"The stupidity of buy American"

[veremchuka]

Is a column by John Stossel in today's newspaper. I always laugh at those who insist on "buy American" or that they have an "American car or truck" because they have a Chevy or Ford etc. My Honda is no less American than their car. There is no such thing as an "American" car or truck anymore, a fair percentage of parts in that "American" car/truck are from various countries.

I also thought his fair trade goods observation makes a lot of sense. YYMV.

The stupidity of 'buy American' | New Hampshire OPINION02

 

[rescueme]

One thing you forget is that the profit on the car (regardless of where the parts are sourced or where it is built) goes back to the "home country".

If you wish to support a company based in a foreign country, so be it.

I won't get into an argument on what is/isn't "foreign" but just to point out a fact (as a person who retired after almost three decades from a company that was initially U.S. owned, but over time was acquired by two different foreign companies in time, located in different countries).

Profits went to HQ, wherever it was located - not a U.S. company in my later years there....

BTW, this applies to new "units" only - not used...

 

[justplainbll]

One thing you forget is that the profit on the car (regardless of where the parts are sourced or where it is built) goes back to the "home country".

If you wish to support a company based in a foreign country, so be it.

I won't get into an argument on what is/isn't "foreign" but just to point out a fact (as a person who retired after almost three decades from a company that was initially U.S. owned, but over time was acquired by two different foreign companies in time, located in different countries).

Profits went to HQ, wherever it was located - not a U.S. company in my later years there....

BTW, this applies to new "units" only - not used...

Hopefully a meaningful percentage of the expenses go to employee compensation and profits go largely to the stockholders.

 

[Bestwifeever]

Isn't that why many folks have an international chunk in their portfolio, so those profits come back to them?

 

[rescueme]

Hopefully the a meaningful percentage of the expenses go to employee compensation and profits go largely to the stockholders.

In my case, as soon as the "foreign owners" came into power, local employee benefits went down the tubes.

I can't speak for others, but for us (as a foreign subsidiary) rather than part of a known U.S. company (I won't mention the name, but I'm sure everybody has seen the main product on the highways), our benefits (including profit sharing) were reduced radically.

What could be taken from the employee and given to the stockholders was a radical change, slashing such items such as profit sharing by more than 90%.

The employees contributed to the profits, but were awarded very little - unlike when the company was owned within this country, when the employees were given monetary recognition of their efforts (which also were reflected in the folks that held our stock, at the time).

 

[FUEGO]

I have to strongly agree with John Stossel's take on the situation. With global sourcing of parts, components, etc, what does it even mean to buy American?

And why would I want to support the job of someone I don't know in say Hawaii which is almost 5000 miles away instead of someone working in a Caribbean island nation or Latin American country around 1000-1500 miles away (closer than the Western mainland US in fact)?

If anything, the folks in impoverished nations need the revenue from my purchases more than relatively rich folks in Hawaii or mainland US. Add to that the fact that my wife and her family has roots in an impoverished developing nation (as many families with recent immigrant pasts have). The folks overseas subsistence farming and eking out an existence could definitely use a buck more than some guy in Iowa or Idaho.

I think he is spot on about the "certified fair trade" goods too. Take coffee for example. I can't remember the number, but I think it is something like 10 cents per pound of fair trade coffee actually gets to the farmer. But the mark up on fair trade coffee in stores is typically 3000-4000% of this 10 cents. Poor people in developing nations would be far better off if I as a consumer strive to buy the highest value coffee for my dollar, and then take the savings and donate some portion to charity that benefits poor people in developing nations. Strangely enough I have just done this, when I happened to hear a compelling presentation at a trade event from a guy that does charity work in developing nations with low overhead costs - I gave the guy $40 on the spot after the presentation. Probably what I would have spent had I bought fair trade coffee for the year. The difference is that around $40 is going to help poor people in developing nations instead of a buck or two.

In general, I try to keep my purchasing decisions as purchasing decisions (ie most value for money) and my philanthropy as philanthropy (giving to those who are most in need). Start mixing the two and you get wasteful inefficiencies. Just my $0.02 (or $0.10).

 

[FUEGO]

Isn't that why many folks have an international chunk in their portfolio, so those profits come back to them?

Absolutely! I recall looking at a summary of where all my assets are invested, and some of the companies that I have the highest stake in were Japanese auto companies (through the . So when I bought my Japanese auto, the profit was coming right back to me, right here in America! Take a look at VEA, the vanguard developed markets international fund. Top 10 holdings? Toyota!

And many US employees work for foreign companies and do very well for themselves. My DW for example. Thank goodness for her job and career, because her employer is treating her much more nicely than my current or past employer did in terms of benefits and compensation.

 

[FinanceDude]

One thing you forget is that the profit on the car (regardless of where the parts are sourced or where it is built) goes back to the "home country".

If you wish to support a company based in a foreign country, so be it.

I won't get into an argument on what is/isn't "foreign" but just to point out a fact (as a person who retired after almost three decades from a company that was initially U.S. owned, but over time was acquired by two different foreign companies in time, located in different countries).

Profits went to HQ, wherever it was located - not a U.S. company in my later years there....

BTW, this applies to new "units" only - not used...

As soon as the domestic manufacturers make a car that lasts as long as my Honda I will consider it. 1 and 2 year JD Power numbers don't cut it with me. When Ford and GM and Chrysler can show me 10 year numbers as good as Honda and Toyota, I'll think about it. IMHO, all cars like the Fusion and Malibu show me is that GM could have made these cars 15 years ago but thought their buyers would stupid and would continue to buy cars that were poorly made........

This is not the only example where "buy American" didn;t work but it the easiest to recall........

 

[Gatordoc50]

Is a column by John Stossel in today's newspaper. I always laugh at those who insist on "buy American" or that they have an "American car or truck" because they have a Chevy or Ford etc. My Honda is no less American than their car. There is no such thing as an "American" car or truck anymore, a fair percentage of parts in that "American" car/truck are from various countries.

I also thought his fair trade goods observation makes a lot of sense. YYMV.

The stupidity of 'buy American' | New Hampshire OPINION02

Interesting logic. I wonder if this means our government should be purchasing cheaper products abroad instead of more expensive American made products, investing for new technologies in foreign lands to save on labor costs and hiring of foreign contractors for infrastructure improvements.

 

[travelover]

Interesting logic. I wonder if this means our government should be purchasing cheaper products abroad instead of more expensive American made products, investing for new technologies in foreign lands to save on labor costs and hiring of foreign contractors for infrastructure improvements.

Absolutely. The logical extension is that we could swap demanding US citizens to Third World countries in exchange for harder working, less demanding people. Sort of the ultimate outsourcing.

 

[FUEGO]

Interesting logic. I wonder if this means our government should be purchasing cheaper products abroad instead of more expensive American made products, investing for new technologies in foreign lands to save on labor costs and hiring of foreign contractors for infrastructure improvements.

I had to giggle a little at this. When I go to the infrastructure construction sites, I see a fair amount of the bolded section occurring fairly often. I mean what right minded American would work long dangerous hours in extreme temperatures for $12/hr and minimal or zero benefits? When the alternative is playing xbox and living at home with their parents and/or collecting a govt dole check? I was shocked when our contractor said they start working at 5:30 some days, other days 6. As in AM?!?!?! In the morning?!?!

And a different contractor doing some highly technical highly skilled work - native born Americans are in the minority - most of the tech geniuses are speaking English with a Russian, Indian or W African accent. Fortune 100 sized company (US based).

 

[Nords]

One thing you forget is that the profit on the car (regardless of where the parts are sourced or where it is built) goes back to the "home country".

Well, thank goodness the American multi-national corporations promptly repatriate all their profits and expeditiously pay taxes on them!

And why would I want to support the job of someone I don't know in say Hawaii which is almost 5000 miles away instead of someone working in a Caribbean island nation or Latin American country around 1000-1500 miles away (closer than the Western mainland US in fact)?

I'll try not to take that personally, but I'd like to think that you'd support the job of the person who gives you the best quality or value for your dollar. Sometimes that means paying for "Made in Hawaii" or wherever it comes from.

Local clothing company Hilo Hattie recently went through a bankruptcy. The major issue was outsourcing production to China, where the clothing could be made really really cheap. Unfortunately the quality went down, too, and the local Hawaii execs couldn't get the Chinese subcontractor to fix their problems. They also couldn't change their production & shipping quickly enough to capitalize on local trends or fads. By the time Hilo Hattie returned production to local companies (or faster companies) it was too late.

 

[JPatrick]

Local clothing company Hilo Hattie recently went through a bankruptcy. The major issue was outsourcing production to China, where the clothing could be made really really cheap. Unfortunately the quality went down, too, and the local Hawaii execs couldn't get the Chinese subcontractor to fix their problems. They also couldn't change their production & shipping quickly enough to capitalize on local trends or fads. By the time Hilo Hattie returned production to local companies (or faster companies) it was too late.

Getting it "right" is part of the China drill. It ain't easy, and many don't succeed, as apparently Hattie discovered..
Not to worry, when production shifts to Vietnam and places we've never heard of, she can give it another go.

 

[Midpack]

Well, thank goodness the American multi-national corporations promptly repatriate all their profits and expeditiously pay taxes on them!

I was wondering when someone would point that out. Not only do foreign owned companies profits from US sales & services go elsewhere, but a lot of "American company" profits on their foreign products & services are held offshore and subsequently Corp taxes, all perfectly legal under US Corp tax laws.

Local clothing company Hilo Hattie recently went through a bankruptcy. The major issue was outsourcing production to China, where the clothing could be made really really cheap. Unfortunately the quality went down, too, and the local Hawaii execs couldn't get the Chinese subcontractor to fix their problems. They also couldn't change their production & shipping quickly enough to capitalize on local trends or fads. By the time Hilo Hattie returned production to local companies (or faster companies) it was too late.

Don't doubt your story in the least. But remember a few decades back when everyone said exactly the same about Japan, before they decimated our auto industry, essentially killed off all US consumer electronics manufacturers, etc...

 

[FUEGO]

I'll try not to take that personally, but I'd like to think that you'd support the job of the person who gives you the best quality or value for your dollar. Sometimes that means paying for "Made in Hawaii" or wherever it comes from.

Local clothing company Hilo Hattie recently went through a bankruptcy. The major issue was outsourcing production to China, where the clothing could be made really really cheap. Unfortunately the quality went down, too, and the local Hawaii execs couldn't get the Chinese subcontractor to fix their problems. They also couldn't change their production & shipping quickly enough to capitalize on local trends or fads. By the time Hilo Hattie returned production to local companies (or faster companies) it was too late.

He he, I knew I could count on the Hawaii posters to bring that up! No, I definitely prefer the best value, regardless of the country of origin. Nothing against Hawaiians at all.

I don't know the details of the Hilo Hattie case, but plenty of clothing lines produce overseas and succeed in the US market. In fact, it is the rare exception today to find mass produced clothing made in the USA. An old high school friend runs a local jeans company with production here in town (though even here you probably won't hear a lot of English spoken on the work floor). Of course he's selling a pair for $250. I think I'll go to walmart and get 10 pairs of slightly crappier (made in China) jeans for that price! However I believe he still sources his denim from Japan, since that is the de rigueur denim for high price jeans.

One interesting outsourcing story I have seen lately is at DW's company. They outsourced some IT work from high cost NY and NJ to a big tech city in India. A few years later they are rethinking that decision and insourcing it to a middle America destination that has lower cost of living (vs NY and NJ). The Indian labor market was more competitive than the US market and constant pay raises, night shift differential pay, language/culture barriers, work quality issues, etc quickly made the business case to bring operations back stateside. Stagnant stateside wages and weak dollars will do that!

 

[clifp]

Absolutely. The logical extension is that we could swap demanding US citizens to Third World countries in exchange for harder working, less demanding people. Sort of the ultimate outsourcing.

I think this an excellent opportunity to employ some of those unemployed Wall St types to figure out some creative way of selling whining US citizens for hard working immigrants. In general the Wall St types did a excellent job of selling dodge debt, and toxic mortgages, I see no reason they couldn't bundle up groups of US citizen, slap some labels and get AAA prices for them. Being Americans from places like Lake Wobegon of course they'd all be well above average in IQ, hotness/hunkness etc.

 

[JPatrick]

I think this an excellent opportunity to employ some of those unemployed Wall St types to figure out some creative way of selling whining US citizens for hard working immigrants. In general the Wall St types did a excellent job of selling dodge debt, and toxic mortgages, I see no reason they couldn't bundle up groups of US citizen, slap some labels and get AAA prices for them. Being Americans from places like Lake Wobegon of course they'd all be well above average in IQ, hotness/hunkness etc.

Thanks for the tip.
I just never thought of Lake Wobegon as a Center for hotness.

 

[Ed_The_Gypsy]

I buy used vehicles. I pay a local mechanic to keep them running.

Other stuff? We like to buy locally when we can. Of course, we buy some stuff on the internet.

We try to focus on rewarding good service with our trade. For example, certain airlines, etc.

 

[ziggy29]

I'm more interested in keeping ordinary Americans employed than in fattening the coffers of multinational corporations, their shareholders around the world and their executives.

Whether that means buying a Ford or a Hyundai -- where the corporate HQ is located -- is less important to me.

 

[Beryl]

I'm more interested in keeping ordinary Americans employed than in fattening the coffers of multinational corporations, their shareholders around the world and their executives.

Whether that means buying a Ford or a Hyundai -- where the corporate HQ is located -- is less important to me.

This. I prefer to see the 'Made in the USA' label. I'm also old enough to remember and get goose bumps over 'look for the Union label'.

 

[Gumby]

I try to buy "Made in USA" whenever I can.

 

[Nords]

Don't doubt your story in the least. But remember a few decades back when everyone said exactly the same about Japan, before they decimated our auto industry, essentially killed off all US consumer electronics manufacturers, etc...

I'm trying hard to detect the analogy between recent outsourcing to China and the Japanese quality initiatives of the 1980s. You might have to fill in the blanks on that one for us readers.

I think Apple said it best-- "Assembled in China from an American design"...

 

[Midpack]

I'm trying hard to detect the analogy between recent outsourcing to China and the Japanese quality initiatives of the 1980s. You might have to fill in the blanks on that one for us readers.

Believe me, I like to buy American like everyone else. Americans buy foreign goods because the price and quality is compelling, not to spite other Americans.

Whether outsourcing is voluntary (your China example) or involuntary (my Japan examples), it's because the price is attractive and the quality and operability is perceived as acceptable or better. What prevented either type of outsourcing to Japan before the 80's was their poor quality. They steadily improved their quality such that arguably the cars and consumer electronics they manufactured became equivalent and then superior to domestic products.

I may be mistaken, but it seems the quality of goods from China have improved in general, though not world class yet. Assuming they won't continue to improve quality just like Japan did and become even more compelling isn't out of the question.

Having said that, there are factors that will make US goods more competitive and indeed many industries have increased their foreign sales dramatically (check out bourbon, who knew). We will have to compete globally, relying on other countries to have inferior quality may not pan out.

 

[justplainbll]

If history repeats itself, perhaps Aesop’s fable of the aunt and grasshopper and the fable relating to the Swiss drilling a hole in wire that America had proudly drawn so fine will refocus American priorities, work ethic (¿and arrogance?)?

 

[justplainbll]

Would be nice if the LL Beans and such would try opening 'Made In USA' sections. Even if they had lower margins on such a section it still might be worth their while as a marketing / advertising strategy.