it produces some really weird outcomes.”

A 2011 crash on China’s newly constructed, high-speed rail system resulted in 40 deaths and nearly 200 injuries just months after it began operation. Major earthquakes struck in May 2008 and April 2010 resulting in tens of thousands of deaths in collapsed structures – including schools. These events deepened many Chinese citizens’ skepticism of their nation’s ability to produce reliable, quality products that can stand toe-to-toe with world competitors.

While the flow of goods often seems to be one way, in reality the increasingly affluent in China are buying American – including U.S. automobiles. “They’re built in China,” said Denton, “but they’re U.S. brands. They’re buying Cadillacs and Buicks. GM is making quite a bit of money in China. They also like our hightech products – our computers, our music and our software.

“They have a very hierarchical culture that puts a lot of pressure on them for conspicuous consumption,” said Denton. “The higher you go in their society, the more you’re supposed to demonstrate your level by using expensive products. The pressure is naturally there because of their culture. But there’s also a real bias against things Chinese because of their quality problems. They prefer in many cases to buy foreign brands, and they love U.S. brands for that reason.”