American Assumption

How many times have your heard the phrase; Never assume, it will only make an ASS out of U and ME. I have heard it more times then I could count, but I still do it. As I was doing research for this entry, I discovered that an assumption I made about two years ago was wrong. First a little background.

In 1995, the Federal Trade Commission (FTC) was considering the requirement that automobile companies mention the domestic content of vehicles in advertisements. The following year, in comments to the FTC regarding “Made in the USA” advertising claims, the American Automobile Manufacturers Association (AAMA) confirmed that there was confusion in the market place about what “Made in the USA” actually means, but suggested that no specific action should be taken. See the complete comments at
http://www.ftc.gov/opp/jointvent/madeusa/ftp/usa/103.txt.

A couple of things about the comments shocked me; first, after all these years there is still the same confusion. Second, the AAMA seemed to want to play on that confusion. From the comments, “Moreover, we note that consumers’ contextual understanding of a “Made in the USA” claim may vary greatly from product to product and, for our industry, has changed in recent years and may continue to evolve. Therefore, we suggest that the Commission reject setting rigid standards that may soon become obsolete or cause more confusion than they resolve.” In other words, the AAMA agrees that there is a problem, but suggests that nothing be done.

Why would the AAMA object to regulations that would highlight “Made in the USA” product content? One answer comes later in the same comments. “During the 1970s, American companies began to offer imported products under American nameplates (“captive imports”), allowing consumers to choose, from Buicks and Fords built in Germany, or Plymouths from Japan. Today, captive imports continue to provide retailers with products, and manufacturers with sales outlets, that otherwise would be unavailable.” The AAMA wants to play on the confusion since it is more likely that the American consumer will ASS-U-ME an American nameplate has more domestic content then a foreign nameplate. Another reason is that the domestic content of the American nameplates is decreasing. This is confirmed by the AAMA comment “Next, domestic manufacturers began utilizing imported components, especially power train equipment, to fill voids in their own product lines.”

I have to admit that I was the kind of person they were thinking about. This is evident in my decision to buy a Ford Escape. I wanted to buy American and the Escape seemed like a good choice. In my research, I learned that the Mazda Tribute was really an Escape with a different body. I think that I made an assumption that most people would make: The Escape has the same domestic content, or more, domestic content then the Tribute. Turns out I was wrong. According to a USA Today article, see the following link http://www.usatoday.com/money/autos/2007-03-21-car-content-chart_N.htm, the 2008 Escape has only 65% domestic content while the Tribute has 75% domestic content.

In my buying decision the domestic content difference probably would not have affected my choice, since I purchased the Escape Hybrid. The issue is that I thought I could make an assumption on a topic I thought was a no brainer. Obviously I was wrong.

My wrong assumption only opens the door to a bigger question. Which would have been better for the overall domestic economy, buying the Escape or the Tribute? Is it the foreign nameplate Tribute, at 75% domestic content, or the domestic nameplate Escape, at 65% domestic content? In time I expect we will be able to know easily, just not today.