In Henry Ford’s day, consumers knew exactly where their cars came from. Ford made everything under one roof, processing steel and splitting lumber for wheel spokes at the massive River Rouge plant in Dearborn, Michigan. But that level of manufacturing purity hasn’t been the case for a long time.
Now, break down a single “American-made” transmission and you’ll find many smaller parts, each stamped with its own country of origin.” You may well find 80 percent of the parts inside that transmission didn’t come from the US,” said Frank DuBois, associate professor of international business. “You start disaggregating vehicles, and you’ve got thousands of primary and secondary suppliers that have some hand in creating those parts.”
For the consumer who simply wants to know, “Was this car made in America or not?” a clear answer is almost impossible. In 2013, when Toyota is newly sponsoring NASCAR, Chrysler has a plant in Canada, and BMW employs thousands of South Carolinians, what does it mean to be American-made?
An expert on global supply chains and a car buff, DuBois saw that this fundamental shift in manufacturing had not been reflected accurately in existing measurements. He turned his attention to the American Automotive Labeling Act (AALA), which purports to inform consumers about the “American-ness” of the vehicles they buy.
Since 1994, the regulation has stipulated that vehicles must carry labels stating what percentage of their parts came from the US or Canada, and which countries contributed at least 15 percent of the content. Also listed are the country of assembly and where the engine and transmission were made.
But the AALA data are critically flawed and easily manipulated, according to DuBois. He has created a new index that he believes more accurately reflects vehicles’ country of origin, including several factors not addressed by the AALA. For consumers who insist on buying American, DuBois’s index enables them to make a more informed decision. Compared to the AALA index, he said, it “gives consumers more knowledge, and knowledge is power.”
DuBois argues that his index provides a more accurate assessment of a vehicle’s true country of origin: “All that automakers are required to do is abide by the terms of the AALA, and I would argue the AALA is a flawed measure.”
Made in America?
In smaller industries—apparel, furniture, foodstuffs—the country classification is often simple. But with automobiles, it’s a very different story.
DuBois first learned about country-of-origin issues in the early 1970s, as a Volkswagen mechanic in Virginia Beach. The shop did a brisk business replacing mufflers; the parts came from Germany and popped easily onto the cars. But when the shop began sourcing mufflers from Brazil, it took a lot more work to wrestle them onto the VWs. That’s when DuBois became aware of the increasing globalization of manufacturing.
To DuBois, American-made is not a term that can be applied wholesale; instead, it reflects a percentage of content. While purists may shudder at the globalized economy, pure American-ness is no longer realistic, he said. “We’re not at the point where everything can be American-made anymore.”
The impetus for DuBois’s research was a conversation with an alumnus, Rob Engel, BS ’82/MA ’04, who serves at the American Automotive Policy Council (AAPC).
Using data from the AALA, automakers’ annual reports, and Form 10-K filings to the US Securities and Exchange Commission, DuBois’s index ranks 253 models based on
Each category is scored higher for US-based parts and operations. For example, a car gets a 6 if its R&D is domestic, a 3 if R&D is foreign but the car is assembled in the US, and a 1 if R&D is foreign and the vehicle is imported. Scores are summed for a possible total of 100.
According to his analysis, a GM, Ford, or Chrysler vehicle designed and sourced in the US but assembled outside the US scores higher than a vehicle assembled in the US using a foreign engine and transmission by a foreign automaker.
He anticipates the index will draw criticism from manufacturers. His response? “Show me something better.”
Born in the USA
Even the most homegrown manufacturers are now global corporations. DuBois noted that of Ford’s 56 research centers, 45 are in the United States—which means 11 are elsewhere. On the other hand, four out of every 10 Ford workers are based in the US, while Toyota has just one out of 10.
BMW operates one of the largest manufacturing plants in the US: about 7,000 workers staff its Greer, South Carolina, plant. Yet most of the content used to assemble the BMWs comes from overseas, and about 70 percent of the cars go back there, according to DuBois.
Given these complexities, what makes a car American-made depends on whom you ask. In Cars.com’s 2012 American-Made Index, the top-ranking vehicle isn’t a Ford, Chevy, or GM—it’s the Toyota Camry, made in Kentucky with an American engine and transmission.
In DuBois’s 2013 index, by contrast, the Camry is in a six-way tie for 12th, with a score of 78.5. According to his analysis, the most American car is a three-way tie between the GM Acadia, Enclave, and Traverse, all with a score of 88.5. Although non-US vehicles may rank higher in terms of the country of origin of parts and components, the fact that GM does most of its research and development in the US, and is headquartered there, moves it to the top of his ranking. DuBois argues that an index of this sort must account for the country of origin of the manufacturer and the location of R&D operations. Some Japanese models do rank higher than domestic models, but only 17 of the top 65 vehicles on his index are from foreign manufacturers.
However, none of the Big Three gets a perfect 100 on DuBois’s index. When scores are averaged, GM is in the high 70s, followed by Chrysler and Ford. Still, their averages are significantly higher than Honda, Toyota, and other foreign manufacturers.
The data also vary depending on whether you are looking for a sedan, a pickup, or a minivan. The sedan shopper who insists on buying American may be surprised to learn that the Ford Fusion and Chrysler 300 rank lower on DuBois’s index than several Japanese models. Pickups, on the other hand, consistently rank as full-blooded—well, mostly—American. And if you’re in the market for a minivan, the highest-ranking models are from Honda and Toyota.
Totaled Beyond Repair?
In theory, that is what the AALA was supposed to address when it was created almost two decades ago. But its numbers were tangled from the start.
For one thing, AALA reports do not distinguish between US and Canadian parts. As DuBois pointed out, Windsor, Ontario, is just five miles from Detroit across the US-Canada border. That proximity, combined with an exchange rate advantage, once prompted many domestic manufacturers to set up plants in Canada.
But that’s just one problem with the numbers. DuBois sees many more, starting with the fact that automakers report their own data—there are no auditors, no third-party verification. That means manufacturers can massage their reports in any number of ways.
For example, automakers submit one report for each model—say, the Honda Civic—without accounting for differences among the Civic Coupe, Civic Sedan, Civic Si Sedan, and so on.
The most dramatic opportunity to fudge the numbers lies in the part of the legislation that says if manufacturers have at least 70 percent domestic content, they can round up to 100 percent. That means engineers can assemble a car with almost one-third of its parts from another country and tout it as fully American-made.
DuBois’s index addresses those weaknesses by broadening the factors used to determine country of origin. Beyond physical parts, other factors—such as research and development, corporate overhead, and assembly—often represent money flowing to the country where the automaker is headquartered.
“They want to be a global enterprise with a strong local presence, but where the rubber meets the road, where do the profits go? The profits go, more often than not, back to the home country of the manufacturer,” DuBois said.
An accurate assessment is crucial because auto manufacturing remains a critical sector of the US economy, in both job creation and the economic multiplier effect. An estimated 14 million new cars and trucks were sold in the US last year, each costing an average of $30,303, according to Forbes.
Accuracy also matters because post-recession consumers pay more attention to where cars come from. And automakers are responding with investments in “Made in America” advertising. But, as with most advertising, the devil is in the details. DuBois pointed to Volkswagen, which heavily promoted its new plant in Chattanooga, Tennessee, even building a $40 million visitor center, according to Motor Authority. Yet only one of VW’s 21 models, the Passat, is assembled in the US, compared with 29 of 34 GM models.
While American and foreign automakers play up “Made in America,” that may not be the best strategy for companies targeting consumers overseas. While DuBois’s work speaks to consumers who want American-made products, the research of Assistant Professor Cristel Russell touches the other end of the coin: international consumers whose anti-American views lead them to spurn products with strong American branding.
Russell’s work has serious implications for how companies should promote products in international markets. Those exports, by the way, totaled $2.1 trillion in 2011, according to the US State Department.
Russell found that for individuals with a negative attitude toward the US, the more strongly they associate a brand with America, the more deeply they will be prejudiced against those products.
The catch? Most people’s views are not black-and-white.
According to Russell, numerous factors influence attitudes about distant nations. Historical relationships and media coverage play a role. The biggies—war, the economy, environmental crises—all shape the way we view other nations. At the micro level, someone who has visited America will likely have a different impression than someone with only secondhand knowledge.
Some brands have the power to rise above politics. Levi’s jeans, for example, are widely viewed as authentically American, Russell said: “For those brands, being positioned in America has worked in their favor because they are able to capitalize on good associations.”
Companies pay attention to such things because, ultimately, humans are malleable. “We’re very easily manipulated…which is why marketers have a job,” Russell said. “They’ve figured out they can shift people’s views.”
Yet anti-American feelings, where they exist, are deeply anchored. When such views are entrenched, even clever marketers have a tough time turning them around. One strategy is to employ counter-stereotypic association training, or playing against type.
For example, a prevalent stereotype of the US is “everything is big and plenty,” Russell said. A branding strategy to counteract this impression would play up features people do not associate with that image.
First, however, companies must understand how strongly consumers view their products as American.
Working with Dale Russell, a researcher at the Uniformed Services University, Assistant Professor Russell set out to test whether the strength of a brand-country association influenced the relationship between consumers’ animosity toward a country and their attitudes toward certain brands. In other words, if a consumer strongly associates McDonald’s with the US and has anti-American feelings, is that person less likely to patronize McDonald’s than an anti-American consumer who only loosely associates McDonald’s with the US?
First, the researchers measured the strength of country associations for several brands. Then they used different advertising images to manipulate those associations and measure whether consumers’ attitudes were affected.
Previous research had confirmed that animosity toward a country affects consumers’ willingness to buy its products. Researchers also know these attitudes are powerful even when inaccurate; in one study, participants incorrectly identified the country of origin for one-third of 84 brands.
They surveyed 731 university students in France. The country was chosen in part because among US allies, France’s anti-Americanism is most pronounced. The researchers were also intimately familiar with the ins and outs of Franco-American relations, as Cristel is French and Dale an American.
The French present an interesting case of ambivalence because their feelings toward America are complex, she said. On the one hand, America came to France’s aid in World War II. The French also embrace American pop culture. On the other hand, many French view the influx of American fast-food restaurants as a threat to their traditional way of life.
“That’s French culture, so at the same time that they have all this deep-felt love and respect for America’s help in the past, they find themselves always criticizing the invasion of McDonald’s and Coca-Cola and how that’s ruining culture,” Russell said. “That’s why we talk about ambivalence, because people have really mixed feelings about this.”
The students answered questions measuring their attitudes about 14 brands, half of which were American. One month later, 291 of the students took a survey rating their agreement with 12 statements measuring attitudes toward America.
The Russells found that four of the US brands were strongly perceived as American, four were not, and the remainder fell somewhere in the middle. Analysis showed that, indeed, consumers’ animosity toward brands was related to the strength of their association with the US, with one interesting exception: Levi’s, thanks to its perceived authenticity.
The more consumers think of these brands as American, the researchers found, the more negative they feel toward them.
Swallow It Whole
Building on that finding, they conducted a second study of 77 French residents between the ages of 20 and 35. This time, their goal was to evaluate consumers’ responses to a fictitious new beverage, V, when it was shown in American and non-American contexts. Consumers viewed one advertisement showing the Statue of Liberty and the tagline “V is soon arriving from America.” They viewed a second advertisement creating a weak US association, with the tagline “V is soon arriving from afar” against the skyline of Melbourne.
After participants viewed the ads, the researchers measured their attitudes toward V, including how American they perceived it to be. They then told the participants they could enter a lottery for free beverages and choose from an assortment that included V and other brands. This captured whether participants’ attitudes could actually extend into a purchasing decision.
The results confirmed that consumers with low animosity toward the US showed little difference in their attitudes toward V, regardless of whether it was pitched against a New York City skyline or not. But the most anti-American consumers did adjust their attitudes in response to whether V was presented as American. This finding was substantiated in participants’ choice of which beverage they would select to drink: Those who felt animosity toward America and perceived V as American were less likely to choose it.
“With a single picture, you can completely shift people’s perceptions and responses to brands in this case,” Russell said. “It’s fascinating to see this because there’s been lot of talk about, ‘Does this matter for brands? Should marketing managers worry about this kind of stuff?’ Clearly you see, yes, it does.”
The French participants in the study elicited vocal criticisms of America when it came to current events, Russell said, but “once you scratched the surface, a lot of them were talking about rock and roll and jeans and all the things they quite love about America.” That led Russell to her next project: a formal study of the effects of ambivalence.
Strong vs. Weak
The complexities of ambivalence vary, but a common stance toward America is to embrace its popular culture while rejecting its politics. When researchers detect such mixed opinions, it is “clearly a signal that what’s going on there doesn’t line up,” Russell said. She attributes the discrepancy to the fact that people are good at compartmentalizing, disentangling “I like American movies” from “I hate what the American government does.”
This study, also conducted in France, was the first to measure how consumers’ ambivalence toward a country related to their willingness to buy associated brands. The researchers’ prediction? The more ambivalent people are about the US, the less willing they will be to buy American brands.
The researchers used in-depth interviews of French residents to come up with 20 statements capturing common beliefs about the US, and 291 university students then rated their agreement with the statements.
In the next phase, the researchers chose seven US brands that were perceived as very American and seven non-US brands. Participants rated their attitudes toward the brands, along with their frequency of consumption and future purchase intent. They also completed a questionnaire designed to provide an objective assessment of their ambivalence toward the US. Researchers then paired these results to evaluate the relationship between ambivalence and brand attitudes.
They found that “consumers who harbor both positive and negative views of a country are less willing to purchase emblematic brands from that country.” Resisting the purchase, it turns out, is one way we cope with inner conflict. According to Russell, researchers know that ambivalence is uncomfortable—the more conflicted we feel toward something, the more likely we are to avoid it.
For businesses, she said, that means companies should strive to reduce consumers’ ambivalence and overcome it with stronger arguments. Corporate research into overseas markets also should measure consumers’ ambivalence and the strength of brand associations.
Think Global, Act Local
As with auto manufacturing, the ever-expanding reach of global corporations has blurred the lines of what is purely American and what has taken on a life of its own, well beyond our borders.
Some entrepreneurs find opportunity in anti-Americanism. When Coca-Cola struggled in the Middle East market, French businessman Tawfik Mathlouthi introduced Mecca Cola in 2003 in a bid for anti-American soda drinkers, according to a BBC report. (He also, however, played up the Coke resemblance with white letters on a red label.) Mecca Cola is now sold in many countries, from Algeria to the United Arab Emirates.
Like Coca-Cola, famous brands that originated in the US are often viewed as American, regardless of how global they have become. Starbucks is for sale in 60 countries. McDonald’s burgers are in 119 countries. Consumers, however, still view them as American.
In the midst of this fragmentation of ownership, campaigns like the Farm to Table movement have sprung up. Growing in popularity, the focus is on the consumption of goods grown locally, thus supporting the local economy. A dollar spent at a local business, supporters argue, translates to 45 cents reinvested locally—as compared to 15 cents of dollars spent on products made by large corporations, according to Eat Local First.
Is that good for business, or bad? Just as with vehicles, it depends on whom you ask.
Academic papers that gave rise to the cover story:
Frank DuBois, “Evaluating ‘Made in America’: A Critique of the American Automotive Labeling Act And a Proposed Alternative,” accepted by the Academy of International Business Annual Meeting (July 2013).
Cristel A. Russell, Dale W. Russell, and Jill Klein, “Ambivalence Toward a Country and Consumers’ Willingness to Buy Emblematic Brands: The Differential Predictive Validity of Objective and Subjective Ambivalence Measures on Behavior,” Marketing Letters (2011).
Cristel A. Russell and Dale W. Russell, “Guilty by Stereotypic Association: Country Animosity and Brand Prejudice and Discrimination,” Marketing Letters (2011).